The Traverse City commission will meet tonight (Monday) to discuss a long-awaited draft ordinance that would legalize retail recreational marijuana operations within city limits. The milestone comes nearly three and a half years after Michigan residents voted to legalize adult-use cannabis, and three years after the lottery process that distributed Traverse City’s medical marijuana permits. The Ticker caught up with several local players to find out what their plans are for this potential new chapter in northern Michigan’s marijuana story.
The city has drawn significant criticism for its handling of marijuana commerce, particularly in regards to how it distributed marijuana licenses. Held in the spring of 2019, Traverse City’s medical marijuana permitting process drew 72 applications, many of them from downstate cannabis businesses eyeing the area as a high-value market. Ultimately, 13 businesses won the right to open medical dispensaries within city limits, 11 of which eventually did open stores in town; none of them were locally-based companies.
Nick and Eric Piedmonte, a pair of brothers who run the northern Michigan marijuana brand Dunegrass along with their cousins Chris and Bryan, still recall the frustration they felt in May 2019 when they missed out on a Traverse City medical permit. Dunegrass was drawn “somewhere in the low 20s” in the lottery, and the businesses selected in front of it were mostly downstate entities that had flooded the draw with multiple applications. The lottery was set up in such a way that businesses with enough money could pay the $5,000 application fee repeatedly and “stack” multiple applications on a single dispensary location.
“Those facilities [that ultimately got permits in Traverse City] collectively submitted 34 applications into the lottery,” Nick says. “I believe I am the only adult-use marijuana retail licensee in the state of Michigan who is also a City of Traverse City resident.”
Dunegass has spent the three years since the lottery building its identity as a northern-Michigan-centric cannabis brand. Right now, the company has six adult-use retail stores operating in northern Lower Michigan or the Upper Peninsula, including shops in Manistee, Cadillac, Beulah, Big Rapids, Gaylord, and Marquette. The Piedmontes are hoping to open at least three more stores this year, including one in Scottville, a second shop in the Upper Peninsula, and (ideally) a dispensary in Traverse City.
That goal is contingent upon Traverse City adopting its new adult-use ordinance. Devised by an ad hoc committee and endorsed by the city’s planning commission, the ordinance would create 10 “overlay district” zones throughout the city where recreational marijuana stores could be located. The city commission will discuss this evening how many permits they wish to allow, what the scoring rubric should look like for assessing applicants, and more. Commissioners will also decide whether they are ready to move the ordinance forward for an enactment vote, which would take place on May 2.
The process could also be blocked by legal challenges. The city commission previously tried to adopt an ordinance that would have limited the number of recreational dispensaries in the city to four. Medical marijuana establishments pushed back and sued, arguing that state law effectively grandfathers their businesses in to any new adult-use marijuana ordinance the city might adopt. 13th Circuit Court Judge Thomas Power ruled against the dispensaries on that front, but the dispute isn’t over, with medical sellers now appealing the decision to the Michigan Court of Appeals.
In the meantime, medical stores in town have repeatedly suggested that their stores won’t survive long on medical sales alone. Skymint, one of the largest marijuana operators in the state of Michigan, temporarily shuttered its Traverse City store last spring and has yet to restart operations there nearly a year later.
If and when a new ordinance does go into effect, the Piedmontes are hopeful that their local roots will win them extra points in whatever scoring rubric the city adopts. Where the city was allowed to distribute medical permits on a chance-based lottery basis, state law requires adult-use permits to be allocated based on merit. In Eric Piedmonte’s view, if local businesses had been valued more heavily from the start, the city may have avoided some of the headache and instability its marijuana market has seen over the past three years.
“In 2019, when we built a business plan around running a medical store here in Traverse City, a key component of that plan was the resources and the networks that we could bring to bear simply because we’re from the region,” Eric explains. “I think maybe the uniqueness of our business plan, because of our locality, should have been a differentiator. And maybe the permit-by-lotto system didn’t necessarily yield the best operators. Am I the best operator for the Detroit or Grand Rapids region? Probably not. There are probably companies that are based down there that can do a better job in those markets because they’re local. But we felt strongly that we were going to have the ability to run a successful operation in Traverse City, even as a medical-only dispensary.”
Where the Dunegrass team is still enthusiastic about being a part of Traverse City’s budding cannabis scene, Tina Schuett has lost any interest she once had in running a dispensary.
Schuett, a co-owner of Traverse City’s Rare Bird Brewpub, was another local applicant who missed out on a medical permit in Traverse City’s 2019 lottery. That year, Schuett purchased the former Krause Realty Solutions building at the corner of Munson Avenue and Eighth Street (pictured) in hopes of converting it into a dispensary. She and several other local property owners raised alarm bells to the city before the lottery even took place, citing concerns that deep-pocketed applicants from out of town were flooding the lottery with multiple applications. The city, she says, opted not to heed those warnings.
“I think the city handled it wrong from the start,” Schuett says of the medical permitting process. “They got played. They refused to take the warnings before it happened. We told them, ‘Look, we can delay this. You don’t have to do this lottery right now. People are cheating.’ And they just ignored it. [The cheating] happened, and the city collected $400,000 in application fees, and I think that’s all they really cared about at the time.”
When asked whether she’s thought about going after a recreational permit when the city opens up that process, Schuett says she hasn’t even been following the dialogue around the new ordinance. Her experience in 2019 convinced her that the system favors “big money and bigger companies” and makes it “pretty much impossible for small players to compete.”
If there’s one silver lining to what happened three years ago, Schuett says, it’s that missing out on a favorable lottery draw saved her from wasting even more money on a (literal) pipe dream.
“I definitely feel like we dodged a bullet, given the way the city handled everything and the lawsuits that came,” Schuett says. “A lot of these companies [that got permits] have been able to keep their lights on because they are big companies and have a lot of money behind them. But because we’re just locals and would have just had this one shot, I probably would have lost a ton of money being open for only medical for those years in between.”
Editor’s Note: This story is a modified and shortened version of a feature that appears in this week’s Northern Express. Click here to read the Express version.
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