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Economic Evolution in the Great Lakes State
Mon July 4, 2011
reWorking Michigan: Ordinance impacts new business opportunities
By Rob South, WKAR News
LANSING, MI – Last week, the city of Lansing took steps to crack down on medical marijuana shops. A new ordinance restricts where a shop can open and limits the number of shops allowed in the city. The state legislature is working on similar laws and the state attorney general's office also issued a pair of rulings last week that further limit how medical marijuana can be grown and sold. The flurry of new rules is frustrating some business owners who see the drug as an economic opportunity.
Ryan Basore is proud of his year-old business on East Michigan Avenue. Last year he leased an abandoned doctor's office and spent about $80,000 on renovations and improvements.
"This is just an alley where the kids smoked cigarettes for years," Basore explains. "These buildings, like most on Michigan Avenue were abandoned. And what we did is we put up all the fencing, this nice deck out here and now it's a place where people can come have meetings and relax. Putting a lot of our own money and time into improving a building that according to the new ordinance we have to leave in a year. So, it's a little frustrating."
That's because under Lansing's new medical marijuana rules, Basore and about a dozen other marijuana dispensaries have been zoned off the struggling Michigan Avenue strip. Basore owns Capital City Caregivers. Across the street are two more dispensaries and more importantly, two churches. The ordinance prohibits businesses like Basore's from operating within 1,000 feet of schools or churches.
Basore is understandably frustrated by the changes. He says the ordinance is contrary to what city officials have been trying to accomplish: create new business and new jobs.
He points out that the contractors, retailers and even a local artist commissioned for original, pot-themed paintings have all benefited from the business. And, he says he has six full-time employees.
"They make anywhere from $400 to $750 per week," Basore says. "These are people that didn't have much access to jobs elsewhere and are not college grads, besides myself."
Basore is also quick to point out that he pays a lot for attorneys who help him navigate the state's murky medical marijuana laws. For all his trouble, he insists he's not the one getting rich.
But he shouldn't be. Under Michigan law, medical marijuana dispensaries are all non-profit. His role is to provide a space for patients to store and use their medicine.
"And we facilitate that with having a non-profit building; we have a membership that helps pay the dues, and you do get a free gram; a patient gets a free gram of meds on their birthday and a T-shirt," Basore says. "Membership for the year is $25."
Basore says Capital City Caregivers has about 1,500 members so dues add up to less than $40,000 a year. To help pay the bills, the center relies on a few other income streams, including a small shop which sells smoking supplies.
"You could call it a head shop, but it's not," Basore explains. "You have to be a medical marijuana patient to get into that area...and it's vaporizers, bowls, whatever the different apparatuses it is to use to inhale your medicine, so we have that. And we do fundraisers too to try to keep the doors open. But the main thing is to provide a safe place for access for patients to transfer to another patient so they can have medicine."
And it's that transfer of medical marijuana from one patient to another where many people believe the real money is made...and where Basore gets a little shy.
"Um...we do get paid some rent by some of the patients and that's about it," Basore says. (South: "Explain how that works.") "That's something I can't get into." (South: "But do you charge for the product; I mean, do you make that financial exchange?") "I have nothing to do with that," Basore explains. "That's between a patient and a patient. There's a way that it's structured legally, and that's something I definitely don't want to give the secret out there on how all that is set up."
Basore doesn't deny that there's plenty of illegal activity that masquerades as medical marijuana. But he insists that's not his business model and he should be treated like anyone else trying to make a living.
"It's all hard-earned," he says. "We're not people where the banks are loaning us money; when we're not asking for tax abatements from the city. This is all our own money that we've saved up and put it back in the economy and given it everything we've got...and we know it could be taken from us at any minute."
Basore says since he opened in the spring of 2010, business has been good. But the market is saturated, and he expects many of the 31 medical marijuana distribution centers in the city of Lansing will go out of business before long. For now he says he's just trying to figure out how he'll keep things going when he's forced to move off of Michigan Avenue next year.