In a significant decision for cannabis advocates and the cannabis industry, on September 1, 2023, the Michigan Court of Appeals issued an opinion directing the placement of a cannabis-related charter amendment on the November 7, 2023, ballot for the residents of the City of Keego Harbor, Michigan, to consider on Election Day. Thanks to the Court’s decision, the voters of Keego Harbor have the chance to directly determine whether they wish to permit recreational marijuana retailers in their community. John Fraser served as lead attorney on the matter in the Oakland County Circuit Court and the Michigan Court of Appeals with assistance from Lance Boldrey, Gary Gordon, Alan Wilk, Steve Liedel, Cheyenne Benyi, and Olivia Flower.

The proposed charter amendment was organized by Open Stores in Keego Harbor Committee (“Open Stores”) by way of initiative petition. The charter amendment petition was complementary to an ordinance initiative petition also advanced by Open Stores pursuant to the Michigan Regulation and Taxation of Marihuana Act (“MRTMA”), MCL 333.27956(1).

While the MRTMA grants the right to initiate an ordinance by way of petition, a series of unpublished orders from the Michigan Court of Appeals last fall ruled that MCL 333.27956(1) only permits ordinances initiated pursuant to MCL 333.27956(1) to “provide for the number of marijuana establishments allowed within a municipality or to completely prohibit marijuana establishments.” As a result, ordinances initiated by petition pursuant to MRTMA to allow adult-use marijuana establishments are likely to be very limited in scope; they can generally only provide for the number and type of establishments to be permitted. This is a very significant limitation because these ordinances lack any definition as to the application process and the regulation and licensure of these businesses. Generally speaking, MRTMA initiative petitions are typically directed at municipalities whose leadership is either opposed to adult-use marijuana establishments or apathetic to the effort. Accordingly, the lack of any defined application process is a serious limitation to MRTMA initiative petitions—particularly on an uncooperative municipality.

In light of the shortcomings of a MRTMA initiative petition, Open Stores made the decision to pursue both a MRTMA initiative petition and a proposed amendment to the Keego Harbor City Charter by way of initiative petition as authorized by the Home Rule City Act. Open Stores circulated and turned in petitions with the required number of signatures to the Keego Harbor City Clerk on June 22, 2023. On August 2, 2023, the City approved placement of Open Stores’s MRTMA ordinance on the November ballot but rejected its proposed charter amendment on the basis that Open Stores had not received the prior approval as to the form of the charter amendment petition from the City Clerk prior to circulating. The City claimed that such approval was required by citing to Section 6.8 of the City Charter.

In response to the City’s refusal to place its proposed charter amendment on the November ballot, Open Stores filed an action for mandamus in the Oakland County Circuit Court on August 16, 2023. Open Stores argued that Section 6.8 of the City Charter was inapplicable to charter amendment initiative petitions because that provision of the City Charter is found within the “City Legislation” chapter and the context of that chapter makes clear that it applies only to ordinance-related petitions—not charter amendment petitions. The Circuit Court promptly issued and scheduled a hearing to show cause as to why a writ of mandamus should not issue on August 23, 2023. Following the hearing, the circuit court denied Open Stores request for writ of mandamus and dismissed the case in an order entered on August 24, 2023.

Open Stores failed its claim of appeal as of right in the Michigan Court of Appeals that very same day and also promptly filed a motion for expedited appeal, which was granted on August 28, 2023. The Court of Appeals took the request to expedite seriously and ordered Open Stores to file its Brief on Appeal on August 28, 2023, and the City’s Response Brief by August 30, 2023. In an extraordinarily expedited appeal, the Court of Appeals issued its Opinion on September 1, 2023—only 16 days after the complaint had been filed in the trial court! The Court of Appeals reversed the trial court and ordered the Keego Harbor City Clerk to immediately certify Open Stores’s proposed charter amendment to the November 7, 2023 , so that it can be considered by the voters.

The Court explicitly noted in its Opinion that Open Stores’s proposed charter amendment and MRTMA-initiative were complementary as part of an overall licensing and regulatory structure to place this issue in the hands of the voters. Michigan has a long history of ensuring that citizens have the right to engage in direct democracy by taking up public policy matters themselves, and the Court of Appeals’s opinion reaffirmed that commitment.

Michigan, like many other states, places significant authority with local municipalities when it comes to the licensure and regulation of adult-use marijuana businesses. Michigan’s emphasis on direct democracy provides unique opportunities to place these issues directly in front of the voters. Dykema’s Cannabis Industry group can help interested operators explore and craft unique solutions to help create new market opportunities in the Michigan marketplace.