LANSING, MI -- It was no surprise when Michigan began accepting applications from recreational marijuana businesses Nov. 1.

The state Marijuana Regulatory Agency in July recommended to communities that didn’t want recreational marijuana businesses to formally opt out by the time the application window opened.

“The release of the rules today provides local municipalities and prospective licensees with the information they need to decide how they want to participate in the new industry,” Marijuana Regulatory Agency Director Andrew Brisbo said in a July 3 statement. “Since we plan to start taking business applications Nov. 1, stakeholders will have four months to evaluate these rules and make their decisions.”

Detroit still hadn’t passed a formal opt-out ordinance by that deadline.

The Detroit City Council on Nov. 5 voted to pass a temporary ban on recreational businesses. The ordinance is in place until Jan. 31 and didn’t take effect until Nov. 12.

“The state says whenever a municipality decides to send the opt-out ... the city is allowed to do so and it will receive it,” Detroit Councilman James Tate said at the Nov. 5 meeting. “So, though we are on ... Nov. 5, we did begin our process prior to Nov. 1 and that was recognized by the state.”

In the meantime, between the state application window opening on Nov. 1 and the Detroit ban taking effect Nov. 12, five companies, Brightmoore Gardens, 420 Factory, HCM Provisioning, Utopia Gardens and Plan B Wellness Center, filed applications with the Marijuana Regulatory Agency to operate state-licensed recreational marijuana businesses in Detroit.

Each of those businesses, four retailers and a grow facility, are currently operating in Detroit under the state’s medical marijuana licensing law. While they’ve completed the paperwork and undergone facility inspections, the recreational licenses remain in limbo, says Howell-based attorney Denise A. Pollicella.

Pollicella is representing the companies in three Court of Claims lawsuits filed in December against the state Marijuana Regulatory Agency, its director, Andrew Brisbo, and the state Department of Licensing and Regulatory Affairs.

The lawsuits request the Court of Claims issue an order requiring issuance of recreational licenses by the Marijuana Regulatory Agency.

Pollicella, who expects the lawsuits to eventually be consolidated, argues the state is obligated to issue recreational licenses, since there was no opt-out ordinance in place when her clients filed their applications.

The Marijuana Regulatory Agency issued licenses to several Ann Arbor businesses in a matter of weeks. The Detroit applicants filed within a matter of hours or days of those Ann Arbor businesses, Pollicella said.

They are now forced to watch as millions of dollars in recreational marijuana sales -- nearly $6.5 million over the first four weeks -- occur while they await the state’s decision in bureaucratic purgatory.

The state licensing agency, which has 90 days to issue or deny an application, is “appearing to intentionally drag their feet on these,” Pollicella said.

Marijuana Regulatory Agency spokesman David Harns declined to answer whether Detroit notified the agency of its intent to opt out of the recreational marijuana program prior to Nov. 1, or if there is a policy in place regarding how to handle applications filed in municipalities prior to opt-out bans taking effect.

“No comment on pending litigation,” Harns said.

MLive also left messages and is awaiting comment from attorney Joseph T. Froehlich, who is representing the state and Detroit City Council members.

Stuart Carter, owner of Utopia Gardens, asked Brisbo if he intended to issue licenses to the Detroit businesses during an industry networking event in December.

The response was vague.

“If there’s not a prohibitive ordinance in place at the time of application, that would not be a basis for denial,” Brisbo said. “But we have to look at all the other criteria as well.”

Tate said City Council was drafting an ordinance that, if passed, would allow recreational marijuana businesses in Detroit.

Following implementation of Detroit’s ban, the Marijuana Regulatory Agency on Nov. 12 began cancelling previously scheduled inspections required prior to licensing the lawsuit says. Pollicella said, since filing the lawsuit, those inspections were rescheduled and all of her clients passed.

There is no established deadline for when the Court of Claims must rule on the lawsuits.

-- Gus Burns is the marijuana beat reporter for MLive. Contact him with questions, tips or comments at fburns@mlive.com or follow him on Twitter, @GusBurns. Read more from MLive about medical and recreational marijuana.

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