Is Lansing the future weed capital of Michigan?

James Daly holds a momentous distinction in Michigan’s budding recreational marijuana industry.

As the owner of Arbor’s Wellness in Ann Arbor, Daly was the first licensed weed salesman to sell a legal bag of recreational pot in the state. For him, that sale helped materialize years of legislative evolution for an industry that was once considered an unthinkable notion. And it also energized his expansion plans.

“In Ann Arbor, this has been a big industry and sort of a statewide destination for medical — and now recreational — marijuana,” Daly said. “But the bottom line is that the industry in Lansing is poised to be much bigger than Ann Arbor simply because of the cultivation and processing facilities taking off within the city.”

Daly’s parent company — Arbor Farm — is one of the largest license holders for growing operations in Lansing. It recently secured $17 million in funding. Crews are renovating a massive, 144,000-square-foot industrial space on the corner of Hosmer and Hazel streets to house 15,000 plants.

“In Ann Arbor, there are less than a handful of growers,” Daly added. “These operators are all kind of eyeing Lansing as their headquarters in this industry, and we’re all intent on opening up as quickly as we can.”

But why isn’t Lansing already competing with Ann Arbor for the state’s first recreational sales? Supply issues are slowing the market. Some industry insiders also blame the Lansing City Council and an overly competitive selection process. But most agree: Lansing hasn’t missed out on much. And momentum is building.

“Lansing and Flint were both one or two Council members away from being Ann Arbor,” explained Rick Thompson, owner of the Michigan Cannabis Business Development Group. “It’s all about the constitution of the City Council. That’s the real determining factor in which city gets the first stab at the recreational market.”

The Lansing City Council in October welcomed Michigan’s recreational marijuana industry by amending an ordinance that could eventually allow for up to 28 dispensaries for both medical and recreational weed in the city. Applications for those shops open next week. Officials plan to get them licensed as quickly as possible.

Lansing City Clerk Chris Swope estimated that recreational dispensary licenses could be issued as soon as February. But after the state started issuing licenses earlier this month, Lansing has already fallen behind.

“Look at the history. Lansing has had some significant resistance to adopting pro-cannabis ordinances,” Thompson added. “Ann Arbor, on the other hand, was willing to make this work more quickly. Lansing is just a step behind, and it all comes down to whether the City Council truly represents the feelings of its citizens.”

Voters took a step in that direction last month when they replaced First Ward Councilwoman Jody Washington with decidedly pro-pot Brandon Betz.

Lansing’s competitive scoring process for recreational pot — much like for medical — allows would-be retailers to apply for a limited number of licenses. The highest scoring applicants on criteria like capital investment and job opportunities will get first dibs. A preference will also be given to those already licensed for medical sales.

Swope noted that Lansing’s licensed provisioning centers are all in “pretty good position” to go recreational.

The 30-day window for recreational applications will open Dec. 23. In the meantime, and after Ann Arbor’s licensed shops raked in more than $1.6 million in the first week of sales, Lansing’s local pot entrepreneurs have been forced to sit on the sidelines as the industry plants roots on the other side of the state.

“I really like to stay as advanced as possible,” said Tom James, owner of Homegrown Lansing. “I am really kind of bummed out that we didn’t get to be fully recreational by December. I saw the buzz in Ann Arbor, and, of course, yeah, we would’ve liked to have been a part of that, but I still see Lansing as a big hub for this industry.”

In addition to running his provisioning center off Pennsylvania Avenue, James is constructing a 15,000 square-foot grow operation for 1,500 plants along Oakland Avenue. It’ll be finished in February, just in time to develop his own supply chain for what he hopes will soon become Lansing’s first recreational pot shop.

“Lansing has had its own process and its own timeframes, but they decided to go with this process, and now it’s just a matter of time,” James added. “We might’ve had to wait a few months, but at least we’re still in the game.”

Ann Arbor enacted its ordinance on recreational pot about a week after the Lansing City Council. Still, its comparatively streamlined selection process has given it a headstart into the recreational marijuana market.

Ann Arbor Planning Manager Brett Lenart said his city’s selection process, while it shares the same 28-shop limitation as Lansing, skips Lansing’s scoring process for licenses. Would-be weed retailers in Ann Arbor are instead only required to have a special land use permit granted on a first-come, first-served basis.

“Our Council and the city has traditionally had this certain level of support during this legislative evolution of marijuana,” Lenart added. “They were really interested in asking us to move expeditiously and sort out of the structure to move forward as quickly as possible. We knew that adult-use, recreational sales were coming.”

For some Lansing City Council members, hindsight is 20/20. Councilman Brian Jackson, for example, is still disappointed that the capital city fell behind the forefront of the industry — if only by a couple months. He thinks hesitation from his colleagues and a general “fear of the unknown” has stalled expansion in Lansing.

“Some of our leaders have had a strong stance against it and therefore didn’t want to take charge or move forward with anything that would allow this to happen too quickly,” Jackson added. “We were also just very slow to act on what we knew was going to happen. We all knew it was going to be legalized recreationally.”

“You’ve got a City Council that is changing, so these things are going to change,” added Councilwoman Kathie Dunbar. “I think you’ll find there is a more progressive majority on the Council next year. I’m very concerned that we’re losing some opportunities for revenue by not having this system already in place and operating.”

