Traverse City commissioners Monday hashed out their preferences for new medical marijuana rules for the city, scheduling an official vote for December 3 to approve the new ordinance. Commissioners Monday also expressed support for introducing a new annual fee for all liquor license holders in the city – a proposal that will also return before the board December 3 and is designed to combat the city’s rising costs for alcohol enforcement.

Medical Marijuana
After months of deliberation and review by city planning commissioners and an ad hoc committee of city commissioners, Traverse City appears poised to pass new rules next month that will allow five different types of medical marijuana businesses to operate in the city.

City commissioners had one of their final opportunities Monday to share feedback on the draft policy before it comes for a formal vote December 3. The new rules would allow dispensaries – also called provisioning centers, or retail stores – to operate in Traverse City, along with grow operations, processing facilities, testing laboratories, and secured transportation companies. Businesses other than dispensaries would primarily be restricted to industrial districts, with laboratories additionally allowed in hospital districts. All businesses would have to be at least 1,000 feet away from schools.

While retail dispensaries were originally proposed to be allowed on Front Street and other parts of Traverse City’s downtown (C-4) district – in additional to hospital and C-3 commercial districts – strong opposition from the Downtown Development Authority (DDA) appeared to convince a majority of commissioners Monday to cut that section from the ordinance, effectively banning dispensaries downtown. “I just don’t want to see a ‘green mile’ on Front Street,” said Commissioner Michele Howard, expressing her concern dispensaries could take over downtown. Commissioner Richard Lewis agreed, saying the DDA had worked for decades to turn downtown into the region’s “retail center” and that he wasn’t comfortable seeing medical marijuana sold in the city’s “main business corridor.” 

While other commissioners supported allowing dispensaries downtown – including Brian McGillivary and Amy Shamroe, who sat on the medical marijuana ad hoc committee with Howard – they indicated their willingness to move the policy forward without that provision.

Commissioners also extensively debated a proposal to cap the city’s number of retail dispensaries at 13 – licenses that would be available by lottery to business owners who are pre-qualified by the state and have a guaranteed location for their business – and whether there there should be a minimum distance required between dispensaries. Those questions still remained in limbo Monday and will likely be further debated by the commission December 3 before a vote occurs. Should the new rules be approved in December, City Clerk Benjamin Marentette said the earliest the first dispensary licenses would likely be issued would be May, to allow time for businesses to apply for licenses and a lottery to occur.

Commissioners also acknowledged more changes could lie ahead due to Michigan voters’ decision to legalize recreational marijuana earlier this month. “We should be mindful that wherever we’re allowing medical, we’re very likely allowing recreational, and the public should be aware of that as well,” said Commissioner Tim Werner.

While Michigan cities can opt out of allowing recreational marijuana businesses under the new law, City Attorney Lauren Trible-Laucht cautioned that doing so after approving medical marijuana could result in the city being sued – one of several legal challenges she said was a likely outcome of the ballot proposal passing. “The statute that was just initiated…will be heavily litigated,” she said. “The language of the statute is pretty thorny.”

Liquor License Fees
City commissioners Monday also expressed their support for a proposal from city staff to introduce a new annual fee for liquor license holders in Traverse City – a proposal designed to evenly spread costs for alcohol enforcement, including police and administration time, across all city businesses selling alcohol.

After analyzing staff and police costs related to liquor licenses activities – including investigations, arrests, compliance enforcement, and reports – staff estimated the city’s total annual cost at $297,600, a figure Marentette said was likely conservative. “I think that’s estimating the city’s costs on the low end,” he said. City Manager Marty Colburn added that more than half of all police cases in Traverse City involve alcohol, ranging from DUIs to disturbing the peace to domestic abuse arrests. Marentette also noted that the approximate $60,000 the city receives in annual alcohol revenue had been subtracted from cost estimates before arriving at the $297,600 figure, ensuring the city was not “double dipping” in its estimates.

Dividing the $297,600 figure among Traverse City’s 193 liquor license holders, Marentette came up with an annual fee of approximately $1,542 per liquor license registration to cover city costs. While license holders pay an average $200 annual fee to the state, there is currently no annual fee charged by the city – only an initial application fee. Marentette, acknowledging the proposal represented “a new fee not seen before by city businesses operating liquor licenses,” did not propose setting the annual fee at the full $1,542 but instead suggested a more modest fee of $550, which he said would at least cover the city’s direct costs – though not police costs.

But several commissioners, expressing their support for the policy, said they believed license holders should be charged the full fee to cover their costs, as other groups are when they incur city staff time. They encouraged Marentette to return on December 3 with a proposal that reflected the full number. “If the true cost of this is $1,542, I have no problem setting the fee at that,” said Howard. “We don’t give other people a discount.”

If the fee is approved by commissioners next month, it will go into effect May 1 to coincide with the state’s renewal timeline for liquor licenses.