The Michigan statute that authorizes recreational marijuana, the Michigan Regulation and Taxation of Marihuana Act (MRTMA), provides that, if a municipality limits the number of marijuana establishments that may be licensed, it must decide among the competing applications by a competitive process. In Bluewater Cannabis Company et al. v City of Westland et al., the City was sued by several applicants who were denied licenses to sell marijuana in the City. The applicants argued that the City’s requirement that applicants agree to a “waiver” in submitting their applications violated the applicant’s constitutional and statutory rights. The Circuit Court ruled in favor of the City, and the Court of Appeals in an unpublished opinion affirmed.
The application form that the City required each applicant to sign as part of a request for a license contained a provision that the applicant waived its right to any kind of trial; that the applicant consented to arbitration of any claims; and, that the applicant waived any right to challenge the City selection process or selection criteria. The waiver also enacted a six-month statute of limitations on arbitration claims, and provided an award of attorneys’ fees to the City if the City prevailed in arbitration.
The Circuit Court and the Court of Appeals rejected the applicant’s argument that the waivers were unconstitutional, holding that agreements to waive certain rights can be enforced when an application is voluntary. The Court also noted that the City provided both for arbitration and for an appeal of its scoring decisions, so there was a remedy even if trial rights were waived.
Many municipalities have elected to not allow marijuana establishments in their jurisdictions. For those that have, however, the Bluewater Cannabis Company case demonstrates that including waivers in the application can be very beneficial to the municipality in the event the application process is later challenged by those who were not awarded marijuana establishment licenses.