Nov. 26—BENZONIA — A recreational marijuana shop is closed temporarily, an owner confirmed, after circuit court officers served the business with an asset seizure order.
Lake and Leaf, a small retailer on U.S. 31, has been closed since Nov. 8, when a Kent County 17th Circuit Court officer, Kurt Orosz, along with two colleagues executed a seizure order.
Orosz did not return a call seeking comment Wednesday, although Benzie County Sheriff Kyle Rosa confirmed his office sent a deputy to the shop on Nov. 8 to stand by during the seizure.
David Seman, a Lake and Leaf owner, on Wednesday acknowledged the business was experiencing a cash-flow crunch.
“Due to lack of federal oversight with regards to cannabis, traditional banking avenues are not available to marijuana entrepreneurs,” Seman said.
“This forced us to seek private investment,” Seman said. “Those investments come with interest rates that make keeping cash flow, payroll and business operations practically impossible.”
Michigan voters legalized medical marijuana sales in 2008 and recreational sales in 2018, but federal law still bans its use.
Banks can’t lawfully lend to marijuana businesses, even in states where growing the plant, manufacturing products for sale and retailing those products have been legalized.
A Benzie County Sheriff’s Office report states Orosz was at Lake and Leaf to serve orders related to two holding companies, KDDS Enterprises, LLC and Midori Products, LLC.
The sheriff’s office report states that products belonging to these companies where what Orosz was removing from the store.
Kent County court documents also show requests for bank account garnishments have been filed, beginning in April, with that county’s 17th Circuit Court by Leaning Rock Investments, LLC, of Byron Center, against Midori Products.
Lake and Leaf opened in the summer of 2020 inside a previously vacant building that once had housed a hair salon and an employment agency.
“It was destroyed,” Matt Rothermel, a shop co-founder, told the Record-Eagle in February, of the building. “Vandals had gotten in. There were holes in all the walls. There were mice.”
At one point, the company employed as many as 27 people, that number later dropped to about 16, most of whom are now laid-off because of the closure, information provided to the Record-Eagle shows.
Rumors that the shop had tax issues or had run afoul of the state’s marijuana regulatory agency are false, records show.
However, small start-ups like Lake and Leaf are finding it difficult to compete with corporations, some of which have pockets deep enough to open more stores than communities can support — and to sue when they don’t get what they want.
Yet, in 2022, U.S. District Court Judge Gershwin A. Drain ruled that municipalities are afforded great latitude by the state marijuana statute, which says if there is a competitive process to award licenses, the municipality shall select applicants “who are best suited to operate in compliance with this act within the municipality.”
Some officials consider rehabbing old buildings, the way Lake and Leaf did in Benzonia, to be a factor in making a license applicant “best-suited,” the judge ruled in a downstate case.
Anecdotally, retail prices of marijuana have dropped as the market is becoming increasingly saturated, and several billboards along I-75 advertise a chain of downstate retailers under the slogan, “free weed.”
Back in Benzonia, Seman said the majority of Lake and Leaf’s creditors have been patient and are, as he terms it, “seeing the bigger picture,” for which he is grateful.
“That bigger picture is company longevity, community commitment and the ability to be versatile in a dynamic market,” Seman said, adding that he hopes to re-open and is looking for ways to cut costs and expand retail operations.
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