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Michigan town's pot bonanza turns into a marijuana melee over corruption claims

Francis X. Donnelly, The Detroit News on

Published in News & Features

After the council adopted the committee’s recommendations in 2021, five losing applicants quickly filed lawsuits against the city. They said the scoring was arbitrary, overlooked pertinent information and accused the committee of making its decisions in private.

The Fire Station, a medical and recreation marijuana dispensary, was one of the original two applicants that the Menominee city government approved for operating in the city. A committee gave it a perfect score of 50.

The committee had scored the applicants during a public meeting, but there was little discussion and all three committee members gave identical scores for each applicant in each category, said the losing applicants.

“(It) was a debacle,” said Steve Eckley, head of business development for Higher Love, an applicant that had one of the lowest scores, 42. “(The) scores were completed ahead of time, and there was no dissent among the selection committee.”

The rejected applicants found a sympathetic ear on the City Council; in fact, a lot of sympathetic ears. In March 2023, the council voted 6-3 to approve a resolution saying it was considering settling the lawsuit by the dispensaries and awarding them licenses.

Most of the six council members supporting the expansion were the same ones who supported the limit two years earlier. Why did they change their minds?

Some council members said the lawsuit was preventing any dispensaries from opening, so settling the legal action would allow the city to begin collecting taxes from them.

Menominee City Council member Doug Robinson said he voted to lift the cap on the number of marijuana dispensaries in the city after originally supporting a limit of two dispensaries because the city needed more revenue. A lawsuit by rejected applicants had delayed the opening of pot outlets, he said.

“The city needed additional revenue sources,” City Council member Doug Robinson said. “The most important dollar you have is the one you got and the one you can get. There’s also a cost to not doing something.”

Other council members, however, were dubious about the about-face by their colleagues. They said the city fully expected the lawsuits, prepared for them legally and were winning the legal actions, which it later did.

The council members who opposed the expansion said they were suspicious about the motives of their fellow elected officials but stopped short of accusing them of anything untoward. Rize and The Fire Station were less circumspect.

The two dispensaries filed a federal lawsuit in 2023 accusing several council members of having various conflicts of interest in supporting the increase in the number of dispensaries. The legal action was later dropped in favor of the lawsuit in state court.

The federal lawsuit said Joe Dulak, a real estate broker who joined the council in 2022, could make money from commissions or referrals from the sales of properties to the pot shops. The legal action didn’t cite any instances of Dulak being involved in such transactions.

Dulak didn’t respond to emails and phone calls asking for comment.

Menominee City Council member Joe Dulak, who is also a real estate broker, has been accused by the Rize and The Fire Station pot dispensaries in a lawsuit of potentially making commissions or referrals from the sales of properties to the pot shops since the council limited the limit on the number of dispensaries. But the lawsuit didn’t cite any instances of Dulak being involved in such transactions.

Lawsuit explores potential conflicts

The federal lawsuit also noted that Councilman Josh Jones is the brother of Joseph Jones, a lawyer for Higher Love, one of the dispensaries originally rejected by the city.

During a council meeting in September 2021, Josh Jones talked in general terms about the possibility of his brother having an investment with a dispensary, but that, Mike Celello, the city attorney, told him that it didn’t present a conflict of interest, according to meeting minutes.

Asked about the matter, Celello told the council that the question posed by Jones wasn’t related to the council’s code of ethics. If it had been, Celello said he would have responded that it was a conflict of interest for Jones to vote on giving a license to Higher Love.

Despite the lawyer’s view, the council voted 4-3 to allow Jones to vote on the matter, according to the minutes. All four council members who supported Jones also favored increasing the number of dispensaries.

Neither Jones nor his brother responded to emails or phone calls requesting comment.

At the same council meeting in 2021, Councilman Dennis Klitzke recused himself from voting on the expansion because he was in discussions to sell property to Higher Love.

But that didn’t stop him from talking about the issue during interviews and at council meetings. He told the Marinette Eagle Herald in a story published Oct. 3, 2021, that the city should have given Higher Love a license. He told the reporter that the dispensary could bring 80 jobs and $10 million in investment to the city.

“This is a one-shot deal, either come here or they don’t,” he said. “They’re going to locate somewhere else and that will be that. This is an opportunity to generate revenue.”

Klitzke died in May.

