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A Michigan state appeals court has granted two Detroit-area companies another shot at challenging the validity of marijuana retail licenses awarded by the city of Royal Oak. The court found that the city violated the state's open meetings law during the selection process.

On Wednesday, a three-judge panel ruled that while Royal Oak did not violate due process or the state’s marijuana law, it did breach the Michigan Open Meetings Act (OMA) when selecting applicants for the city’s cannabis licenses. The court rejected arguments from the plaintiffs, Exclusive Capital Partners LLC and Quality Roots LLC, regarding vagueness in the city’s cannabis ordinance, but determined that the city’s closed-door sessions involving city officials in the licensing process were improper.

Judge Noah P. Hood, writing for the panel, explained that while the lower court's decision to dismiss the case was upheld in most respects, the violation of the open meetings law required further review. "We therefore reverse the circuit court’s decision regarding the [open meetings] violation and remand for the circuit court to address whether invalidation of the license awards is appropriate," Judge Hood stated.

The case arose after Quality Roots filed suit against Royal Oak in 2022, alleging the city violated the open meetings law by holding private meetings to determine which applicants would receive the two cannabis retail licenses it planned to award. According to the court records, Exclusive Capital and Quality Roots were two of 31 applicants competing for the licenses.

Quality Roots argued that the city manager conducted four closed-door sessions with selected city officers to rank applicants, without keeping official records of these meetings. Royal Oak countered that the city manager’s role was only advisory, and the ultimate decision on who would receive the licenses was made by the city commission during a public meeting in April 2022.

However, the appeals court disagreed, finding that the city manager had, in effect, decided who would receive the licenses. The court noted that the city commission’s April meeting appeared to rubber-stamp the city manager's recommendations, without considering other applicants.

The appeals court determined that for the licensing process to comply with the open meetings law, the closed-door sessions involving the city manager and local officials should have been open to the public. The ruling mandates that the lower court reexamine whether the licenses should be invalidated due to this violation.

Quality Roots and Exclusive Capital are represented by attorneys Brian Etzel and William C. Disessa, while Royal Oak is represented by Anne McClorey McLaughlin of Rosati Schultz Joppich & Amtsbuechler PC.

The case is Quality Roots Inc. et al. v. City of Royal Oak, case number 372893, in the Michigan Court of Appeals.