Thursday, December 1, 2022

Court of Appeals affirms Ionia County judge’s dismissal of marijuana business lawsuit

Leoni Wellness sued Easton Township in Ionia County Circuit Court after retail license went to BBSM

Amanda Zdarsky, attorney for Easton Township, bottom right, argues against a lawsuit on behalf of her client in Ionia County Circuit Court before Judge Suzanne Kreeger, top left. The lawsuit was filed by Leoni Wellness attorney Mike Bahoura, bottom left. Kreeger dismissed the lawsuit in August 2021. The Michigan Court of Appeals recently ruled that Kreeger acted properly in her ruling. — DN file photo

LANSING — The Michigan Court of Appeals has affirmed an Ionia County judge’s dismissal of a marijuana business lawsuit filed against Easton Township last year.

The Easton Township Board in April 2021 granted authorization for its sole retail license to BBSM LLC after Leoni Wellness and BBSM both made their pitches at a township board meeting.

State law requires a merit scoring system if a local municipality limits the number of marijuana licenses it awards — and Easton Township has limited its retail licenses to one.

The township initially scored 50 points each to BBSM and to Leoni Wellness on their applications, but voted to approve BBSM because that company was operated by locals who had lived in the township for more than 40 years. After Leoni Wellness argued the decision was improper, the township board voted to rescind the license awarded to BBSM because only Township Supervisor Bill Patton had scored the two applications.

The township board then scored both applications and determined BBSM had a higher score than Leoni Wellness. Patton told the Daily News that Leoni lost points by not having a current medical marijuana license, as well as its history of compliance with township and state regulations and its impact on traffic and public safety.

Leoni Wellness filed a complaint in June 2021 in Ionia County Circuit Court claiming the criteria used by Easton Township to award its recreational retail license violated the Michigan Regulation and Taxation of Marijuana Act (MRTMA) and the Open Meetings Act. The lawsuit claimed the township denied Leoni the license “by employing favoritism and bias, including but not limited to awarding a permit to less qualified applicants based entirely on that applicant’s length of residency in the township.”

After hearing arguments, Ionia County Circuit Court Judge Suzanne Kreeger granted a summary disposition of all counts in August 2021. Leoni appealed the decision with the Court of Appeals.

In a Nov. 10 opinion, the Court of Appeals affirmed Kreeger’s ruling, noting that while Kreeger erred in granting summary disposition regarding Leoni’s constitutional claims, Kreeger still reached the correct decision.

Leoni Wellness argued that Kreeger erred in granting the township’s motion to dismiss based on the township’s claim that Ordinance 44 was preempted by or in conflict with the MRTMA.

“Because the electorate adopted the Marijuana Act with provisions that specifically allow municipalities to adopt regulatory ordinances and take actions consistent with the Marijuana Act, this court cannot conclude that the Marijuana Act occupied the entire field of regulation,” the Court of Appeals opinion stated. “Furthermore, Ordinance 44 does not conflict with the Marijuana Act.

“The trial court also did not err when it dismissed (Leoni’s) claim regarding equal protection,” the Court of Appeals stated. “(Leoni) argued that that (the township’s) decision was premised on (Leoni’s) residency as compared to BBSM’s residency. Even though (the township’s) board’s original determination was premised on the residency of each applicant, when (the township) board rescored both applicants, it explicitly stated that it did not consider residency as a factor. The other factors considered by (the township) board, including (Leoni’s) lapsed marijuana license and the proposed location for (Leoni’s) proposed business were rationally related to the legitimate government purpose of effecting the Marijuana Act.”

Leoni Wellness also alleged that the Easton Township Board violated the Open Meetings Act.

“Under the Open Meetings Act, a public body has the right to reenact a disputed decision and, if reenacted in conformity with the Open Meetings Act, the reenacted decision cannot be invalidated by reason of a deficiency in the procedure used for its initial enactment,” the Court of Appeals stated. “Because the (township) board rescinded the authorization that it made at the meeting held on April 6, 2021, the trial court could no longer consider any deficiency in the decision from the April 6, 2021, meeting when deciding whether the decision made on April 20, 2021, should be invalidated.”

The Court of Appeals opinion was signed by Judges David Sawyer, Jane Markey and Brock Swartzle.

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