# Exclusive Capital Partners LLC v. City of Royal Oak

> Michigan Court of Appeals · December 4, 2024

URL: https://www.frixlaw.com/law-library/cases/10754717

## Case

- **Court:** Michigan Court of Appeals
- **Decided:** December 4, 2024
- **Precedential status:** Published
- **Opinion:** Opinion
- **Cited by:** 0 later opinions in the Frix Law Library

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## Opinion text

If this opinion indicates that it is “FOR PUBLICATION,” it is subject to
revision until final publication in the Michigan Appeals Reports.

STATE OF MICHIGAN

COURT OF APPEALS

EXCLUSIVE CAPITAL PARTNERS, LLC, FOR PUBLICATION
December 04, 2024
Plaintiff-Appellant, 3:22 PM

V

CITY OF ROYAL OAK, No. 366247
Oakland Circuit Court
Defendant-Appellee. LC No. 2022-193015-CZ

QUALITY ROOTS, INC.,

Plaintiff-Appellant,

V

CITY OF ROYAL OAK, No. 366257
Oakland Circuit Court
Defendant-Appellee, LC No. 2022-192383-CZ
and

PGSH HOLDINGS, LLC,

Intervening Defendant-Appellee.

Before: BOONSTRA, P.J., and JANSEN and N. P. HOOD, JJ.

N. P. HOOD, J.

These consolidated appeals involve defendant, the city of Royal Oak’s (the City),
recreational marijuana ordinance. Plaintiffs, Exclusive Capital Partners, LLC (Exclusive), and
Quality Roots, Inc. (Quality), appeal by right the separate December 2022 orders of the circuit
court granting summary disposition in favor of the City under MCR 2.116(C)(8) and (C)(10) on
plaintiffs’ substantially identical claims challenging the award of marijuana retail licenses to other
applicants.

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In Docket No. 366247, Exclusive adopts the arguments of Quality’s brief and also argues
that the circuit court erred by dismissing its claim that the marijuana ordinance was void for
vagueness. In Docket No. 366257, Quality asserts that the circuit court erred by granting summary
disposition because (1) the marijuana ordinance is inconsistent with the Michigan Regulation and
Taxation of Marihuana Act (MRTMA), MCL 333.27951 et seq., school-buffer requirement, MCL
333.27959(3)(c); (2) the marijuana ordinance is inconsistent with the MRTMA’s competitive-
process requirement, MCL 333.27959(4), both facially and as applied; (3) the City violated the
Open Meetings Act (OMA), MCL 15.261 et seq., because the City Commission delegated its
governing authority to the city manager who selected licensees in closed-door meetings; (4)
Quality sufficiently alleged and established a claim of substantive due process; (5) Quality
sufficiently alleged and established that the marijuana ordinance was unconstitutionally vague;
and, (6) injunctive relief was proper because invalidation of a license is a proper form of relief.

For the reasons later stated, we affirm the orders granting summary disposition except as
they relate to the OMA issue. Regarding plaintiffs’ OMA claims, the circuit court erred by
granting summary disposition. We reverse and remand for proceedings to determine the
appropriate remedy for the violations.

I. BACKGROUND

A. MRTMA

These cases occur against the backdrop of the MRTMA. We recently summarized the
origins and relevant sections of the MRTMA in a similar case, Yellow Tail Ventures, Inc v Berkley,
344 Mich App 689, 693-695; 1 NW3d 860 (2022):

Our Constitution permits the people of Michigan to bypass our Governor
and Legislature and enact a statute by the citizen-driven initiative process. Const
1963, art 2, § 9. A statute enacted by initiative has the same force and effect as one
passed the traditional way, with the exception that the initiated statute is not subject
to gubernatorial veto and any amendment requires ¾ votes of both chambers of the
Legislature. Id.

For decades, it has been unlawful to manufacture, sell, or possess marijuana,
under both federal and state criminal law. In November 2018, Michigan voters
approved Proposition 18-1 by a vote of 2,356,422 to 1,859,675. As a result of this
approval, it is now lawful to manufacture, sell, and possess marijuana under
Michigan law, though it remains unlawful to engage in any of these activities under
federal law.

Proposition 18-1 became the [MRTMA]. (Note: The MRTMA uses the
“marihuana” spelling; when we are not quoting the act, we use the more familiar
“marijuana” spelling.) Section 2 of the act sets out the people’s “purpose and
intent” with respect to the MRTMA. These include the need “to control the com-
mercial production and distribution of marihuana under a system that licenses,
regulates, and taxes the businesses involved” and to “ensure security of marihuana
establishments.” MCL 333.27952. The people directed that, “[t]o the fullest extent

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possible, this act shall be interpreted in accordance with the purpose and intent set
forth in this section.” Id.

Specifically with respect to the local regulation of marijuana, the MRTMA
prohibits anyone from selling marijuana to the general public without first obtaining
a local license. A municipality can “completely prohibit or limit the number” of
marijuana establishments—including the number of retailers—that can operate
within its boundaries. See MCL 333.27956(1). If a municipality permits marijuana
establishments to operate within its geographical borders, then that municipality
can adopt ordinances that, among other things, impose “reasonable restrictions on
public signs” and “regulate the time, place, and manner of operation” of such
establishments, so long as those ordinances “are not unreasonably impracticable”
and do not conflict with the MRTMA or rules promulgated under the act. MCL
333.27956(2). And, if a municipality elects to limit the number of marijuana
establishments, then that municipality must select its licensees “among competing
applications by a competitive process intended to select applicants who are best
suited to operate in compliance with this act within the municipality.” MCL
333.27959(4).

Additionally, the MRTMA prohibits any marijuana establishment from being located within 1,000
feet of an existing public or private school providing education for kindergarten through 12th
grade, “unless a municipality adopts an ordinance that reduces this distance requirement[.]” MCL
333.27959(3)(c).

B. THE ROYAL OAK MARIJUANA ORDINANCE

Against the backdrop of the MRTMA, in July 2020, the City adopted a recreational
marijuana ordinance, Royal Oak Ordinances, § 435 et seq. The marijuana ordinance authorizes
all types of marijuana licenses allowed by the MRTMA, but limits the number of licenses
available. See MCL 333.27959(2); Royal Oak Ordinances, § 435-2(B). With respect to retail
licenses, relevant here, the marijuana ordinance limits the number of municipal licenses to two.
See Royal Oak Ordinances, § 435-2(B)(5).

The marijuana ordinance grants the city manager “the power to fully and effectively
implement and administer the municipal license application process.” Royal Oak Ordinances,
§ 435-2(E). The ordinance directs that if more applications are received during the application
window than licenses allowed, then “the City shall decide among applications by a competitive
process intended to select the applicant(s) who are best suited to operate in compliance with the
[MRTMA] within the City.” Royal Oak Ordinances, § 435-4(C)(2) (emphasis added). Sec-
tion 435-4(C)(4) of the marijuana ordinance sets forth a ranking process, directing that the
applicants and their applications “will be ranked in the order of which is best suited to operate in
compliance with the [MRTMA] within the City as determined by the City Manager or his or her
designee.” (Emphasis added.) Section 435-4(C)(4) further states that this ranking will be used to
fill available license slots until all slots are filled, and mandates that 10 “competitive criteria” shall
be used to meet this end: (1) the entire application and applicant’s likelihood of success, (2) the
applicant’s tax history, (3) whether the applicant has previously operated a business within the

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City, (4) whether the applicant has a history of criminal convictions, (5) whether the applicant has
ever been denied any kind of commercial license, (6) whether the applicant has ever applied for
bankruptcy, (7) whether the applicant has conducted any outreach on behalf of the proposed
business, (8) whether the applicant has encouraged a successful workforce, (9) whether the
applicant has taken steps to introduce equity into the proposed operation, (10) whether the
applicant has proposed a plan incorporating sustainable infrastructure. See Royal Oak Ordinances,
§ 435-4(C)(4)(a) to (j).

If an applicant is awarded a municipal license through this competitive process, the
applicant has five days to pay an application fee. See Royal Oak Ordinances, § 435-4(D)(2). Once
the applicant pays the fee, the application is forwarded to various City departments for their
approval. See Royal Oak Ordinances, § 435-4(D)(3). If the application is complete, the City
Planning Commission considers the applicant’s special-land-use permit and site plan and makes a
recommendation to the City Commission for approval. See Royal Oak Ordinances, § 435-
4(D)(4)(f) and (5). See also Royal Oak Ordinances, § 770-52.1(B) (amended zoning ordinance
providing a mechanism to allow marijuana land uses in certain zoning districts as a special land
use, which requires site-plan review and recommendation by the Planning Commission before a
final decision by the City Commission). If the City Commission approves and all conditions are
ultimately met, the City Clerk issues the license. See Royal Oak Ordinances, § 435-4(D)(7).

