Opening a marijuana provisioning center in the City of Grand Haven requires both a Special Land Use Permit and a Facility Permit. The City of Grand Haven did not approve the sale of recreational marijuana until June 20, 2022. Recreational marijuana provisioning centers are far more profitable than medical marijuana provisioning centers because of the broader customer base. When recreational marijuana sales were approved by Michigan voters in 2018, those with established medical marijuana provisioning centers risked losing their customers and ultimately their businesses if local ordinances did not permit recreational sales. For this reason, those holding local medical marijuana permits have commonly been given first priority for recreational permits by municipalities with evolving ordinances.
In early 2022, those in Grand Haven, with approved medical permits that had not yet opened a center, were in a precarious position. Would the city grant them priority even though they had not yet established their business?
In June of 2022 in Grand Haven, Rebecca Neil held a permit for a medical provisioning center and hoped to open a facility on Jackson Street, but had not yet done so. It appears ordinances were altered, that enabled Rebecca Neil to receive priority for a medical facility permit and the ability to open a center on Jackson Street.
Two weeks before the new ordinances were approved, during the June 6, 2022, meeting of the Grand Haven City Council, land use and regulatory language for recreational marijuana provisioning centers was discussed. Several notable exchanges took place during that meeting.
During the public comment portion of the meeting, Rebecca Neil expressed her desire to get her “shovel in the ground.” (1:06:30) “Some of you might know I am one of your medical recipients. I own the property over on Jackson Street 1025. Our hope is that we take this medical establishment, and we make it accessible to any adult over the age of 21. [] Our previous ordinance in the medical was appropriate even from an adult youth standpoint, and so I like to see that move forward. I am also a local constituent. I live here. I've lived here for the last eight and a half years. I actually have another business as well, and so I’d like to see this move forward. We've waited a long time. I am obligated to one year of making this establishment accessible. That is per the ordinance that it currently stands. And I'm just really interested in getting my shovel in the ground and building onto a property that sits vacant.”
During the discussion, City Administrator Pat McGinnis discussed granting priority for recreational marijuana provisioning centers to those who had medical establishments. (2:10:20) “Current medical marijuana establishments that are out there; Are they automatically qualified applicants? Or do they automatically get a spot in line? Or do we have a lottery? And the discussion was that through your land use authority, you've already approved four locations.” He explained he had concluded that, “They would be eligible to be the first applicants for these recreational permits.”
A short time later Mayor McNally acknowledged the permit connected with the Jackson St property, which had not yet begun construction, could become a potential issue. (2:12:00) McNally “I'm actually already worried about the extension we gave to the one on Jackson because we didn't follow our own ordinance.”
This statement raises some questions. Who granted the extension? Why was it granted and why did the city council fail to follow city ordinances?
A few minutes later, Mayor McNalley read the ordinance and inquired about a word change. (2:35:00). “Applications for new facility permits where no building is as yet in existence: Any applicant for commercial, whose building is not yet in existence at the time of the city's special land use permit, shall have one year immediately following the date of the city's special land use permit approval to obtain a building permit and commence construction.” Mayor McNally then highlighted the change to this section of the ordinance and asked why the change was made. “It used to say COMPLETE construction why did we change that to say COMMENCE construction?”
City Manager Pat McGinnis addressed the question, but did not answer to Mayor McNally’s satisfaction. She repeated her question several different times and did not receive a satisfactory answer, and then continued. “But it leaves it totally open-ended. For instance, I think the premises on Jackson basically ceased construction. [] We gave them an extension because they had a year to complete. [] They've preserved their right to have a recreational marijuana operation [], but they've really just basically used their extension as a placeholder.”
Next Mayor McNally asked who changed the ordinance. “Pat did you change it or did Tom change it?”
City Manager Pat McGinnis answered. “We discussed that extension of time because it seemed inequitable to have the same standard for somebody that's going into a building that already exists versus a building that didn't exist yet.”
Mayor McNally again asked about who changed the ordinance. “When you say we, you and Tom? Or you and someone else?”
This time McGinnis indicated that he himself, attorney Ron Bultje, attorney Tom Forshee and Community Development Manager Jennifer Howland made the changes to the ordinance.
(2:39:50) Mike Fritz was also worried about a lawsuit. “On the Jackson Street part now, because they got that as a placeholder, is this going to open [] this up to a lawsuit from somebody else because they're using it like for a placeholder?”
(2:40:20) City Attorney Tom Forshee did not think the city would be liable for a lawsuit because their land use rights and permits were still ongoing.
Fritz was still concerned. “We authorized a medical marijuana not recreational, and then they came to us and because they had wetlands in it, and so we gave them an extra year.” Mayor McNally jumped in, “but it wasn't really about wetlands.” Fritz continued, “It was one excuse after another.”
Cummins replied, “We did it based on the advice received at the time from our city attorney who reviewed this and gave us options for how we should consider that. [] We did it based on advice and research.”
Mayor McNally added, “And I would argue deception by the applicant.”
The address of the construction site is 1021 Jackson Street, not 1025 as stated by Rebecca Neil during her public comment. The property is on the north side of Jackson Street, east of US. 31, between Lake Michigan Credit Union and The Lighting Corner. It was vacant land until construction began in July 2023. The property is owned by 1021 Jackson St., LLC. The registered agent is Mazin Samona, a successful businessman from Troy, MI, that happens to be the registered agent for several cannabis businesses. 1021 Jackson St., LLC was formed on September 9, 2022. The ownership history of 1021 Jackson Street is interesting:
The parent parcel was owned by Grand Plaza, but was split into three parcels in 2005.
One parcel was Quit Claim Deeded to Lake Michigan Credit Union.
Then the Lake Michigan Credit Union parcel was split in 2019, and one parcel was sold to Thomas Haehn and John C. Phillips in October of 2019 for $285,000.
On September 12, 2022, Haehn & Phillips sold the vacant parcel to 1021 Jackson St., LLC for $900,000.
This is interesting for several reasons. First of all, during the June 6, 2022, meeting, Rebecca Neil said, “I own the property over on Jackson Street 1025.” Not only did she have the incorrect address, but she was not listed as a property owner. As noted previously, the owners were Haehn and Phillips. Philips lives in Sandusky, MI and Haehn lives in Nashville, TN. By selling the property to 1021 Jackson Street, LLC in September 2022, Haehn & Phillips made a profit of $615,000 after owning the parcel for less than two years. The sale appears to have been a private sale, meaning the property was not listed with a real estate agent.
With the opportunity for recreational marijuana sale through municipal regulation came the opportunity for preferential treatment from local officials. Local officials have the opportunity to determine not only if sale, processing, and growing of marijuana will be permitted, but also how many businesses will be afforded that opportunity as well as restrictions on where they may be located. In this case, it appears, ordinances were changed to provide a permit advantage to a specific business. A lot of money was made on the sale of the Jackson Street property. In less than a two-year time frame, local property values had increased, but this sale was a windfall for the previous owners.