Dustin Walsh
This story was republished with permission from Crain’s Detroit.
Has metro Detroit hit its limit on weed?
Tuesday’s election may indicate the five-county region is all but full up on where marijuana retailers can set up shop. Voters overwhelmingly rejected ordinances to allow for marijuana sales in Rochester, Birmingham, Grosse Pointe and Keego Harbor.
In Rochester, more than 89% of the voters rejected the ordinance to allow up to three dispensaries in the city. Nearly 74% of voters in Birmingham and more than 61% of voters in Keego Harbor did the same.
That’s a sharp contrast from last year’s election where voters in eight of the 12 communities in metro Detroit moved to allow marijuana establishments. Nearly 60% of voters in Royal Oak Township voted in favor of marijuana dispensaries last election, for instance.
“Given the gaps by which the proposals failed, generally speaking, I’d agree that (metro Detroit is at the ceiling for new marijuana establishments) for the near future,” said Ben Sobczak, partner at Detroit law firm Dickinson Wright PLLC and former general counsel for marijuana company Pleasantrees.
The issue is a mix between NIMBYism against the formerly illicit plant and access.
Residents in Rochester voted in 2018 in favor of authorizing recreational marijuana sales in the state by a margin of 54% to 46%. Voters in Birmingham were even more decisive, passing the statewide proposal 58% to 42%.
The majority of voters in these communities clearly agree marijuana sales should be legal, they just don’t want dispensaries in their own backyards.
And it’s not as if consumers there need to toil to find a nearby retail outlet.
The closest dispensary to downtown Rochester, Joyology Orion in Auburn Hills, is just a seven-mile drive. So while there’s likely marijuana consumers in the city, the short drive is convenient enough for the commuters in the bedroom community.
Same for Birmingham with Lume Cannabis’ Berkley location less than four miles from its city center.
While the majority of weed retailers are dispersed near the Southern border in Oakland County, its nearly 1.3 million residents are generally no more than a 10-mile drive from the nearest dispensary, according to a map maintained by the Cannabis Regulatory Agency. Which is in stark contrast to residents in farther-flung regions in the state — the nearest dispensary to consumers in Bad Axe in the Thumb region is more than 35 miles away, for example.
And in those more affluent communities like Rochester and Birmingham, delivery is likely an attractive option. Most dispensaries offer delivery, making even a four-mile commute moot. Lume will deliver “discreetly” to a residence in Birmingham for free with a minimum order value, usually between $75 and $100.
But for the weed industry, these wealthy communities — relatively close to highways —hold potential windfalls for high-margin products. Retailers certainly don’t feel the industry is saturated. And the evidence supports their outlook.
Recreational marijuana sales have flourished. In 2023 alone, monthly adult-rec sales have climbed from $196 million in January to $270 million in September. Early projections were always for the state to top out at $3 billion in sales as a total market. The state is likely to exceed that total this year with no real indications of hitting a ceiling … yet.
But whether marijuana operators continue to pressure new communities to opt in for legal sales is another question.
City councils from all four of the communities with votes did not set forth to pen an ordinance. These ordinance moves were brought forth by ballot drives, some driven by industry players.
Open Stores in Keego Harbor Committee and Open Stores in Rochester Committee were run by Keri Knipple, an employee of cannabis real estate firm Canna Zoned MLS. Canna Zoned is owned by developer Jeffrey Yatooma.
Yatooma’s group has led ballot drives in several communities in recent years, including Auburn Hills, Brighton and others. The group’s perceived goal is to pen the ordinance, limiting licenses in the communities and selling off the licenses it gains access to the highest bidder.
But Doug Mains, partner and head of the cannabis practice at Honigman LP, said groups looking to turn communities with ballot proposals may have run out of rope, but they won’t stop trying to get access to local licenses.
“At least not until everyone cannibalizes each other,” Mains wrote in a text. “But I’m not sure people will keep trying the ballot initiative route. At this point, I don’t see it being too fruitful.”
And, for many communities, authorizing marijuana sales has been expensive and painful. Dozens of lawsuits across the state have cropped up, many ongoing, between marijuana operators and city councils over the license selection process. Pontiac remains embroiled in a lawsuit, for instance.
At this stage in the industry rollout, each new territory is hotly courted and contested. The industry is effectively fighting over the scraps of valuable territory left in metro Detroit.
But, as Tuesday’s election showed, the community members themselves may feel there’s enough weed to pass around without any new outlets.