Additionally, the marijuana ordinance contains numerous “operational requirements” for
license holders. See Royal Oak Ordinances, § 435-5(A). These are the requirements that licensees
must abide by once operating. See id. Among these operational requirements, consistent with the
MRTMA, is that “[n]o Marihuana Establishment shall be permitted within a 1,000-foot radius of
any school.” Royal Oak Ordinances, § 435-5(A)(5)(a).

Although the MRTMA allowed municipalities to opt out of the 1000-foot-buffer-zone
requirement, the City initially did not reduce the requirement within the marijuana ordinance, but
it adopted amendments to its zoning ordinance to allow such reduction on a case-by-case basis.
At the time the City approved the recreational marijuana ordinance, it also approved amendments
to its zoning ordinance that would accommodate marijuana land use as a special land use. See
Royal Oak Ordinances, § 770-52.1(B). The zoning ordinance gave the City Commission
discretion to deviate from the operational requirements of the ordinance as follows:

Deviations from applicable setback, parking, and other requirements may be
granted by the City Commission, provided there are features or elements
demonstrated by an applicant and deemed adequate by the City Commission upon
the recommendation of the Planning Commission that are designed into the site
plan for purpose of achieving the objectives of this section. [Royal Oak Ordinances,
§ 770-52.1(B)(14)].

In other words, the City Commission could approve a reduction of the buffer-zone requirement for
a given site plan, but only on the recommendation of the Planning Commission.

As later described in further detail, the City later amended its ordinances to give the City
Commission authority to make such approval without a recommendation from the Planning
Commission. We take judicial notice that while the appeal was pending, on June 26, 2023, the

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City Commission approved amendments to the recreational marijuana ordinance. See Royal Oak
Ordinance 2023-06 (June 26, 2023). The amendments to the marijuana ordinance were similar to
provisions in the zoning ordinance, § 770-52.1(B)(14), which allowed deviation from the 1,000-
foot-buffer requirement. The primary difference is that the amendments to the marijuana
ordinance conferred authority to the City Commission, without recommendation from the Planning
Commission.

C. THE RETAIL LICENSE SELECTION PROCESS

The City accepted applications for retail licenses from December 7, 2020 through
February 7, 2021. The city manager at the time, Paul Brake, received a total of 31 applications,
including, respectively, from Quality and Exclusive.

In evaluating the applications, the city manager consulted with various municipal officers,
in what he called a “workgroup.” The workgroup included Todd Fenton—the deputy city manager
and director of economic development, the city manager’s assistant, the director of community
development, the city planner, the city engineer, the chief of police, the city treasurer, and the city
attorney. This workgroup met in closed session four times in August 2021 to help evaluate the
applications.

Members of the workgroup provided the city manager input not only from their review of
the applications, but also regarding matters pertinent to their particular expertise, such as land use,
parking, or business development. The workgroup did not rank applicants, but rather assisted the
city manager with narrowing down the applicants through a process of elimination by assessing
the applications on the basis of the competitive criteria in the marijuana ordinance.

The meetings took place on August 4, August 11, August 18, and August 25, 2021.
According to the city manager, there are no official notes or minutes of the meetings. Fenton,
however, testified that the city manager’s assistant compiled comments from the meetings.
According to the city manager, assessment of the competitive criteria required a “qualitative
analysis.” While the competitive criteria are all “equally important” on the “surface,” some criteria
were allotted greater weight than others, and, while many of the criteria facially required yes-or-
no answers, applicants could satisfy some criteria by varying degrees. According to Fenton, the
workgroup did not compare applications or weigh criteria; instead, members discussed the degree
to which certain criteria were satisfied. By the last meeting, members of the workgroup were asked
to submit their opinions regarding which candidates were the best applicants.

After the last workgroup meeting in August, the city manager consulted individually with
Fenton and the director of community development regarding the finalists, and then using a
“qualitative” approach, individually came to the final decision for the two retail licenses. The city
manager then categorized the remaining applicants as either “standby” or rejected, but did not
numerically rank them. The city manager confirmed that he did not use any type of scoring rubric,
and each of the criteria were weighed equally. Regarding the compliance criterion, the city
manager testified that he considered which applicant was best suited to comply with the marijuana
ordinance, not the MRTMA. He further stated that, although the process was collaborative, he

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made the final selections himself. The city manager identified both plaintiffs in the standby
category.

In December 2021, the City notified Quality that its application had not been selected for
moving forward in the licensing process, but that the application would not be officially denied
until the prospective licensees successfully completed the licensing process. Exclusive was also
notified that it was on the standby list. Several days later, the City informed PGSH Holdings, LLC
(Gatsby), and Royal Oak Treatment LLC (Royal Treatment) that the city manager chose them to
receive retail licenses. Consistent with the marijuana ordinance, a hearing was scheduled before
the City Planning Commission to consider its recommendation to the City Commission regarding
these entities’ special-land-use permits and site plans. That hearing was scheduled for February 8,
2022.

About a week before that hearing, Quality filed a complaint against the City, alleging due-
process violations, OMA violations, and violations of the MRTMA’s competitive-process and
school-buffer requirements, given that Gatsby was located less than 1,000 feet from a K-12 public
school, Oakland Schools Technical Campus Southeast (OSTC-SE). It is largely undisputed that
Gatsby’s site plan placed it approximately 88 feet from OSTC-SE. The complaint sought
declaratory and injunctive relief preventing the City from issuing special-land-use permits and
final authorization of licenses for Gatsby and Royal Treatment.

As scheduled, on February 8, 2022, the Planning Commission meeting proceeded after
Gatsby and Royal Treatment had submitted applications for site-plan review and special-land-use
permits under the City’s zoning ordinance. The Planning Commission voted three to two to
recommend denial of Gatsby’s special land-use permit, and four to one to recommend approval of
Royal Treatment’s special-land-use permit. As later described in greater detail, the City
Commission approved the special land use for Gatsby and Royal Treatment. In the case of Gatsby,
the City Commission’s approval was contrary to the Planning Commission’s recommendation.

D. PROCEDURAL BACKGROUND

In March 2022, while the licensing process for Gatsby and Royal Treatment was still
pending, the City moved for summary disposition in lieu of an answer regarding Quality’s
complaint. Around the same time, Exclusive filed its complaint, seeking, among other things,
declaratory relief that the City failed to comply with its marijuana ordinance because a committee,
not the city manager, had selected the successful applicants. It also sought declaratory relief
regarding the alleged due-process violations, the alleged OMA violation, and the alleged MRTMA
violation.

In April 2022, the circuit court consolidated the cases. The City then moved for summary
disposition of Exclusive’s complaint under MCR 2.116(C)(8) and (C)(10).

With both motions pending, on April 25, 2022, the City Commission approved the site
plans and special-land-use permits for both Gatsby and Royal Treatment. The City issued the two
retail licenses the next day. On May 18, 2022, the city manager informed Quality by letter that its
license application was formally denied. Apparently, Exclusive did not learn that its application
had been denied until August 1, 2022.

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After the City issued the licenses, plaintiffs amended their complaints. The City filed new
motions for summary disposition, which plaintiffs opposed. The circuit court considered each case
separately at a December 2022 motion hearing. Regarding Quality’s claims, the circuit court
granted the City’s motion, stating:

[The City’s] motion for summary disposition is granted pursuant to C-8 and
C-10. The claim for violation of the [OMA] is dismissed as it is inapplicable to the
facts of the case at bar pursuant to [Herald Co v Bay City, 463 Mich 111; 614 NW2d
873 (2000)] . . . . The various constitutional claims are dismissed pursuant to C-8
and C-10 pursuant to [Pinebrook Warren, LLC v City of Warren, 343 Mich App
127; 996 NW2d 754 (2022), rev’d __ Mich ___ (2024) (Docket Nos. 164869
through 164877) (Pinebrook I)].

The claims regarding the city ordinance are dismissed pursuant to C-8 and
C-10 insofar as the ordinance does not violate the statute. The statute requires
municipalities to determine which entity is best suited to comply with the statute
within the municipality, nor does the statute require certain variables to be given
certain weight. The ordinance at issue does not violate the [MRTMA], and the
claims are hereby dismissed as are the claims that the city manager violated the
statute and ordinance.

