Bureaucracy, conflicting opinions slow medical marijuana business in Pontiac

Candice Williams

| The Detroit News

Early last year, a developer brought a vision to Pontiac for a medical marijuana complex, months after residents voted to allow processors and dispensaries to operate in the city.

As a community benefit, a grocery store potentially operated by Hollywood Markets, would front the proposed $40 million development at Glenwood Plaza in the city’s center, still ripe for new investment.

The project has stalled, however, as the developer waits for the city to approve licenses for medical marijuana tenants within the complex amid a disagreement regarding a local ordinance. The project is among dozens of medical marijuana related ventures that have also been awaiting approval from the city for nearly a year — and it’s unclear when the bureaucratic logjam could break.

“Our project, this is something that can spark a bunch of commerce and revitalization to the area, but the overall thing is everything is being held up because of cannabis,” said Manuel Ferraiuolo, of the investment firm Rubicon Capital, developer of Glenwood Plaza.

Cannabis should be something that is a spark plug to get everything moving. It shouldn’t be something that holds everything back. And right now in the city of Pontiac everything is being held back.”

In August 2018, Pontiac voters passed by one vote a medical marijuana ordinance that would allow for up to 20 medical marijuana provisioning centers, also known as dispensaries, and an unlimited number of processors and growers. This has drawn more than a hundred applications from medical marijuana companies and caused disagreement within the administration on when and how to proceed.

Applications came in from processors and growers starting last year, while dispensaries applied for licenses during a three-week period in January. For some businesses, things aren’t moving fast enough.

As of the city clerk’s latest update in October, about half of the 103 provisioning applicants are in phase one of a nine-phase process while the rest were in phases two or three. Among grower and processor applicants, two are in the first phase and eight are in phases three or four.

Among the most ambitious of the proposed projects appears to be one planned for Glenwood Plaza. The plan calls for the former Kmart complex on South Glenwood to be transformed into a secure medical marijuana park with eight cultivation and processing tenants. A grocery store and a four-space retail spaces would sit along the front of the development.

Conflicting opinions

At issue with the development is a difference in interpretation of local zoning ordinance within the administration. City Clerk Garland Doyle says the ordinance currently doesn’t allow for the licensing of medical marijuana businesses at the site. The developer and the city attorney contend that the project is allowed.

In January, the site was granted a conditional rezoning that would change it from local business to corridor commercial and light manufacturing that would allow medical marijuana facilities in the light manufacturing zoned areas of the site. The zoning map amendment also states that the applicant may only occupy up to 100,000 square feet of medical marijuana non-provisioning facilities until there is a grocery store that is at least 15,000-square-feet operating on the site.

Doyle says that due to an overlay district the city put in place after the passing of the medical marijuana ordinance, the project is not allowed at the site without the Planning Commission changing the ordinance.

“It’s my position that a conditional rezoning addresses the zoning issue of the ordinance,” he said. “It clearly says here medical marijuana grower uses are not permitted outside the Cesar Chavez and Walton Boulevard medical marijuana overlay districts.”

City Attorney Anthony Chubb said that the matter is a fairly complex interplay between Michigan law, the Michigan Zoning Enabling Act, and a city ordinance: “Anytime that there’s any inconsistency between a local ordinance and a state law, state law controls,” he said. “It is my understanding that he’s solely relying on local law.”

Chubb said he expects that the clerk will process applications, including one for Glenwood Plaza, now that the election is complete. If not, the city could be facing lawsuits from applicants.

“I would certainly hope and presume he will act consistent with my legal analysis,” he said, “but if he does not, it is almost certainly going to result in litigation against the city.”

The length of time it’s taken for Pontiac to move forward with the marijuana industry is unusual, said Matthew Abel, senior partner Cannabis Counsel, PLC, which advises entrepreneurs on licensing and compliance.

“I think Pontiac could certainly use the jobs and the revenue and the people coming to town,” he said. “There’s so many positives about it. Other cities have licensed medical, recreational facilities in numbers greater. It’s doable if they have the collective will to do it.”

Mayor Deirdre Waterman said applicants, including the Glenwood Plaza project, have been waiting an inordinately long period of time: “They’re all waiting with community benefits and development projects. They’re just waiting for the interim clerk to do his job.”

A community benefit planned for Glenwood Plaza includes a grocery store. Ferraiuolo said the grocery store is not financially feasible without first having approval for medical marijuana businesses, which would subsidize the market. He said he’s in talks with Troy-based Hollywood Markets to operate a store that would be called Glenwood Market.

“We wanted to bring in a reputable name,” he said, adding that Hollywood Markets previously had a distribution center nearby.

As for the medical marijuana component, one of the largest tenants is expected to be Southfield-based Pharmaco Inc. If approved, the complex would bring 400 jobs.

During a job fair last December, dozens of job seekers gathered in one of the vacant storefronts to interview for positions. There will be a free training program for Pontiac residents.

Waiting continues

The developers of Glenwood Plaza aren’t the only ones waiting for the city to take action on medical marijuana business applications in Pontiac.

Dr. Bryan Swilley, who operates an independent medical practice in Pontiac, said he’s spent about $50,000 to $60,000 on an attorney, paperwork and architecture services for a dispensary he and his partners have planned for a former Salvation Army store on Perry Street near Martin Luther King Boulevard. He said he sat down with city officials last summer to ensure that zoning would allow his project. He applied in January and has been waiting since.

“Even with the pandemic this could have been reviewed,” he said. “There are a number of ways this could have been done in three months or less.

“For some people it definitely works,” he said, reiterating the benefit medical marijuana would bring the community. “It helps them with a number of things. It helps them with pain, it helps them with eating disorders. It may help them with some mental issue they may have. It is without question beneficial as long as it’s used correctly.”

Downtown property owners have kept property sitting empty as hopeful dispensaries wait to hear if they’ll be among the five lucky ones selected to operate in the downtown.

“In our downtown at one time most of the buildings had options on them,” Waterman said. “People were waiting to see whether their application would be successful or not.”

Pontiac property owner Tim Shepard said he has had five vacant properties downtown under contract for about two years. That means that other businesses interested in opening up shop can’t. He’s had inquiries from hair salons and a skate board shop.

“Most of them are just now vacant storefronts,” he said. “It’s really a strange thing when somebody calls looking for retail space and we have to say no there’s nothing available and they’re driving through town seeing vacancy after vacancy.”

Shepard said landlords are getting a fraction of the rent that they would normally get on a building as potential dispensaries take a chance on having their application approved.

“They do usually pay some kind of a rent, but it’s usually not enough for most of us to cover our taxes and other expenses,” he said.

Shepard said the effort is worth the potential increased foot traffic that will come into the downtown through the cannabis industry.

“We’re all pretty positive for Pontiac, especially the downtown,” he said. “We’re ready to let this thing roll… There are literally people sitting with millions of dollars ready to invest in these properties.”

[email protected]

Twitter: @CWilliams_DN

Latest posts