Dispensaries sue city of Grand Rapids over social equity policy

Yahoo

20-02-2025

GRAND RAPIDS, Mich. (WOOD) — The owners of six Grand Rapids dispensaries are suing the city, claiming its social equity policies have effectively become a fine.
The city in 2018 adopted the Marihuana Industry Voluntary Equitable Development Agreement, and in 2020 adopted the Cannabis Social Equity Program, which required cannabis licensees to adopt a social equity plan, according to the lawsuit.
'Nationwide, significant harm has been caused to communities of color by the War on Drugs and oppressive cannabis regulation,' the . 'Through partnerships with business allies and community we have the ability to be on the right side of history and help make real change – equitably. This Policy is intended to be a step toward helping to support equitable economic initiatives, including job creation, removing barriers to local ownership, and contracting opportunities for traditionally disadvantaged groups within the community.'
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According to the city's website, participation is voluntary. However, once a plan is submitted to the city, it is legally enforceable. The city also gives priority to applicants based on points earned through the policy, with points awarded in five weighted categories: local ownership, workforce diversity, supplier diversity, new business development (minority business incubator) and cannabis community fund investment.
A plan could include things like committing to maintaining a diverse workforce, having diverse suppliers and helping others start a business. The policy says that if a licensee does not meet the requirements, it would face sanctions, like a reduction in how long the license would last or a report to the state. The sanctions listed in the policy originally did not include any monetary fines.
In 2022, the City Commission recognized that most dispensaries would not be able to meet the commitments they made, and the city created a point transfer system, the lawsuit says.
The lawsuit claims that in practice, the point transfer system meant that licensees that are not compliant with the city's social equity policies are told to pay up to 3% of their gross revenue, or risk losing their license.
The lawsuit says that as far as the dispensaries' attorneys are aware, the funds go into the city's general fund.
The point transfer system was not in place when the dispensaries submitted their forms, the lawsuit says.
Six dispensaries are involved in the lawsuit: Fluresh, owned by Fluresh LLC; Ascend Cannabis, owned by FPAW Michigan LLC; two High Profile locations, owned by QPS Michigan Holdings LLC and Fish Ladder Holdings LLC; two Skymint locations, owned by The District Park LLC and Green Skies-Healing Tree LLC.
Between 2022 and 2024, the six dispensaries involved in the lawsuit have paid a total of $2.2 million, the lawsuit says, paying anywhere between $40,000 to $512,000 a year.
'The City of Grand Rapids has devised a convoluted framework to fine, tax, and/or penalize its cannabis licensees through improper fees, for failing to comply with 'social equity' policies that have been incorporated into the City's cannabis ordinance,' the lawsuit says. 'Substantively, the City has adopted what is really a revenue generating policy under the veil of 'social equity,' as a means of avoiding scrutiny from voters or to circumvent the explicit cannabis fee and fine limitations placed on municipalities under State law.'
It claims that the city has put the dispensaries' state license at risk by waiting to file notices of noncompliance until a few weeks before their licenses were set to expire. For example, the city filed a notice of compliance against Fluresh with the state's Cannabis Regulatory Agency in 2024, almost forcing it to close its operations both in Grand Rapids and throughout the state.
The CRA ultimately told the city to withdraw the notice, and Fluresh was able to renew its state license on the last possible day, the lawsuit says.
The lawsuit says factors that made Fluresh no longer compliant included its founder moving from Grand Rapids to Traverse City to be closer to family during the pandemic. It also claims the city has been 'overbearing' while trying to enforce the policy: at one point, it asked for the personal tax returns for the past 10 years for all of Fluresh's employees, the lawsuit says.
The dispensaries have requested a preliminary injunction on the matter. The lawsuit is asking, among other things, that the city repay the fees they paid in 2023 and 2024.
A spokesperson for the city declined to comment.
'The City does not comment on pending litigation,' the spokesperson said.
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