Likewise, the claims challenging the ordinance for vagueness are dismissed.
The city manager was required to consider certain factors, which he testified were
indeed considered.

The ordinance does not infringe on [F]irst [A]mendment rights, does not
prohibit certain conduct, and does not grant the finder of fact unfettered discretion.
Thus, the ordinance is not void for vagueness.

Next, the claims that the city manager violated the ordinance are dismissed.
The city manager complied with the statute and the ordinance. The claims
regarding this issue are dismissed pursuant to C-10.

Lastly, the claim seeking injunctive relief is moot. As noted by [the City],
the licenses have been issued to two non parties. The court cannot create a new
license, nor can the court remove the licenses from the non parties. The claim for
injunctive relief is dismissed as moot.

Exclusive then briefly addressed its void-for-vagueness claim, arguing that the marijuana
ordinance was so vague as to give the city manager unfair discretion, and that the city manager’s
own deposition demonstrated that he did not know how to apply the marijuana ordinance. The
circuit court again ruled in favor of the City:

First, the claims that the city manager violated the ordinance are dismissed. . . . The
claims regarding this issue are dismissed pursuant to (C) (10). Likewise, the claims
challenging the ordinance for vagueness are dismissed. The city manager was
required to consider certain factors which he testified were indeed considered.

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The ordinance does not infringe on First Amendment rights, does not
prohibit certain conduct, does not grant the finder of fact unfettered discretion.
Thus, the ordinance is not void for vagueness. Further, Plaintiff’s assertion that it
was denied in appeal is without merit and moot. The various constitutional claims
are dismissed pursuant to (C) (8) and (C) (10) pursuant to [Pinebrook I]The claims
regarding the city ordinance are dismissed pursuant to (C)(8) and (C)(10) [insofar]
as the ordinance does not violate the statute.

The statute requires municipalities to determine which entity is best suited
to comply with the statute within the municipality nor does the statute require
certain variables to be given certain weight. The ordinance at issue does not violate
the MRTMA and the claims are hereby dismissed. As are the claims that the city
manager violated the statute and the ordinance. [The City’s] motion for summary
disposition is granted pursuant to (C) (8) and (C) (10). The claim for violation of
the Open Meetings Act is dismissed as it is inapplicable . . . . This is pursuant to
[Herald Co, 463 Mich 111] and [Pinebrook I] . . . .

Thereafter, the circuit court entered orders consistent with its ruling from the bench.

Both plaintiffs moved for reconsideration, and the circuit court denied both motions. With
the exception of the 1000-foot buffer requirement, the court concluded that both plaintiffs merely
repeated the arguments of their original briefs. Regarding Quality’s argument that the court had
failed to rule on its claim that the City violated the 1,000-foot buffer requirement, the court
reasoned as follows:

Plaintiff’s motion for reconsideration essentially presents the same issues already
ruled on by the Court. To the extent Plaintiff argues that the Court did not expressly
address the argument that the City violated the school buffer zone required by the
MRTMA, the Court addressed the issue when it . . . concluded that the City’s
licensing ordinance does not violate the MRTMA. In its motion for summary
disposition, [the City] argued that MCL 333.27959(3) addresses only the
obligations of the Michigan department of licensing and regulatory affairs and does
not impose any obligation on [the City], and that the MRTMA authorizes the City
to reduce the 1,000-foot buffer. Based on the plain language of the statute, Plaintiff
has not demonstrated palpable error in the Court’s decision.

The circuit court also found that because it had determined that the City complied with its
marijuana ordinance and the MRTMA, Quality had failed to demonstrate any palpable error in the
dismissal of the due-process claim.

Quality appeals by right in Docket No. 366257. Exclusive appeals by right in Docket
No. 366247 and explicitly incorporates by reference the arguments Quality advances. We
consolidated these appeals. See Exclusive Capital Partners, LLC v Royal Oak, unpublished order
of the Court of Appeals, entered June 6, 2023 (Docket Nos. 366247 and 366257).

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II. STANDARDS OF REVIEW

A trial court’s decision on a motion for summary disposition is reviewed de novo. See
Maiden v Rozwood, 461 Mich 109, 118; 597 NW2d 817 (1999). In this case, the circuit court did
not specify the subrule under which it dismissed Exclusive’s claim, but MCR 2.116(C)(10) appears
to be the proper subrule because the circuit court seems to have referenced facts outside the
pleadings. Summary disposition under MCR 2.116(C)(10) tests the factual sufficiency of the
claim. El-Khalil v Oakwood Healthcare, Inc, 504 Mich 152, 160; 934 NW2d 665 (2019).
Summary disposition is appropriate under (C)(10) if there is no genuine issue regarding any
material fact and the moving party is entitled to judgment as a matter of law. Sunshine v Delta
College Bd of Trustees, 343 Mich App 597, 601; 997 NW2d 755 (2022) (quotation marks and
citation omitted). “A genuine issue of material fact exists when the record leaves open an issue
upon which reasonable minds might differ.” El-Khalil, 504 Mich at 160 (quotation marks and
citation omitted).

Interpretation of a municipal ordinance is also a question of law reviewed de novo.
McMillan v Douglas, 322 Mich App 354, 357; 913 NW2d 336 (2017). This includes the
constitutional question whether an ordinance is void for vagueness. In re TEM, 343 Mich App
171, 179-180; 996 NW2d 850 (2022). The rules applicable to the interpretation of a statute apply
to the interpretation of an ordinance. See id. at 180. When interpreting an ordinance, we must
discern the drafter’s intent, which we accomplish by giving the words selected by the drafter their
plain and ordinary meanings. See id. If an ordinance is unambiguous, it must be applied as plainly
written. See id.

III. VOID FOR VAGUENESS

The circuit court correctly granted summary disposition on plaintiffs’ claims that the
marijuana ordinance was void for vagueness and their related argument that it gave the city
manager unfettered discretion.1 Exclusive argues that the marijuana ordinance is unduly vague
and therefore unconstitutional, giving the city manager inadequate standards or guidance for
implementing a competitive process and leaving that officer with unrestrained discretionary
power. We disagree.

“The ‘void for vagueness’ doctrine is derived from the constitutional guarantee that the
state may not deprive a person of life, liberty, or property without due process of law.” Proctor v
White Lake Twp Police Dep’t, 248 Mich App 457, 467; 639 NW2d 332 (2001), citing US Const,
Am XIV; Const 1963, art 1, § 17. “ ‘It is a basic principle of due process that an enactment is void
for vagueness if its prohibitions are not clearly defined.’ ” People v Howell, 396 Mich 16, 20 n 4;

1
Quality also raises a constitutional vagueness argument. Most of its argument is devoted to
rebutting the City’s arguments. Quality has otherwise raised only a cursory argument, which
ordinarily would be insufficient for this Court’s consideration. See Houghton v Keller, 256 Mich
App 336, 339; 662 NW2d 854 (2003). We nonetheless elect to address these claims as they overlap
with Exclusive’s vagueness claims.

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238 NW2d 148 (1976), quoting Grayned v City of Rockford, 408 US 104, 108-109; 92 S Ct 2294;
33 L Ed 2d 222 (1972). Vague laws implicate three related, core concerns:

First, because we assume that man is free to steer between lawful and unlawful
conduct, we insist that laws give the person of ordinary intelligence a reasonable
opportunity to know what is prohibited, so that he may act accordingly. Vague
laws may trap the innocent by not providing fair warning. Second, if arbitrary and
discriminatory enforcement is to be prevented, laws must provide explicit standards
for those who apply them. A vague law impermissibly delegates basic policy
matters to policemen, judges, and juries for resolution on an ad hoc and subjective
basis, with the attendant dangers of arbitrary and discriminatory application. Third,
but related, where a vague statute abuts upon sensitive areas of basic First
Amendment freedoms,” it “operates to inhibit the exercise of those freedoms.
Uncertain meanings inevitably lead citizens to steer far wider of the unlawful zone
than if the boundaries of the forbidden areas were clearly marked.” [Grayned, 408
US at 108-109 (quotation marks, citations, and alterations omitted).]

We have previously observed in other contexts, “[a] statute or ordinance may be void for
vagueness if (1) it is overbroad and impinges on First Amendment freedoms, (2) it does not provide
fair notice of the conduct it regulates, or (3) it gives the trier of fact unstructured and unlimited
discretion in determining whether the statute has been violated.” Yankee Springs Twp v Fox, 264
Mich App 604, 606; 692 NW2d 728 (2004).

