The Warren City Council will consider a settlement Tuesday night that would open the door to marijuana dispensaries in the state’s third-largest city.
The proposed consent agreement would settle more than a dozen lawsuits, shield the city from possibly millions of dollars in damages and provide financial benefits, including an upfront payment of $1 million, pledged by 28 applicants who would be granted operating licenses, said Angela Pike, an attorney who has represented Warren in facilitation talks since August.
“We believe this is a good settlement,” she said.
Judge Carl Marlinga of Macomb County Circuit Court, who ordered the facilitation, ruled earlier that Warren violated the Open Meetings Act in 2019 when it interviewed and subsequently granted licenses to 15 of more than 60 applicants in a process that wasn’t open to public view.
Multiple lawsuits followed, and most of the current council members were not on board when the first licenses were granted and subsequently voided by Marlinga.
“The city inherited a liability with potential exposure in the tens of millions of dollars and through their outstanding leadership negotiated a proposed settlement that instead would result in a $70 million investment in the city,” said attorney Rich Sulaka, who represents the group seeking licenses.
“The proposed settlement would also create at least 300 jobs with a commitment that all jobs would pay a livable wage of at least $15 per hour and prioritize hiring Warren residents first,” he said. “… While we recognize the industry is new and there may be a negative stigma around cannabis, venture capital investment in cannabis startups currently exceeds all other investments, including tech.”
Attorney Jeff Schroder, who represents the City Council, agrees.
“There is untold amount of potential liability,” he said. “There is a consent agreement that most can live with, which also provides some sizable benefits for the city.”
The council will take up the matter at 7 p.m. during a virtual Zoom meeting the public can view online.
Warren Mayor James Fouts, who has repeatedly opposed allowing marijuana dispensaries in the city, begrudgingly said the settlement is worthy of consideration.
“I have been completely left out of this by the council — this is all a council project,” said Fouts. “But even being on the outside, it is pretty clear that there could be a lot of financial damage to the city with litigation and considerable good from some of the commitments, as well as limiting how and where they can operate.”
Pike said approval by a simple majority vote of the seven-member council could mean:
•The city does not pay any money to the parties, which is a risk in the current and future lawsuits.
•Dismissal with prejudice (meaning parties cannot refile) of the 11 lawsuits that are part of the Macomb County Circuit Court case, the seven cross-complaints filed against the city and individual defendants by the original license holders, two administrative appeals and a separate civil lawsuit.
The parties agreed to waive all claims against the city and the individual defendants as part of the settlement.
•The city reissues the 15 medical marijuana provisioning center licenses to the original applicants who received licenses in October 2019.
•The city issues licenses to 13 of the 16 other parties. The other three have waived any rights to a license and have received payments from the others, according to Schroder.
•The 28 parties receiving licenses would have the option for a shared medical and retail facility. The city’s current ordinance only allows recreational licenses at facilities that have medical licenses.
The consent judgment spells out locations for the 28 facilities. All but one are in areas zoned industrial. One facility would go in an area zoned commercial. A map of the sites can be viewed here.
The purpose of the arrangement, Pike said, was to address concerns that none of the dispensaries be located in residential areas or within 1,000 feet of a school or 500 feet from residential-zoned properties, including parks, libraries and churches.
All sites must be monitored around the clock by video cameras and private security guards.
The agreement includes time limits for operators to pass state and city inspections and provisions to prevent them from selling their licenses before opening. The license-holders also are required to invest at least $2.5 million each to construct or renovate the facility where they will operate.
Twenty-eight applicants also have committed to community involvement, which could range from volunteering time to donating a percentage of their profits to local charities to donating school supplies or Thanksgiving turkeys.
Applicants will advertise newly created jobs to Warren residents at a minimum of $15 per hour.
One applicant, Sozo Health Inc., said in a news release it had donated $10,000 to Gleaners Food Bank and committed to supporting 10 Warren families with $1,000 each for the holidays.
Each license holder must obtain a state license if they want to sell recreational marijuana. A majority have indicated they plan to grow or process marijuana.
Besides the $1 million one-time benefit payment to the community there will be an excess tax estimated to be more than $1.2 million the first year the 28 dispensaries are open. That would be automatically received from the state based on tax received from recreational marijuana sales, and is expected to grow every year.
The proposed consent judgment/ settlement is recommended by Pike; Schroder; City Attorney Ethan Vinson; and the mediator/facilitator in this case, retired Judge Peter Maceroni.
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