Municipalities Accept Bribes For Marijuana Big Buck Opportunities

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Small towns have big say on future of Michigan's medical marijuana industry

Posted on October 30, 2017 at 7:15 AM

Applicants to establish medical marijuana businesses line up in Bangor Township, near Bay City, to turn in paperwork on Sept. 1, 2017. (Andrew Dodson | MLive.com)

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By Emily Lawler

elawler@mlive.com

By Emily Lawler and Craig Mauger

 

LANSING -- The application cost for a medical marijuana business permit from  Bangor Township -- a 14,641-person township outside Bay City -- isn't cheap. Still, at $5,000 each, the township received 18 applications in just three weeks this fall.

"A guy today called me and said he's applying for three licenses," Bangor Township Clerk Dawn Bublitz said on Aug. 30, two days before the township's application window opened.

"Is it OK that I bring cash?" she said the person asked. "I said, '$15,000?'"

Bay County township sees lineup for medical marijuana applications

The rush of interest from medical marijuana entreprenuers isn't unique to Bangor Township.

A new state law regulating what could be an $837-million industry in Michigan gives local governments of all sizes the power to help determine which businesses can take part in the medical marijuana industry. The law has shifted some of the high-dollar effort to influence medical marijuana policy in Michigan from the state capitol to municipal buildings across the state.

Under the Medical Marihuana Facilities Act the Legislature approved in 2016, an appointed state board with five members will decide who gets licenses to grow marijuana, to transport it, to process it, to sell it or to provide safety compliance. However, under the law, the Medical Marihuana Licensing Board can consider whether local governments have approved ordinances or permits for businesses.

Paul Samways, an accountant who runs Cannabis Accounting Inc., has dispensary clients who are seeking local approvals in hopes they will be able to obtain a license.

"Seventy-five percent of the battle is finding someplace to be," he said. 

Many of those hoping to get into the new industry believe approval from a municipality with its own medical marijuana ordinance could be key to getting the all-important state license. That has led to a rush to get local governments to act despite the fact the state is still weeks away from approving administrative rules under which the medical marijuana industry will operate.

 

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According to associations that represent townships and cities, it's unclear exactly how many local governments have approved ordinances to "opt-in" to the state's new medical marijuana system. But some, like Clare, Kalkaska and Pinconning Township in Bay County, have adopted ordinances to allow medical marijuana businesses within their borders. Others, like Buchanan in Berrien County and Niles, have expressed intent to allow them.

Many more municipalities located across Michigan are expected to take action after the state Bureau of Medical Marihuana Regulation releases official rules later this fall.

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'Every community in the state has been approached'

Among the first to act was Webberville, a 1,272-person village located along Interstate 96 in central Michigan.

Its action was sparked by a request from the Michigan Cannabis Development Association, a group representing marijuana interests. Denise Pollicella, general counsel for the MCDA, declined to discuss which clients had requested she approach the city.

But the move worked - in February, Webberville approved an ordinance to allow growing operations, processing facilities, transporters and safety compliance facilities, but not provisioning centers.

In August, the village signed off on a medical marijuana extraction facility permit application from Webberville Ventures LLC, a company incorporated just that month.

It was McKenna & Associates, Webberville's planning consultant, that drafted the ordinance changes. And Webberville isn't their only local government client looking for assistance.

"As far as I can tell, every community in the state has been approached," said Chris Khorey, principal planner with the firm.

Webberville Ventures is among the companies lucky enough to have found a site already. But to truly break into the industry - which it estimates in its business plan to be worth $900 million by 2020 - the company needs a license from the state as well. Its business plan assumes it will get a license by February 2018.

In an interview, Jared Bundgarrd, the company's registered agent on its business filing, acknowledged there's some risk in paying a local permit fee of $5,000 and beginning to invest in a business before a required state license has been approved. But he said getting the local permit was key to advancing the business's plans and to making the case for a state license later.

"At this point, from our perspective, it's a risk that's worth taking," he said.

Pollicella, who works with many different clients in many different municipalities, compared getting into the medical marijuana industry now in Michigan to real estate speculation -- the act of purchasing real estate at one moment with the hope that its value will increase in the future.

If marijuana were legalized in Michigan one day, as a ballot proposal campaign is currently seeking to make a reality in 2018, those in the medical marijuana business could see their values increase.

But there are uncertainties. The Michigan Department of Licensing and Regulatory Affairs is still working to draft the rules by which the industry will operate, and there is no guarantee of any company getting a license from the Medical Marihuana Licensing Board.

Some marijuana businesses worry the state board could steer state licenses to the most wealthy applicants. Pollicella noted that the board is barred from putting caps on the number of licenses it offers, meaning it can't give only two licenses to grow marijuana to allow a monopoly on certain portions of the industry.

At the same time, she admitted the board could restrict access to licenses through other ways.

"We simply don't know," she said of what will be the eventual outcome with licensing.

Interest is 'staggering'

In the meantime, prospective businesses are working to lay the groundwork for their state licenses by scoring local permits in key geographic locations.

The 11,257-person city of Niles in southwest Michigan, about two hours from Chicago, hasn't adopted an ordinance yet, but plans to. And there has been heavy interest.

Sanya Vitale, Niles' community development director, says Niles gets about five phone calls and three to four emails about medical marijuana each day. Calls come from medical marijuana dispensaries and businesses located outside of Michigan, she said.

The interest in Niles has been "staggering," Vitale said. The level of interest is partly because of the city's proximity to other states, like Illinois and Indiana, she explained. If recreational marijuana were legalized one day in Michigan, the location could be financially beneficial for businesses.

Niles plans to adopt ordinances and then begin accepting permit applications after the state sets rules for medical marijuana later this year. The city wants to know the rules before going forward, she said.

Vitale described Niles as a "rust belt community" that believes it will see job opportunities through the presence of a growing medical marijuana industry. The Niles-Benton Harbor area has an unemployment rate of about 5 percent, according to the Bureau of Labor Statistics.

"Do we think it's going to be some boon for Niles? No, not really," Vitale said. "But every little bit helps."

Similarly, Bublitz, of Bangor Township, said the industry could lead to extra revenue for her township. If the township is going to be part of the industry, it wants to get on board early, she added.

Bangor Township plans to allow up to 50 grower permits, 10 processor permits, six provisioning permits, five transporter permits and five safety compliance permits.

Asked how the township will decide which businesses get a permit and which don't, she responded, "It's the question of the day."

Contact Emily Lawler at elawler@mlive.com or Craig Mauger of the Michigan Campaign Finance Network at craig@mcfn.org.

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