At the threshold, we reject the City’s argument that the void-for-vagueness doctrine is
inapplicable because Exclusive lacks a valid property interest as a first-time license applicant. The
cases on which the City relies hold that a first-time license applicant does not possess a property
interest, but none of those cases support the proposition that a first-time license applicant’s void-
for-vagueness challenge fails for lack of such interest.2 At its core, the void-for-vagueness doctrine
is concerned that laws provide fair notice and prevent arbitrary enforcement rather than with the
deprivation of a claimant’s property or liberty interests; the doctrine applies regardless of whether
a property or liberty interest is clearly established.

2
See, e.g., Pinebrook I, 343 Mich App at 160 (“a first-time applicant for a license cannot show
that he or she has an entitlement to the license, the first-time applicant has no property interest in
the issuance of the license”); Cary Investments, LLC, 342 Mich App at 316 (“a new applicant for
a license has no property interest in any license to support a claim for deprivation of procedural
due process”); Wong v Riverview, 126 Mich App 589, 593; 337 NW2d 589 (1983) (a “first-time
applicant has no right to procedural due process”). Of note, the City discusses In re TEM, 343
Mich App at 180, in which this Court considered a vagueness challenge to the Adoption Code,
MCL 710.21 et seq. This Court did address whether the petitioners held a protected property
interest and concluded that they did not. Id. at 181-182. But In re TEM’s conclusion in this regard
was not dispositive of the petitioners’ vagueness claim, id. at 182-185, and thus the case does not
indicate that the lack of an existing property interest is fatal to a vagueness claim.

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We likewise reject the City’s argument that the void-for-vagueness doctrine does not apply
to a licensing scheme because the doctrine commonly applies in connection with penal laws or
First Amendment rights. The single authority on which the City relies to support this argument,
Hackel v Macomb Co Comm, 298 Mich App 311; 826 NW2d 753 (2012), recognized that courts
have applied the void-for-vagueness doctrine in other contexts. Id. at 332.3 And, while we are
unaware of Michigan precedent applying the void-for-vagueness doctrine in the context of a first-
time license applicant challenging a licensing scheme, we have applied the doctrine more broadly
than criminal laws. See e.g., In re TEM, 343 Mich App at 180 (the Michigan Adoption Code);
Turunen v Dep’t of Nat’l Resources, 336 Mich App 468; 971 NW2d 20 (2021) (invasive species
regulation); Fox, 264 Mich App at 604 (riparian-use regulation). Notably, the United States
Supreme Court has applied the doctrine to a licensing ordinance. See City of Mesquite v Aladdin’s
Castle, 455 US 283, 291; 102 S Ct 1070; 71 L Ed 2d 152, 161 (1982). In short, the doctrine can
apply to this sort of case.

But Exclusive’s arguments fail. Exclusive contends that the marijuana ordinance is
unconstitutionally vague because it is so lacking in standards as to grant the city manager
unfettered discretion, and thus fails to put applicants on notice about how the ordinance is applied.
“Vagueness challenges that do not involve a challenge to First Amendment freedoms are examined
in light of the facts of the particular case.” STC, Inc v Dep’t of Treasury, 257 Mich App 528, 539;
669 NW2d 594 (2003). A statute or ordinance has a strong presumption of constitutionality, and
the party challenging such law has the burden of overcoming that presumption. Shepherd
Montessori Ctr Milan v Ann Arbor Charter Twp, 259 Mich App 315, 341; 675 NW2d 271 (2003).
“In determining whether a statute is void for vagueness, the entire text of the statute is examined
and the words of the statute are given their ordinary meanings.” STC, Inc, 257 Mich App at 539.
A “statute must give a person of ordinary intelligence a reasonable opportunity to know what is
prohibited or required.” Id. A statute is unconstitutionally vague “where people of common
intelligence must guess at the statute’s meaning and differ with regard to how it applies.” City of
Westland v Okopski, 208 Mich App 66, 74; 527 NW2d 780 (1994). “When determining whether
a statute inappropriately delegates unstructured and unlimited discretion to a decision maker, the
court examines whether the statute provides standards for enforcing and administering the laws in
order to ensure that enforcement is not arbitrary or discriminatory . . . .” English v Blue Cross
Blue Shield, 263 Mich App 449, 469; 688 NW2d 523 (2004) (quotation marks and citation
omitted).

Here, the marijuana ordinance charged the city manager with administering the application
process for recreational marijuana licenses. See Royal Oak Ordinances, § 435-2(E). Although the

3
Hackel involved a void-for-vagueness claim in relation to a county resolution governing the
award of contracts. Hackel, 298 Mich App at 333. There, we held that the resolution did not fit
“within the category of enactments against which a void-for-vagueness challenge is usually
asserted,” but did not expressly hold that the doctrine was limited to such contexts, and ultimately
analyzed the challenged resolution and concluded it was not vague. Id. at 333-334. Hackel, in
fact, recognized that the doctrine had been applied in other contexts. Id. at 332. The City otherwise
cites no law indicating that claims of unconstitutional vagueness are inapplicable, as a matter of
law, in the realm of municipal licensing schemes.

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City was required to decide among applicants if the number of applications exceeded the available
license slots, the ordinance dictated that the city manager “or his or her designee” was to rank the
applicants “in the order of which is best suited to operate in compliance with the Act . . . .” Royal
Oak Ordinances, § 435-4(C)(2) and (4). The ordinance provided that certain “competitive criteria”
“shall be” used for that purpose, including the likelihood of success in harmony with surrounding
properties along with the nine other aforementioned criteria that implicate an applicant’s tax
history, criminal history, financial history, operational history, and sustainability plains. See Royal
Oak Ordinances, § 435-4(C)(4)(a) to (j).

The plain text of the ordinance illustrates that the city manager was not without guidelines,
and the public was not without notice as to the ordinance’s application. The ordinance undoubtedly
allows the city manager some leeway and discretion in administering the licensing process. But it
does not do so to the extent that it renders the ordinance constitutionally infirm. The “prohibition
against excessive vagueness does not invalidate every statute which a reviewing court believes
could have been drafted with greater precision. Many statutes will have some inherent vagueness,
for ‘[i]n most English words and phrases there lurk uncertainties.’ ” People v Petrella, 424 Mich
221, 255; 380 NW2d 11 (1985) (alteration in the original), quoting Robinson v United States, 324
US 282, 286; 65 S Ct 666; 89 L Ed 944 (1945).

On appeal, Exclusive focuses on the city manager’s purported “confusion” in
implementing the ordinance. It relies on a statement in his deposition testimony about using
“qualitative analysis” when the ordinance did not dictate one, and his declining to numerically
rank applicants. Exclusive however cites no authority for the position that a city official’s
confusion, or interpretation, regarding the meaning of an ordinance he or she is charged with
implementing itself establishes that the ordinance is unconstitutionally vague. Due process “does
not preclude a city from giving vague or ambiguous directions to officials who are authorized to
make . . . recommendations.” City of Mesquite, 455 US at 291. The relevant inquiry is whether
the ordinance is so lacking in standards as to give those charged with implementing it carte blanche
to follow their personal predilections. This ordinance does not. Even assuming that the city
manager was confused with respect to implementation of the ordinance’s competitive process, this
alleged fact, if established, would not necessarily indicate that the city manager acted with
unbridled discretion.

Exclusive has failed to overcome its burden of demonstrating that the marijuana ordinance
is unconstitutionally vague. Because no genuine issue of material fact exists concerning whether
the marijuana ordinance is unconstitutionally vague, the circuit court did not err by granting the
City summary disposition with respect to Exclusive’s void-for-vagueness claim.

IV. 1000-FOOT SCHOOL-BUFFER REQUIREMENT UNDER MCL 333.27959(3)(c)

Quality’s lead argument is that the City violated the MRTMA’s school-buffer requirement,
and the circuit court erred by failing to address this issue and denying summary disposition.
Quality describes this issue as “the most simple and straightforward in these consolidated cases.”
It is actually the most convoluted. Ultimately, we conclude that the circuit court properly granted
summary disposition in favor of the City because (1) the marijuana ordinance and general zoning
scheme do not conflict with MCL 333.27959(3)(c) and (2) awarding the retail license to Gatsby
did not violate the MRTMA’s school-buffer requirement despite the close proximity to a school.

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At the outset, we must clarify what exactly Quality is arguing and what it is not. It argues
that the City violated the MRTMA. It does not argue that the City violated its own marijuana
ordinance.