Betz, who replaces Washington Jan. 1, said he plans to revisit Lansing’s recreational marijuana ordinance in January. He recently tasked a marijuana “insider” with rewriting portions of the ordinance to allow for more social clubs and microbusinesses and increase the limit on the number of dispensaries allowed within city limits.

And he thinks a newfound pro-marijuana coalition — consisting of him, Dunbar, Jackson, Councilman Peter Spadafore and perhaps Councilwoman Patricia Spitzley — could generate enough support to make progress.

“It’s important to take this step into the future because it’s a lot of money we’re talking about and a lot of economic opportunity,” Betz said. “There is a wealth of investment money out there ready to pour into this city for shops, grow operations and even social clubs. These business owners are ready to roll. They’re just waiting.”

“I don’t think we’re behind. I think we’re on a different time table,” Spadafore added. “And that’s directly related to being one of the first in the state to dive into the medical market. I’m not in a hurry to rush into this. Just because Ann Arbor is doing it doesn’t mean we’re behind the curve. We’re taking a measured approach.”

City officials, and Betz, recognize the City Council — at least at this juncture — can do little to speed up the licensing process. Reopening the ordinance or the scoring system would only delay Swope’s ability to dole out licenses by February. But local leaders are still watching closely and are ready to make adjustments as needed.

“I don’t think we’ve missed much of an opportunity at all,” Spitzley said. “Would I have liked to have seen this all happen quicker? Sure, but that’s just how regulatory processes go. This ordinance has constantly changed. We’ve never really let it sit to see how it works and whether we can improve the process.”

Jeff Hank, co-owner of Edgewood Wellness and Superior Wellness, plans to submit one of the first applications to transition his medical provisioning centers into Lansing’s new recreational marijuana market. He said the city’s comparatively slower licensing process ultimately won’t impact his local business operations much at all.

“There isn’t enough flower product in the system to really support a larger industry at the moment anyway,” Hank added. “The stores in Ann Arbor are running out of product. If they gave us a recreational license tomorrow, we’d run out of flower products immediately. I don’t think we’re behind in a bad way at all.”

A recent state ruleset allows newly licensed dispensaries to transfer up to 50% of their medical stock into the recreational market. And the split supply amid increased demand is only exacerbating a state wide product shortage as prices skyrocket and retailers struggle to find a reliable and consistent cultivator to stock their shelves.

Robin Schneider, executive director of the Michigan Cannabis Industry Association, said Lansing is only behind Ann Arbor because the Lansing City Council took longer with a more complicated selection process. But the delay isn’t causing any would-be entrepreneurs to miss out on too much cash. The market is tough, she said.

“We have some serious inventory problems,” Schneider added. “There’s this idea that businesses are a lot more profitable than they actually are. A lot of these businesses are barely able to keep their doors open. I think prices are going to continue to go up and there’s a real possibility we’ll run out of flower in the next two months. If anything, Lansing needs to speed up the growing facilities and get them up and running. That’s what we need.”

Added Lansing Mayor Andy Schor: “I don’t think it’s a race to get started. I think it’s about getting it done right. I know a lot of money was made, but I don’t see marijuana as a one-time thing. It’s now legal and it’ll continue to be legal and there will be money to be made for everyone just as soon as we’re able to issue licenses.”

In addition to raising the cap from 25 to 28 cannabis retailers in Lansing, the City Council’s amended ordinance from October also allows for four microbusinesses that can grow and sell up to 150 pot plants on site. Four marijuana “social clubs” — one for each ward — could also open under the ordinance for onsite consumption.

Up to 75 growers could also be licensed to operate in the city, but that cap is set to shrink to 55 by 2021 should any unfilled cultivation licenses remain available. More than 100 growing facilities are approved or conditionally approved. No limit exists on processors or secure transport companies.

Swope said the elimination of the Medical Marihuana Commission — a board formerly tasked with handling appeals from those who were denied licenses  — should also help streamline the city’s licensing process. Swope and his staff will have oversight of the entire selection process and handle those appeals entirely in-house.

Meanwhile, officials at the Michigan Department of Licensing and Regulatory Affairs are standing by, waiting to dole out more recreational marijuana licenses wherever local municipalities have approved their operation.

“A few weeks of a missed opportunity isn’t really my concern when there will be years of opportunity ahead. I’m more interested in making sure we get it done right and we’re able to support this,” Schor added. “I think it’s great if we can supply the needed product, give them space for it and ensure the sustainability of the industry.”

Pot poll: Who tokes on the Council?

We asked. They answered. Does the Lansing City Council smoke pot?

Outgoing First Ward Councilwoman Jody Washington — NO

“No, but I don’t care if other people do. It’s not my business.”

First Ward Councilman-Elect Brandon Betz — YES

“I do. Yes. Absolutely.”

Second Ward Councilman Jeremy Garza — NO

“I do not.”

Third Ward Councilman Adam Hussain — NO

“Not personally, no, but I certainly don’t have any problems with it.”

Fourth Ward Councilman Brian Jackson — YES

“I do, on occasion. … It’s only occasionally.”

At-Large Council Vice President Peter Spadafore — NO

“I do not smoke. … But I have used CBD oil.”

At-Large Councilwoman Patricia Spitzley — NO

“I do not. It’s just not my thing. ... I prefer red wine.”

At-Large Councilwoman Kathie Dunbar — YES

“I do, but I prefer edibles and CBD. I’m just not a smoker.”

At-Large Council President Carol Wood — PROBABLY NOT.

Wood declined to answer the question, but we’re betting she doesn’t puff.