13 Traverse City marijuana shop licenses will be drawn from bucket
Several Michigan cities have held lotteries to determine who wins or loses in the fiercely competitive marijuana sweepstakes
13 Traverse City marijuana shop licenses will be drawn from bucket Several Michigan cities have held lotteries to determine who wins or loses in the fiercely competitive marijuana sweepstakes Check out this story on Freep.com: https://www.freep.com/story/news/marijuana/2019/05/02/traverse-city-lottery-marijuana-licenses/3650492002/
Kathleen Gray, Detroit Free Press Published 12:11 p.m. ET May 2, 2019 | Updated 5:39 p.m. ET May 2, 2019
Some things you need to know about legalized recreational marijuana in Michigan. Mike Thompson, Detroit Free Press
On Friday morning, a 5-gallon bucket will hold the hopes, dreams and fate of marijuana business entrepreneurs in Traverse City.
That's where the small slips of paper, bearing the 78 names of the potential marijuana dispensary owners and the address where they want to put their business, will be placed at 10 a.m.
But only 13 will emerge as winners of the Traverse City marijuana lottery.
"I'll just be drawing out the tickets one at a time from a bucket and the deputy city clerk will assign a number to each ticket drawn," said Traverse City Clerk Benjamin Marentette.
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The first 13 will get a provisional permit to open a medical marijuana shop within six months. If the owners can't meet that goal, the permit will go to No. 14 and on so on down the line with the remaining 65 applicants.
Traverse City isn't the only town to use a lottery to pick winners and losers in the marijuana sweepstakes. Grand Rapids held its lottery last week, but instead of determining who will get city approval for a dispensary, City Clerk Joel Hondorp, who was blindfolded when he drew 81 ping-pong balls out of a rotating drum, was setting up the order in which applications will be considered by the city.
Grand Rapids hasn't set a limit on the number of licenses, leaving it to how zoning shakes out. Dispensaries will not be allowed within 1,000 feet of a park or school or another dispensary.
Mount Pleasant also used a lottery in February to choose the winners of three marijuana dispensary licenses and Portage was firing up the lottery drum Thursday to choose its three dispensary license winners.
In Traverse City, the city commission voted to allow 13 dispensaries in the city, which counts Lake Michigan as a top attraction. It also didn't put any limits on the other categories of business licenses — grower, processor, secure transport and testing facilities — but haven't received any applications for those categories.
"To do a grow operation, it's is so expensive here because the cost of land in Traverse City is so high," Marantette said.
And even though the city commission voted to opt out of the recreational marijuana business until the state comes up with the rules to govern the market, it also adopted a motion indicating that it intends to allow recreational marijuana businesses in the city once the state rules are set.
That set in motion the frenzy for the coveted medical marijuana dispensary permits in one of the state's premier tourist towns because the medical pot licensees will get the first shot at a recreational license from the state.
Seventy-eight groups filed applications for the 13 licenses and the competition for the possible sites that are properly zoned for a marijuana business is fierce.
The requirements for the applicants:
Passing a preliminary vetting by the city and getting pre-qualification status from the state, which includes an extensive criminal and financial background investigation and almost always guarantees that a state license will be approved
A business plan, which includes staffing levels and proof that the business would become a "professional operation
Proof that the applicant has a legal interest in the piece of property where the business will be located. This could be proof of purchase or a lease
A nonrefundable $5,000 application fee
The proof of interest in a piece of property is what has some of the applicants criticizing the city for how it has set up the lottery. While the Free Press has talked to several applicants about the process, none wanted to be identified for fear of damaging their chances to get one of the licenses.
Multiple people have filed applications for the same piece of property in an effort, critics say, to game the system and give them a better chance at winning one of the 13 licenses.
One location — an auto repair and detailing shop at 707 South Garfield — has 11 people vying for the winning lottery ticket. Another — a commercial building at 314 Munson — has 10 people. The city decided it would accept all applications that came in, even if they were for the same property.
"The city doesn't get into regulating how many offers a property owner can take on their property. That doesn't serve any public safety or health purpose," Marantette said. "It's frustrating to some people that there are 10 applications for one piece of property. But somebody has an option on that piece of property and has entered into leases with 10 different applicants, knowing that one of them is probably going to get one of the licenses."
The process has provided a financial windfall for the city, which has already received $390,000 in application fees, none of which will go back to applicants who don't get one of the lucky early draws.
The fee is worth it for the applicants, including big names such as former Detroit Lions standout Calvin Johnson and his wife, Brittney. The couple, along with other business partners, are hoping to start a large marijuana enterprise, including a grow operation in Webberville, a processing facility and dispensaries at several locations around the state, including Traverse City.
"We have a passion for it. We have people in place to make this thing great," Johnson said during a cannabis conference in Toronto in April. "We're starting from the ground up. We want to be a vertically integrated company, so you can control all those facets and take a hands-on approach."
How cities choose winners and losers in the marijuana business has prompted lawsuits and threatened legal action from potential legal weed business owners in many cities including Hazel Park, Walled Lake, Mount Pleasant, Grand Rapids and Traverse City. But it hasn't stopped the cities from moving forward with plans to open up pot shops in their towns.
"There has been talk that one of the applicants has retained legal counsel who has asked for an injunction to stop the lottery," Marantette said. "But I don't know if that's going to be filed and I would say that I'm quite optimistic that our lottery is going to go forward."
Michael Naughton, a Traverse City attorney who represents one of the dispensary license applicants, declined to comment on whether he planned to file a lawsuit to stop the lottery.
"We may or may not," he said.
In the meantime, Marantette is preparing the second floor commission chamber room to accommodate more than 100 people expected for the lottery drawing Friday.
"I'm going to wear short sleeves, so nobody can say I have something up my sleeve," he said.
Kathleen Gray covers the marijuana industry for the Detroit Free Press. Contact her: 313-223-4430, kgray99@freepress.com or on Twitter @michpoligal.
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