This is sensible because the City did not violate its ordinance by awarding Gatsby a retail
license. None of the 10 competitive criteria for retail license applicants contained a school-buffer
requirement. See Royal Oak Ordinances, § 435-4(C)(4)(a) to (j). In fact, nothing in Section 4, the
section of the ordinance relating to applications, directly references a school-buffer requirement.
See Royal Oak Ordinances, § 435-4.4

The marijuana ordinance, however, does contain a school-buffer requirement in Section 5,
the section of the ordinance relating to operations. See Royal Oak Ordinances, § 435-5(A). As
stated, consistent with the MRTMA, the ordinance provides, “[n]o Marihuana Establishment shall
be permitted within a 1,000-foot radius of any school.” Royal Oak Ordinances, § 435-5(A)(5)(a).
Again, this is an operational requirement, not an application or licensing consideration. This
means that an entity like Gatsby, whose proposed site was 88 feet from a school, might succeed in
applying for a retail license, but be poised to violate the operational provisions of the ordinance.
That is, unless the City Commission validly approved a deviation before it started operating.

For Gatsby, this means the City did not violate its ordinances when it awarded the City’s
retail license. We acknowledge that the marijuana ordinance requires the city manager to consider
likelihood of success, which would implicate compliance with the MRTMA, including the school-
buffer requirement. But both the MRTMA and the City’s ordinances contemplated a reduction of
that requirement. See MCL 333.27959(3) (recognizing that a municipality may adopt an ordinance
that reduces the 1,000-foot buffer requirement). See also Royal Oak Ordinances, § 770-
52.1(B)(14) (stating that the City Commission may deviate from zoning requirements upon
recommendation of the City Planning Commission). To the extent that the city manager had to
consider this as part of the competitive criteria, we accept that he could also consider the likelihood
that the City Commission would eventually validly approve a deviation from the school-buffer
requirement for Gatsby. See Royal Oak Ordinances, § 770-52.1(B)(14). And that is exactly what
happened. The City Commission initially approved Gatsby’s site plan, implicitly approving a
deviation from the school-buffer requirement. To the extent that the initial deviation was invalid,5

4
We acknowledge that one criterion potentially requires consideration of the applicant’s ability to
comply with the MRTMA. Cf. Royal Oak Ordinances, § 435-4(C)(4)(a). This implicitly would
incorporate the 1,000-foot-buffer requirement in the MRTMA, assuming the City Commission did
not validly waive the requirement. As we discuss, to the extent this application criterion
incorporates the school-buffer requirement, the City’s ability to waive it before the licensee begins
to operate has the potential to nullify an such incorporation.
5
As noted, both the marijuana ordinance and general ordinances included the buffer requirement.
Royal Oak Ordinances, § 435-5(A)(5)(a) and § 770-52.1(B)(3). But § 770-52.1(B)(14) also
allowed the City Commission to deviate from that requirement if the applicant showed that certain
features had been designed into the plan and the City Commissions deemed them adequate “upon
recommendation of the Planning Commission.”

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the City Commission amended its ordinance to allow it to validly deviate from the school-buffer
requirement on June 26, 2023. Any operation after that point would not violate the statute.

To summarize, the City did not violate the statute by awarding a retail license to Gatsby.
To the extent that Gatsby violated the statute by operating without a valid deviation, it was
Gatsby’s problem, not the City’s. And it was a problem that was solved by June 2023 when the
City Commission amended its ordinances to allow it to validly deviate from the buffer requirement
without a recommendation from the Planning Commission.

Recall, however, Quality does not argue that the City violated its own ordinances. It argues
that it violated the MRTMA because MCL 333.27956(3) prohibits municipalities from imposing
licensure requirements that conflict with the act, MCL 333.27959(3)(c) requires a school-zone
buffer of 1,000 feet unless a municipality has adopted an ordinance that reduces this distance, and
the City has adopted no such ordinance. We disagree.

Quality effectively raises a conflict preemption claim, i.e., a claim that “a local regulation
directly conflicts with state law.” Deruiter v Twp of Byron, 505 Mich 130, 140; 949 NW2d 91
(2020). “Conflict preemption applies if the ordinance is in direct conflict with the state statutory
scheme[.]” Id. at 140 (citation and quotation marks omitted). This analysis necessarily begins
with an examination of the relevant provisions of the MRTMA and the marijuana ordinance.

MCL 333.27959(3) provides as follows:

Except as otherwise provided in this section, the department shall approve
a state license application and issue a state license if:

* * *

(c) the property where the proposed marihuana establishment is to be
located is not within an area zoned exclusively for residential use and is not within

Again, Gatsby’s proposed location was 88 feet from OSTC-SE, which the City did not
dispute qualified as a public school for purposes of the City’s ordinances. Under both the
marijuana ordinance and the general zoning ordinance, then, Gatsby was prohibited from
operating its marijuana facility at its proposed location. The City Commission, however, voted to
approve the license, despite that the Planning Commission had voted to not recommend approval
of Gatsby’s application. The City Commission could approve the license. But because the City
Commission’s approval of the deviation from the buffer requirement in the absence of a
recommendation from the Planning Commission, the City arguably violated § 770-52.1(B)(14). If
the initial deviation was invalidly obtained under § 770-52.1(B)(14), Gatsby’s operation likely
violated the marijuana ordinance’s operations provisions from the time it started operating until
the later valid deviation following the amendments to the marijuana ordinance. This precise issue
is not presently before us. We discuss it only to the extent that it is necessary for us to fully address
Quality’s argument.

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1,000 feet of a pre-existing public or private school providing education in kinder-
garten or any of grades 1 through 12, unless a municipality adopts an ordinance
that reduces this distance requirement[.] [Emphasis added.]

In other words, the MRTMA allows provision of a state license within 1,000 feet of a preexisting
public or private grade school only if the municipality has adopted an ordinance that reduces this
distance requirement.

The MRTMA also authorizes municipalities to adopt ordinances regulating recreational
marijuana establishments within their boundaries and provides certain guidelines. MCL
333.27956(3) provides that “[a] municipality may adopt an ordinance requiring a marihuana
establishment with a physical location within the municipality to obtain a municipal license, but
may not impose qualifications for licensure that conflict with this act or rules promulgated by the
department.” (Emphasis added.)

Reading MCL 333.27956(3) and MCL 333.27959(3)(c) together, we discern two critical
points: (1) the MRTMA does not require a municipality to adopt the buffer requirement as a
qualification for municipal licensure because MCL 333.27956(3), by its plain language, requires
it for state, not municipal, licenses, and (2) an ordinance reducing the buffer zone, as qualification
for municipal licensure, would not conflict with the act because MCL 333.27959(3)(c) indicates
that a municipality may adopt an ordinance reducing that buffer zone.

Our review of the City’s ordinances applicable during the application process reveals no
conflict with MCL 333.27959(3). Section 435-5(A)(5)(a) of the marijuana ordinance stated as
follows:

A. A Marihuana Establishment issued a Municipal License under this
Ordinance and operating in the City shall at all times comply with the following
operational requirements, which the City may review and amend from time to time
as it determines reasonable.

* * *

5. The following spacing requirements for Marihuana Establishments are
required:

a. No Marihuana Establishment shall be permitted within a 1,000-foot
radius of any school.

Additionally, the City’s general ordinances included the provision, “No marihuana establishment
shall be permitted within a 1,000-foot radius of any existing public or private school with a
curriculum equivalent to kindergarten through 12th grade.” Royal Oak Ordinances, § 770-
52.1(B)(3). The plain text of these provisions illustrate that the City adopted the buffer
requirement of MCL 333.27959(3)(c) even though the MRTMA did not require it for municipal
licensing.

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But, § 770-52.1(B)(14) of the Royal Oak Ordinances allowed for deviation from the
ordinances’ buffer requirements:

Deviations from applicable setback, parking, and other requirements may be
granted by the City Commission, provided there are features or elements
demonstrated by an applicant and deemed adequate by the City Commission upon
the recommendation of the Planning Commission that are designed into the site
plan for purpose of achieving the objectives of this section. [Emphasis added.]

Thus, while deviation from the buffer requirement is permitted under § 770-52.1(B)(14) of the
Royal Oak Ordinances, such a deviation may be granted only if the applicant shows that certain
features have been designed into the plan, and that the City Commission deems them adequate
“upon recommendation of the Planning Commission.” Id. This provision allows the City to reduce
the distance requirement of § 435-5(A)(5)(a) of the marijuana ordinance and § 770-52.1(B)(3) of
the Royal Oak Ordinances.

