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September 27 2018

Is Your Municipality Ready for the Potential Legalization of Recreational Marihuana?

By: Ronald M. Redick

Recent polling suggests that Michigan’s recreational marihuana proposal (Proposal 18-1) is likely to be approved at the November 6, 2018 general election. Whether or not the polling is correct, it is important for municipalities to know the implications of this potential new law, so that they are prepared to address this subject matter through appropriate local regulation, if it is approved by the voters.

The most notable aspect of Proposal 18-1, insofar as municipal regulation is concerned, is that it creates an “opt out” scheme for recreational marihuana. In other words, state-licensed recreational marihuana establishments will be permitted in a municipality, unless a municipality “opts out” by adopting an ordinance to expressly prohibit them.

This is the opposite of the statute that currently regulates the commercial production, processing and sale of medical marihuana, which is known as the Medical Marihuana Facilities Licensing Act (“MMFLA”). The MMFLA creates an “opt in” scheme, whereby medical marihuana facilities are prohibited in a municipality, unless a municipality “opts in” by adopting an ordinance expressly allowing them.

The new “opt out” feature of Proposal 18-1 may not be readily apparent because, on one hand, it appears to preserve local control: it grants municipalities the option of adopting an ordinance that would “completely prohibit or limit the number of marihuana establishments within its boundaries.” However, the state licensing scheme created by Proposal 18-1 would require the state to issue an operating license to a proposed recreational marihuana establishment (provided that the application complies with the terms of Proposal 18-1), unless the municipality in which the establishment is proposed to be located notifies the state that the establishment would not be in compliance with an ordinance adopted by the municipality under the terms of Proposal 18-1.

This means that a municipality, if it wants to prohibit the establishment of a recreational marihuana establishment in its jurisdiction, must be able to submit to the state a duly-enacted ordinance that completely prohibits such establishments in the municipality.

Similarly, if a municipality does not want to “opt out,” but does want to limit the number and/or types of recreational marihuana establishments in its jurisdiction, it must adopt an ordinance expressly establishing those limits, and provide that ordinance to the state. Such an ordinance can require a municipal license and impose an annual administrative fee of up to $5,000 on each marihuana establishment. But the ordinance cannot conflict with the terms of Proposal 18-1, and cannot impose requirements that would be “unreasonably impracticable.” This means, generally speaking, that the ordinance cannot impose requirements that are so burdensome that a reasonably prudent person would not operate under those requirements. Other permissible terms of such an ordinance include the following:

  • Reasonable restrictions on signs for marihuana establishments;
  • Regulation of the time, place and manner of the operation of marihuana establishments and of the production, manufacture, sale or display of marihuana accessories;
  • Authorization for the sale of marihuana for consumption in designated areas not accessible to persons under the age of 21, or at special events in limited areas, for a limited time; and,
  • Providing a penalty for violation of the ordinance, which must be a civil infraction and which cannot impose a civil fine of more than $500.

Another interesting aspect of Proposal 18-1 is that it creates a right of local initiative. Specifically, individuals may petition to initiate an ordinance that would either (a) completely prohibit marihuana establishments within a municipality, or (b) provide for the number of marihuana establishments in a municipality. If such a petition is signed by qualified electors of the municipality, in a number greater than 5% of the votes cast for governor in the municipality in the last gubernatorial election, the ordinance must be placed on the ballot at the next general election, for approval or rejection. Thus, despite what the legislative body of a municipality might decide about prohibiting or allowing recreational marihuana establishments, the voters can compel a different result through the initiative process.

Fortunately, municipalities have a reasonable amount of time to respond to Proposal 18-1, if it is approved by the voters. Under the terms of Proposal 18-1, the state is not required to begin accepting applications for recreational marihuana establishments until one year after its effective date (if approved, Proposal 18-1 would take effect 10 days after the results of the election had been certified, and so the one-year deadline for the state to begin accepting certain applications would likely be in mid- to late-November 2019). However, there is nothing that would prohibit the state from deciding to accept certain applications sooner. Therefore, municipalities should not unreasonably delay in the adoption of an appropriate ordinance. The most proactive approach would be to adopt an ordinance now, before the November 6, 2018 election, with terms indicating that it will become effective only if and when Proposal 18-1 takes effect.

If your municipality would like assistance in the drafting of an appropriate ordinance under the terms of Proposal 18-1, please contact one of the attorneys in Mika Meyers’ Local Government Law Practice Group.