A Marijuana Company Stated: “We Want To Be a Part of That Story”!

A Marijuana Company Stated: "We Want To Be a Part of That Story"!

During the summer of 2020, the Lake and Leaf recreational marijuana store opened on U.S. 31 in a space formerly occupied by a hair salon and an employment agency. Founder and current president Matt Rothermel described the structure as “destroyed.” Someone had broken in and vandalized it. All the walls had holes in them.

They caught mice.” Rothermel, together with some close relatives, friends, and acquaintances, funded the business’s inception, aided in the renovation of the building, and ensured that all required licenses and permits were in place; currently, the firm employs 27 people full-time.

“We want to be a part of that tale,” Rothermel said, referring to the narrative in which a tiny business enters into a rundown area, cleans it up, and turns it into a profitable enterprise. State regulators and legislators have stated their intention to establish Michigan’s marijuana economy in a way that is welcoming to micro, small, and medium enterprises like Lake and Leaf, as well as entrepreneurs from neighborhoods that were hit hard by the War on Drugs.

A Marijuana Company Stated: "We Want To Be a Part of That Story"!

Start-ups in the north who are banking on the marijuana retail industry say they are being stifled by larger firms that have the financial resources to open more outlets than local communities can support and resort to legal action when they are denied favorable terms.

Even though voters in Michigan allowed its medical and recreational uses in 2008 and 2018, respectively, its use is still illegal on a federal level. This means that traditional financial institutions are unable to provide loans to the marijuana industry, giving large firms with access to capital a leg up on their smaller rivals.

Rothermel, along with other business owners such as Steve Ezell of Interlochen Alternative Health, is happy to recommend one particular clinic. The Lume Cannabis Group Ltd. One of the more than 30 Lume stores, located in the city of Honor (approximately 7 miles northeast of Lake and Leaf), is headquartered in Troy (where the company is also known as Attitude Wellness).

A Marijuana Company Stated: "We Want To Be a Part of That Story"!

Even though Lake & Leaf is “vertically integrated,” meaning they grow, process, and retail, costs have been lowered in order to compete, as Rothermel explained. It appears as though Lume’s strategy is to “flood the market with as many businesses as they can and then shut down the ones that don’t make it,” as Rothermel put it.

“Their lawyers are apparently very busy in the U.P. at the moment.” No one from Lume answered the phone when we called, and we didn’t get any answers when we emailed them through the website. Formerly, an Honor store clerk had referred a reporter to the company’s headquarters with any questions; anecdotally, Lume customers praised the store for its selection and low costs.

According to court documents, Lume sued the City of Menominee after local authorities there granted recreational permits to Rize and The Fire Station instead of Lume, despite the latter’s application having received higher marks.

A Marijuana Company Stated: "We Want To Be a Part of That Story"!

The attorneys for Lume claimed the municipal officials had broken Michigan law by having score conversations behind closed doors and giving more weight to variables unrelated to whether an applicant would comply with state legislation.

Lume contended in court papers that it was illegal for Lake and Leaf to renovate a vacant home in Benzonia, something that some towns choose to reward with higher scores. Attorney Matthew Cross of Plunkett Cooney, who represented Menominee in a lawsuit against Lume and four other marijuana companies, remarked, “Lume has obviously been the torchbearer in actions like this.”

Having offices across the state, “they want to make the claim that they are best positioned to comply with the Act,” Cross said. ‘By their logic,’ Cross continued, ‘they’d win every time they applied, leading to a handful of major merchants or a monopoly. The law surely didn’t intend for that to happen. An Open Meetings Act lawsuit brought by Lume was thrown out by a judge in the 41st Circuit Court last summer.

A Marijuana Company Stated: "We Want To Be a Part of That Story"!

Judge Mary B. Barglind decided the scoring committee was not a public body and hence not subject to OMA laws because its only responsibility was to evaluate each application and not make any decisions. Berglund also rejected constitutional challenges to Menominee’s marijuana code, which gives preference in license issuance to businesses with a demonstrated commitment to local economic growth and job creation (factors the plaintiffs had argued were “arbitrary and capricious”).

In 2021, Lume sued the little town of Pinckney in the downstate region of Illinois, where the population was only 2,441. The firm made similar arguments in various state and federal courts. Voters there approved an initiative that led to the passing of local legislation that issued a single retail license for marijuana after elected officials had previously banned its sale within the village limits.

Pinckney received bonus points for his applications since he had rehabilitated a vacant building, implemented environmentally friendly business practices, and was a local resident. Of the three candidates, Lume received the lowest score (65 out of a potential 85), and Pinckney ultimately granted a license to The Means Project, which had received an impeccable score of 85.

A Marijuana Company Stated: "We Want To Be a Part of That Story"!

U.S. District Court Judge Gershwin A. Drain ruled that municipalities have broad discretion under the state’s marijuana statute, which provides that if a competitive process is used to award licenses, the municipality shall select applicants “who are best suited to operate in compliance with this act within the municipality.”

The judge concluded that it doesn’t matter if the government authorities’ idea of “best-suited” entails re-registering an eyesore as a tax liability. Cross said he hopes more cities will consider fighting similar issues in court rather than settling out of court for both legal and logistical reasons.

“You dig in your heels because you think you’re correct on the law,” Cross said, “but also because we’re never going to have meaningful answers to these problems if, anytime there’s legal pressure, a community relents.” Litigation threats have been used to influence policymaking before.

A Marijuana Company Stated: "We Want To Be a Part of That Story"!

Although the Green Lake Township board in Interlochen has recently discussed how to manage a competitive process for limited recreational licenses, no action has been taken on the matter. Since Ezell successfully advocated for a referendum initiative allowing for two recreational retailers in the township, the officials there established a law with no limit.

Trustee concerns about being sued by unselected cannabis enterprises were discussed at length at many public township meetings and ultimately resulted in a 5-1 decision against imposing any sort of limit. Ezell, who has applied for a recreational license, explained his plans to construct a new structure on land he owns to the west of town, hire more people, and make a sizable investment. To paraphrase, “Why would I do that now, when Lume could just walk in and build right next to me?”

Ezell has stated that he intends to continue operating his medicinal marijuana business from the same location near Interlochen Corners, should he be granted a recreational license. Entrepreneurs like Rothermel and Ezell feel the size threat is very serious.

A Marijuana Company Stated: "We Want To Be a Part of That Story"!

Rothermel, in spite of himself, pronounced Lume’s new $70 million growing facility in Evart “amazing” after seeing a video of it on Youtube, uploaded by a television station in Michigan. Their joint-rolling equipment costs $500,000. Rothermel shook his head, “We pay someone $16, $17 an hour to sit at a table and roll joints.”

According to a video posted on the company’s website, Lume plans to open 100 stores in Michigan by 2024, making it the largest single-state cannabis operator in the US. Rothermel was asked to comment on the claim that this is a typical example of capitalism at work: well-funded companies that successfully address consumer demands experience rapid growth and eventually dominate their field.

A Marijuana Company Stated: "We Want To Be a Part of That Story"!

Indeed, as he admitted, it is correct, and he even called it fair. Rothermel responded, “As a capitalist, I understand that.” And in the capitalist system we have, he continued, “our purchase is our vote.” “Do you want to vote for one company’s decisions about the market, or do you want to vote to have thousands of small, local firms, and bigger organizations, too, make those judgments?”

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