Because the City adopted an ordinance allowing reduction of the buffer zone consistent
with MCL 333.27965(3) and MCL 333.27959(3), the City’s ordinances, on their face, do not
conflict with the MRTMA. While MCL 333.27959(3)(c) does not require a municipality to adopt
the buffer requirement, that statute indicates that a municipality may adopt an ordinance reducing
the buffer requirement for purposes of state licensing. A review of the City’s licensing and zoning
scheme, which allows a reduction of the buffer zone, reveals no inherent incompatibility between
the then-existing licensing and zoning provisions and the MRTMA.

Quality, however, argues that the City’s zoning does not comply with MCL
333.27959(3)(c) because the latter does not allow a municipal body to decide that the buffer
requirement does not apply. According to Quality, MCL 333.27959(3)(c) requires the
municipality to “adopt an ordinance that reduces [the] distance requirement,” as opposed to
allowing a municipal body to make the decision. We disagree. The zoning ordinance then in
effect allowed the City Commission to deviate from the buffer requirement “provided there are
features or elements demonstrated by an applicant and deemed adequate by the City Commission
upon the recommendation of the Planning Commission . . . .” Royal Oak Ordinances, § 770-
52.1(B)(14). This provision, when implemented, reduced the buffer requirement of the MRTMA.
See MCL 333.27959(3)(c). Notably, the MRTMA does not specify the procedure by which an
ordinance reducing the buffer requirement is adopted. Quality’s claim that § 770-52.1(B)(14) of
the Royal Oak Ordinances conflicts with the MRTMA is not supported by the language of the
statute. In fact, Quality’s interpretation ascribes an intent not reflected in the statute’s plain
language. Because the City’s ordinances do not conflict with MCL 333.27956(3) and MCL
333.27959(3)(c), Quality has failed to state a claim on which any relief can be granted.

V. COMPETITIVE PROCESS MANDATE UNDER MCL 333.27959(4)

Quality argues that the marijuana ordinance conflicts with the MRTMA’s competitive-
process mandate on its face and that the City’s application violated the MRTMA’s competitive-
process mandate. We disagree. The marijuana ordinance did not conflict with the competitive-
process requirement of MCL 333.27959(4), and there was no genuine issue of material fact that

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the city manager complied with the ordinance and the MRTMA. We address each argument in
turn.

Regarding the facial challenge, Quality argues that the ordinance conflicted with the
MRTMA’s competitive-process mandate because the selection process was inherently
noncompetitive. Essentially, Quality argues that the ordinance’s use of binary, yes-or-no factors,
and lack of a numerical ranking system left the City with no meaningful way to distinguish between
applicants.

Here, Quality again raises a conflict preemption claim, i.e., a claim that “a local regulation
directly conflicts with state law.” Deruiter, 505 Mich at 140. This analysis necessarily begins
with an examination of the relevant provisions of the MRTMA and the marijuana ordinance.

MCL 333.27956 allows a municipality to adopt a recreational marijuana ordinance. That
section provides in relevant part that, “[a] municipality may adopt other ordinances that are not
unreasonably impracticable and do not conflict with this act or with any rule promulgated pursuant
to this case . . . .” MCL 333.27956(2). Additionally, MCL 333.27959(4), mandates that a
municipality use a “competitive process” to select among applicants if there are more applicants
than available licenses:

If a municipality limits the number of marihuana establishments that may
be licensed in the municipality pursuant to section 6 of this act and that limit
prevents the department from issuing a state license to all applicants who meet the
requirements of subsection 3 of this section, the municipality shall decide among
competing applications by a competitive process intended to select applicants who
are best suited to operate in compliance with this act within the municipality.
[Emphasis added.]

Because its marijuana ordinance restricted the number of recreational marijuana licenses,
the City adopted the following “competitive” process:

The applicants and their applications will be ranked in the order of which is
best suited to operate in compliance with the Act within the City as determined by
the City Manager or his or her designee. This ranking will be used to fill available
municipal license slots, starting with the best-suited applicant and application, until
all available municipal license slots are filled. The competitive criteria to be used
shall be as follows:

(a) Review of the applicant’s completely submitted, detailed application
(including plans which address the provisions of this section and related provisions,
such as security, lighting, processing, handling of hazardous waste, site plans,
recordkeeping, disposal, water/utility, ventilation, odor, etc.), which illustrates the
likely success of the proposed business, in harmony with surrounding properties at
the proposed site;

(b) Whether the applicant is currently in default or arrears on any taxes or
fees otherwise due to the City, has a history of noncompliance or violations with

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City ordinances or applicable laws, or has been served with any complaint or notice
filed by or with any public body regarding the delinquency in the payment of any
tax required under federal, state or local law;

(c) Whether the applicant is/was a business operating in the City of Royal
Oak within the past two years;

(d) Whether the applicant has a history of criminal conviction/plea, other
than as specified by the MRTMA, MCLA 333.27958.1 (c), as may be amended;

(e) Whether the applicant has ever applied for or has been granted any
commercial license or certificate issued by a licensing authority in Michigan or any
other jurisdiction that has been denied, restricted, suspended, revoked, or not
renewed, or has proceedings pending related to such;

(f) Whether the applicant filed, or had filed against it/him/her, a proceeding
for bankruptcy or been involved in any formal process to adjust, defer, suspend or
otherwise work out payment of a debt in the past seven years;

(g) Whether there is performed and planned future outreach on behalf of the
proposed business and a written plan evidencing the outcome of such meetings, and
whether the Applicant has made, or plans to make, significant physical
improvements to the building housing the Marihuana Establishment

(h) Whether the applicant has taken steps to encourage employee retention,
attract highly capable workers, train employees, and any other employee-employer
factors tending to show a successful workforce;

(i) Whether the applicant has taken steps to include equity, diversity, and
inclusion in their operations that would tend to yield greater profitability,
innovation, and more-effective teamwork; and

(j) Whether the proposed plan incorporates sustainable infrastructure and
energy-efficient elements and fixtures. [Royal Oak Ordinances, § 435-4(C)(4)(a)-
(j).]

Nothing in MCL 333.27956, the section authorizing a municipality to impose local
regulations on recreational marijuana, restricts or delineates what type of criteria may be used in
formulating a “competitive process.” See MCL 333.27956(2). See also MCL 333.27956(3). The
only relevant direction is that any pertinent ordinance must not be “unreasonably impracticable”
or “conflict” with the MRTMA. See MCL 333.27956(2).

Quality’s argument that the marijuana ordinance’s process is not “competitive” because
competition requires a “situation in which people or businesses are trying to be more successful
than each other . . . .” is not persuasive. Although the City used series of yes-or-no factors and did
not use a numerical scoring system, there were still meaningful ways to distinguish the applicants,
thus satisfying the “competitive” requirement within the meaning of MCL 333.27959(4).

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MRTMA does not define “competitive process.” We therefore rely on the plain meaning
and ordinary understanding of “competitive” which is “relating to . . . competition,” or “a contest
between rivals” or “the effort of two or more parties acting independently to secure the business
of a third party by offering the most favorable terms.” See Merriam-Webster Online Dictionary,
https://www.merriam-webster.com/dictionary/competition (accessed November 25, 2024). See
also Merriam-Webster Online Dictionary, https://www.merriam-
webster.com/dictionary/competition (accessed November 25, 2024). When the relevant language
is read as whole, then, MCL 333.27959(4) dictates that the process adopted must evaluate which
applicants offer the most favorable terms, as compared to others, for the purpose of identifying
which applicants are best suited to operate in compliance with the MRTMA. In other words, any
criteria adopted must bear some relation to determining who is best suited to operate in compliance
with the act, and must also aid in evaluating who offers the most favorable terms.

The marijuana ordinance’s ten competitive criteria indicate that the ordinance does not lack
a competitive process for selecting the applicants best suited to operate consistently with the
MRTMA. See Royal Oak Ordinances, § 435-4(C)(4). On the contrary, many of the nine factors
that call for a yes-or-no determination (out of 10 factors total) implicate varying degrees of
compliance. For example, criterion (h) asks whether the applicant has taken steps to promote a
successful workforce. Even if an applicant’s response is affirmative, the way in which an applicant
has met this end, and to what degree, would differentiate that applicant from others. The same
may be said of responses to criteria (g) (future outreach), (i) (equity plans), and (j) (sustainable
infrastructure), and to a lesser extent (c) (operating a business in Royal Oak), and (e) (commercial
licenses). Further, consideration of the applicant’s tax history, bankruptcy history, and criminal
history potentially implicate variation and nuance. One bankruptcy is different than six. Someone
owning property with a tax lien is different than a convicted tax cheat. Quality’s argument ignores
these nuances and inherent differences implicated by the considerations that do not otherwise
provide a numerical rank or value.

