Council considers marijuana dispensary lawsuits settlement

By: Brian Louwers | Warren Weekly | Published November 19, 2020

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WARREN — After 14 months of costly litigation, a collection of lawsuits over medical marijuana dispensary licensing in Warren could be coming to an end.

A decision on a proposed settlement and consent judgment is now up to the Warren City Council, and council members said earlier this month that they wanted to hear from residents and business owners ahead of their final consideration, which could come as soon as a Nov. 24 meeting.

Agreement to the settlement would mean the approval of a total of 28 dispensary licenses in the city. The city’s governing ordinance originally limited the number to 10. It was later amended to 15.

On Nov. 6, attorney Andrea Pike, representing the city and several named individual parties, and attorney Jeffrey Schroder, the City Council’s own legal counsel, recommended accepting the proposed settlement and consent judgement to end 11 separate lawsuits that were consolidated into one case before Macomb County Circuit Court Judge Carl Marlinga.

The lawsuits were filed in 2019 after Warren’s Medical Marihuana Review Committee recommended awarding a set of 15 marijuana provisioning center licenses from a field of dozens of applicants. That recommendation was ultimately approved by the former Warren City Council at its final meeting before the 2019 city election, after which all but one of the members, Council member Ronald Papandrea, left office. Papandrea and former City Council members Cecil St. Pierre, Robert Boccomino and Steven Warner sat on the review committee, along with former Public Service Director Richard Sabaugh and City Attorney Ethan Vinson.

The city’s licensing process became mired in controversy, however, and the licenses were eventually voided by Marlinga, who ruled that the review committee had violated the Open Meetings Act.

A group of 16 entities that were denied dispensary licenses filed lawsuits against the city and were joined together as plaintiffs. The 15 original would-be license holders were allowed to enter the lawsuit as intervening parties, and the consolidated “Pinebrook Warren LLC et al vs. City of Warren et al” matter went through months of facilitation before retired Macomb County Circuit Court Judge Peter Maceroni.

Pike told council members that the proposed settlement and consent judgement took five months to negotiate. She said the terms of the settlement include further no cash payment by the city.

Sources said the city’s legal costs thus far have approached $500,000.

Pike said agreeing to the settlement would require the city to reissue the 15 provisioning center licenses to the original entities awarded licenses in October 2019. It would also require the city to issue licenses to 13 of the 16 parties not originally awarded licenses by the former City Council, at the recommendation of the review committee. Pike said three of the 16 entities had since waived their right to a license.

The locations of all 28 proposed license holders included in the settlement were included in a draft of the consent judgment and were plotted on a map made available to the public online. Pike said the locations all fall in areas zoned for industrial use, per the city’s governing ordinance, except for one, which is in a permitted commercial zone. All 28 locations meet zoning requirements for setback distance at a minimum of 1,000 feet from schools and 500 feet from residential zoning, libraries, parks and churches.
Pike said license holders would be held to “community involvement” commitments included in their original applications. Those include giving a total of $1 million annually to local charities, donating back-to-school supplies and providing turkeys for families in need around Thanksgiving.

The licenses are subject to annual fees. Pike said provisions were in place to prohibit the transfer of licensing before a facility’s opening. All locations would be significantly improved with new construction or remodeling.

“Acceptance of this consent judgement, if approved by this body, will end litigation. It will end the Pinebrook case, the two administrative appeals, the separate civil case, all cross claims and all complaints. It will end the growing legal defense costs associated with these lawsuits and future lawsuits associated with the process,” Pike said. “It will bring an influx of real estate improvements, new businesses and jobs. It will also bring increased tax revenue to the city, annual license fees to the city and many other benefits.”

Schroder advised the City Council that he understands it’s a “tough decision.” He said he concurred with Pike’s assessment and with Maceroni’s belief that the city’s potential legal exposure, should a settlement not be reached and costly litigation continue or escalate, could reach into the “millions of dollars.”

“As a result of that I also concur with the recommendation to settle this case, to keep the city away from the major risk of moving forward in litigation,” Schroder said.