Taken as a whole, the criteria serve as guideposts allowing a decision-maker to determine
which applicants are most favorable for operating in compliance with the MRTMA, providing
criteria an applicant may satisfy by varying degrees. Because the criteria allow for meaningful
distinctions between applicants, the criteria are necessarily competitive.

There being no conflict with the MRTMA, and no allegation of unreasonable
impracticality, Quality has failed to show that the City’s competitive criteria improperly conflict
with the MRTMA. Summary disposition under MCR 2.116(C)(8) was proper.6

6
The City relies on Yellow Tail Ventures, 344 Mich App 703, where this Court upheld the city of
Berkley’s competitive criteria. Although this Court in Yellow Tail Ventures did uphold Berkley’s
competitive criteria, that case is not directly on point. The plaintiffs in Yellow Tail argued that
MCL 333.27959(4) prohibited the city of Berkley from adopting criteria focused on such
community concerns as green infrastructure. Yellow Tail Ventures, 344 Mich App at 701. Those
plaintiffs did not argue that the criteria conflicted with MCL 333.27959(4) as binary or
noncompetitive per se.

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We also conclude that the circuit court properly granted summary disposition on Quality’s
as-applied challenge. Quality argues that the City’s implementation of the competitive process
ran afoul of both the MRTMA and the City’s own marijuana ordinance, because the city manager
admitted he did not understand his task to select applicants best suited to operate in compliance
with the MRTMA and failed to rank or score the applicants, because the interpretation and
application of the criteria were contrary to the text of the ordinance, and because some applicants
were outright disqualified although the ordinance did not allow for disqualification. We are not
persuaded.

“The law presumes public officials perform their duty.” Veldman v Grand Rapids, 275
Mich 100, 113; 265 NW 790 (1936). Generally, “the discretion vested in city officials is not
subject to review by the courts.” White v Grand Rapids, 260 Mich 267, 275; 244 NW 469 (1932).
Accordingly, “[i]f they transcend their power, the courts may interfere. But if acting within the
scope of their power they make mistakes it is not the business of a court to amend or correct their
errors.” Id.

This manifests as two questions: (1) under what authority did the city manager act, and (2)
whether the city manager acted outside of that authority. Taken as a whole, the record establishes
that the City acted within its authority by applying a competitive process to selecting the licensees.
As stated, we discern no conflict between the ordinance and the MRTMA. It employs 10 criteria
of local concern. The city manager applied the ordinance to determine which applicant was best
suited to comply with the act. Initially, he formed a workgroup with whom he collaborated to
narrow down the applicants on the basis of the ordinance’s criteria. Ultimately, the city manager
reviewed all the applications, considered each in relation to the competitive criteria of the
marijuana ordinance, compared the applicants to one another, and independently ranked the
applicants into three categories consisting of the two successful applicants, applicants put on
standby, and applicants who were rejected. There is no genuine issue of material fact as to whether
the City violated either the MRTMA or its marijuana ordinance by implementing this competitive
process.

Quality’s argument that the city manager did not understand his task to be selecting the
applicants best suited to operate in compliance with the MRTMA missed the point. Because the
City’s marijuana ordinance complied with the MRTMA’s competitive-process requirement, and
the city manager indicated that he selected applicants based on who was best suited to comply with
the ordinance, he neither violated the MRTMA nor acted outside his authority.

Quality’s argument that he failed to rank or score the applicants is similarly not persuasive.
The city manager did rank the applicants by category. He just did not use a scoring rubric that
Quality preferred. That the city manager gave greater weight to some criteria rather than others
that may have favored Quality does not indicate that he acted outside his authority or provide a
basis for disturbing the City’s decision.

Relatedly, Quality attacks the City’s interpretation of various criteria, many of which
required subjective assessment which Quality alleges the ordinance did not contemplate. These
arguments reflect Quality’s dissatisfaction with the way the city manager applied the criteria. But

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that does not amount to city manager acting outside the scope of his power. 7 Quality has not
demonstrated that the City acted outside of the scope of its authority under the MRTMA.

Finally, Quality additionally asserts that the circuit court’s analysis was insufficient to
warrant summary disposition, and the court improperly weighed evidence to make a factual
determination regarding the city manager’s conduct. Although the circuit court’s reasoning for
granting summary disposition could have been more elaborative, its conclusion was proper
because Quality failed to establish a genuine issue of material fact concerning whether the city
manager’s administration of the competitive process was inconsistent with the MRTMA or the
City’s marijuana ordinance. Quality also fails to elucidate how the court weighed the evidence
and made credibility determinations in the course of its limited analysis.

In sum, Quality’s facial and as-applied challenge regarding conflicts with the MRTMA’s
competitive-process mandate both fail.

VI. OMA VIOLATION

The circuit court erred by dismissing Quality’s OMA claim. Here, authority rested with
the City Commission, “the public body.” It delegated authority to the city manager who was the
de facto decisionmaker on awarding retail licenses. Relying on our Supreme Court’s decision
Pinebrook Warren, LLC v City of Warren, ___ Mich ___ ; ___ NW3d___ (2024) (Docket Nos.
164869 through 164877) (Pinebrook II), which addressed this very same issue on similar facts, we
conclude that an OMA violation occurred.

“The Open Meetings Act generally requires ‘decisions’ or ‘deliberations’ of a ‘public
body’ to be open to the public.” Davis v Detroit Financial Review Team, 296 Mich App 568, 576;
821 NW2d 896 (2012), citing MCL 15.262 and MCL 15.263. Because the act applies only to a
public body, the initial inquiry is whether the entity at issue constitutes a “public body.” MCL
15.262(a) defines “public body” to include “any state or local legislative or governing body,
including a board, commission, committee, subcommittee, authority, or council, that is empowered
by state constitution, statute, charter, ordinance, resolution, or rule to exercise governmental or
proprietary authority or perform a governmental or proprietary function . . . .”

Generally, the statute provides that for an entity to be a public body, two requirements must
be met: (1) “the entity at issue must be a ‘state or local legislative or governing body, including a
board, commission, committee, subcommittee, authority, or council,’ ” and (2) “the entity must be
‘empowered . . . to exercise governmental or proprietary authority or perform a governmental or
proprietary function,’ and that power must derive from ‘state constitution, statute, charter,
ordinance, resolution, or rule . . . .’ ” Herald Co, 463 Mich at 129, quoting MCL 15.262(a).
Beyond the statutory definition of “public body,” our caselaw has recognized an additional

7
At worst, Quality may have shown that a mistake was made, e.g., a home-based business did not
satisfy criterion (c) (whether an applicant had operated a business within the City in the last 2
years). But even mistakes do not allow this Court to intervene so long as the city official was
acting within the scope of his or her power. See White, 260 Mich at 275. Quality’s arguments on
appeal would require this Court to substitute its judgment for that of the city manager.

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pathway for qualifying as a public body: when one public body delegates authority to another
entity. See Booth Newspapers, Inc v Univ of Michigan Bd of Regents, 444 Mich 211, 225-226;
507 NW2d 422 (1993) (holding that an individual member of the University of Michigan Board
of Regents was a “public body” because the Board of Regents, itself a public body, had delegated
the job of selecting a university president to the single regent). When a court is assessing such a
delegation it must look not only at the language of the ordinance or governing document; it must
also consider how the public body and the entity to which it supposedly delegated authority
actually operated. See Pinebrook II, ___ Mich at ___; slip op at 8.

In Pinebrook II, our Supreme Court held that the de facto decision maker, a review
committee, similar to the city manager in this case, was subject to the OMA. Pinebrook II, ___
Mich at ___; slip op at 9. There, the city of Warren had adopted a medical-marijuana ordinance
consistent with then-governing state law. Pinebrook I, 343 Mich App at 127. The ordinance
created a review committee to evaluate applications, score them, and forward them, along with the
scores and recommendations, to the city council. Id. at 136. The ordinance authorized only the
city council to approve the issuance of a license. Id. at 136. On appeal, this Court held that the
review committee was not a public body subject to the OMA, rejecting the argument that the City
had made the review committee a public body under Booth by delegating its authority to it. Id.
at 150. Instead, the city’s marijuana ordinance gave the review committee independent authority
to act. Id. at 145-146.

Our Supreme Court reversed, holding that this Court erred by limiting its analysis to the
language of the ordinance while failing to consider how the review committee actually worked.
Pinebrook II, ___ Mich at ___; slip op 27. The Court clarified that

in order to determine whether a public body has provided its authority to a different
entity, thus subjecting that second entity to the OMA, we must examine both the
language of the enabling action (in this case, an ordinance) and the actions actually
taken by the new entity . . . . If the second entity makes public policy decisions that
would otherwise have had to have been made by the original public body according
to the law, then the second entity is also a public body covered by the OMA. [Id.
at ___; slip op at 29 (citations omitted).]

Under this framework, the Court concluded that, even though the city’s ordinance technically gave
the city council the final authority to choose which applicants would be awarded licenses, it was
the review committee that, in reality, chose the successful applicants. Id. at ___; slip op at 28-30.
The Court relied on the fact that the review committee scored and ranked the applicants, and the
city council simply adopted the work of the review committee by motion. Id. at ___; slip op at 29-
32. The Court held that, because the review committee performed the governmental function of
making decisions for the city council, the review committee was a public body subject to the OMA.
Id. The Court distinguished Herald Co on the ground that the city manager in Herald Co did not
obtain his authority from the City Commission, but from the city charter, while in Pinebrook
Warren, the city council created the review committee and authorized it to act on behalf of the
council. Id. at ___; slip op at 32-33.

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Relying on Pinebrook II and Booth, we conclude that the city manager and his designees
acted as a public body subject to the OMA. By way of analogy, here, the City Commission is to
the city manager and his workgroup as the city council was to the review committee in Pinebrook
II. Cf. Pinebrook II at ___; slip op at 29-32. The City Commission is a public body that granted
the city manager “the power to fully and effectively implement and administer the Municipal
License Application process.” Royal Oak Ordinances, § 435-2(E). On paper, the marijuana
ordinance did not grant the city manager authority to make the final decision on awarding retail
licenses. Rather, the ordinance indicated that the “City shall decide among Applications” which
were best suited to operate in compliance with the MRTMA, see Royal Oak Ordinances, § 435-
4(C)(2) (emphasis added). The city manager was only empowered to “implement and administer”
the application process and directed to rank the applicants by applying the 10 competitive criteria,
see Royal Oak Ordinances, § 435-2(E) and § 435-4(C)(4)(a)-(j). The successful applicants do not
automatically receive a license after this process. Instead, an applicant obtains the license only
after the City Commission approves the applicant’s special-land-use permit and site plan, and, if
other requirements are met, the City Clerk issues the license. See Royal Oak Ordinances, § 435-
4(D)(4) and (7). That is according to the ordinance.

In practice, however, the city manager’s role was not limited to administering the
applications process and scoring the applicants: whichever applicants made it through the city
manager’s process received licenses. The City received 31 applications for two retail licenses. To
rank the applicants, the city manager formed a workgroup composed of several city officers. They
met in four closed-door sessions to help the city manager assess the applicants. Ultimately, as a
result of these meetings, the city manager ranked the applications in three categories, including a
recommendation that the top two applicants be awarded a license.

While the ordinance tasked the “City” with deciding which applicants would be best suited
to operate within the City, and also with approving the applicants’ special-land-use and site permits
as a predicate to issuing licenses, see Royal Oak Ordinances, § 435-4(C)(2) and (D)(4)(f), the City
Commission adopted the city manager’s recommendation without apparent deliberation. The
minutes of the City Commission meeting with respect the special-land-use permit and site plan of
the two highest-ranked applicants as recommended by the city manager do not reflect any
discussion of other applicants. Consequently, the city manager effectively selected who would
receive the two recreational marijuana licenses. Because the city manager made a de facto policy
choice for the City Commission, the city manager met the definition of “governing body,” and,
thus, was subject to the OMA. It follows that the meetings that the city manager had with his
workgroup should have been noticed and made open to the public.8

We understand our Supreme Court’s decision in Pinebrook II as implicitly rejecting the
City’s argument that the City Commission did not delegate authority to the city manager because
the MRTMA provided the city manager with an independent source of executive authority. The

8
Standing alone, the workgroup did not qualify as a public body because no public body delegated
authority to it. It acted solely in advisory capacity. The city manager made the ultimate ranking
after consultation and there was no indication that the city manager delegated any of his authority
under the marijuana ordinance to the workgroup.

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city council in that case enacted an ordinance under the medical-marijuana law and established a
review committee with authority to act on the city council’s behalf, which the Court considered a
delegation of city council’s powers. Pinebrook II, ___ Mich at ___; slip op at 30. Similarly, here,
the City Commission enacted an ordinance under the MRTMA, and, although the commission did
not create the office of city manager through the ordinance, the commission authorized that officer
to act on its behalf. The city manager’s power in the licensing process derived from the marijuana
ordinance, through the City Commission, not from the text of the MRTMA itself.

For these reasons, the circuit court erred by granting summary disposition in favor of the
City with respect to the OMA claim. We reverse the court’s decision related to the OMA claim
and remand to the circuit court to determine whether the licenses awarded to Gatsby and Royal
Treatment should be invalidated under MCL 15.270(2). We observe that the OMA provides other
remedial options for the public body in this instance. See MCL 15.270(5) (providing a mechanism
for a public body to “reenact the disputed decision in conformity with [the] act” to avoid
invalidation).

VII. SUBSTANTIVE DUE PROCESS

Quality also raises a substantive due process claim. It argues that the circuit court erred by
granting summary disposition on its due-process claim because (1) to the extent it granted relief
under MCR 2.116(C)(10), it failed to reference any material facts outside of the pleadings that
would justify dismissal, and (2) to the extent it granted relief under MCR 2.116(C)(8), Quality
argues it sufficiently alleged that the City acted arbitrarily and capriciously in awarding licenses.
We disagree.9

The City’s conduct in this matter did not rise to the level of substantive due-process
violation. Substantive due process protects an individual against arbitrary government action.
Pinebrook I, 343 Mich App at 158. The predicate for a due-process claim is a property interest at
stake. Id. at 159. Because a first-time license applicant has no entitlement to a license, there is no
property interest at stake. Id. at 160.

Further, this Court has limited such inquiry to whether a city has acted so arbitrarily and
capriciously as to shock the conscience. Id. at 160-161; Cary Investments, LLC v Mt Pleasant,
342 Mich App 304, 316; 994 NW2d 802 (2022). Generally, “[r]efusal to issue a permit is not the

9
Quality has likely abandoned this issue. Its argument is too cursory to warrant this Court’s
consideration. It does not cite any law explaining what requirements a first-time license applicant
must meet to establish a due-process claim. Quality also does not highlight what evidence it
proffered to establish the existence of a genuine issue of material fact in that regard. Instead, it
summarily states the legal conclusion that its allegation that the City acted arbitrarily and
capriciously stated a due-process claim, while offering no explanation of what the law requires.
“An appellant may not merely announce his position and leave it to this Court to discover and
rationalize the basis for his claims, nor may he give issues cursory treatment with little or no
citation of supporting authority.” Houghton, 256 Mich App at 339 (citations omitted). Because
Quality failed to properly address the merits of this claim of error, this issue is likely abandoned.
Nonetheless, we elect to address the merits.

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sort of municipal action that constitutes a violation of substantive due process,” Cary Investments,
342 Mich App at 315, and “[p]icking winners and losers, although it might seem unfair, does not
amount to irrational conduct or oppression, and it does not shock the conscience,” Pinebrook I,
343 Mich App at 165.

The City simply denied Quality a permit. Quality has not established that the City violated
either the MRTMA or its marijuana ordinance, or alleged any conduct that is so egregious and
irrational that it shocks the conscious. Summary disposition of the substantive due-process claim
was proper because Quality has brought to light no genuine issue of material fact concerning
whether the City engaged in arbitrary, irrational, or oppressive conduct.

VIII. CONCLUSION

For the reasons previously stated, we affirm the circuit court’s grant of summary
disposition in all respects except as it relates to its handling of the OMA violation. Because an
OMA violation occurred, the circuit court erred in dismissing those claims. We therefore reverse
the circuit court’s decision regarding the OMA violation and remand for the circuit court to address
whether invalidation of the license awards is appropriate under MCL 15.270(2) and to provide the
public body with the opportunity to remedy to violation. See MCL 15.270(5). In all other respects,
we affirm. We do not retain jurisdiction.

/s/ Noah P. Hood
/s/ Mark T. Boonstra
/s/ Kathleen Jansen

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/10754717. Public record. Not legal advice.