Lume was one of the original losing applicants that was allowed to open a medical and recreational pot dispensary in Menominee after the City Council lifted the restriction on how many dispensaries could operate in the Upper Peninsula city.

Council members ignore legal advice

During the lawsuit by the rejected dispensary applicants, most council members routinely ignored legal advice from its city and litigation attorneys, according to meeting minutes. Instead, they communicated frequently with the lawyers who were suing the city.

If the council members needed a legal opinion, they sought it from the other side’s attorneys, according to the lawsuit by Rize and The Fire Station. During meetings, they parroted the same arguments the rejected applicants were making in court.

At one point, Councilman Bill Plemel complained that the city staff wasn’t returning phone calls from the losing applicants’ lawyers, the minutes showed.

When Plemel proposed the resolution considering a settlement in March 2023, it contained a legal certification, several legal recitals and citations of various state laws, according to the Rize lawsuit. Plemel, 86, is a retired mechanic.

He didn’t respond to emails or phone calls asking for comment.

Relations between the council and city staff deteriorated, with meetings marred by shouting matches and emotional outbursts.

During the March 2023 meeting, Councilwoman Jackie Nutter argued with Celello, the city attorney, and then Botbyl, the city manager, after they said the council had violated the state’s open meetings law, according to a recording of the meeting. Stegeman, the mayor, banged her gavel several times as Nutter interrupted the staffers.


“You scheduled it for tomorrow,” Nutter said. “I already have plans for tomorrow.”

“Well, I’m sorry about that,” Botbyl said. “We all have plans. Then I said if that didn’t work ---”

“You’re not sorry about that,” Nutter said.

“Nutter!” Stegeman yelled.

“No!” Nutter yelled back. “You’re only hammering at me, but we’re both going back and forth.”

'Who settles a lawsuit you're winning?'

In May 2023, a Menominee Circuit Court judge dismissed the lawsuit by the rejected dispensary applicants, ruling that the city awarded the original two licenses correctly.

Two weeks later, the City Council gave in to the demands of the losing applicants, voting to revise its ordinance and allow an unlimited number of pot shops to open.

“Who settles a lawsuit that you’re winning?” asked Stegeman, who opposed the expansion. “I don’t know in whose world you settle a lawsuit that you’re winning.”

When the council opened the licenses to everyone, it also voted to change the ethics rules regarding the businesses.

The 2020 ordinance prohibited council members from having any type of interest, direct or indirect, in a dispensary. The new ordinance forbids them only from owning or operating a business.

The change allowed the elected officials to make money from the dispensaries in other ways, such as selling them property, brokering such deals or selling them products, said the lawsuit by Rize and The Fire Station.

“There is no rational basis for this change in ethical rules except to allow City Council members to profit in some manner from the removal of caps on licensing and issuing more licenses,” according to the lawsuit.

In July, a group named Committee to Stop Unlimited Marijuana Shops filed a petition for a referendum on keeping the number of dispensaries at two.

The petition said it was intended to prevent the opening of dozens of dispensaries. It also would ensure that the pot shops were at least 1,000 feet from schools.

“THAT’S TOO CLOSE!!” the petition read.

The petition also said it would prevent council members from having conflicts of interest.

“City officials should NOT use their position to PERSONALLY BENEFIT because of their job!” it read.

The group was dismissed as a sham by the council majority. It received $200,000 from Rize and The Fire Station, according to Michigan campaign finance disclosures. The notary for the petitioners was Jacie Duranso, who is director of licensing and compliance for The Fire Station, according to the dispensary’s website.

Two weeks after the petition was filed in July, receiving 1,200 verified signatures, the City Council called a special meeting.

The council repealed the revised ordinance allowing unlimited dispensaries and then adopted a nearly identical one but, this time, it included a $15,000 appropriation to the police. The city charter prohibits referendums from being held on ordinances that involve funding measures.

Robinson, the councilman who proposed the move, was candid about his reasoning. He said he wanted to prevent the referendum because the committee sponsoring it was a front for Rize and The Fire Station.

“The idea behind this is to put an end to a referendum that was brought forward by outside parties,” Robinson said.

'Pot Town USA'

Rize and the Fire Station opened dispensaries over the summer and were soon followed by three competitors in the fall. One of the first things Wisconsin residents see when they cross the bridge into Menominee is the Higher Love store, located behind the Michigan Welcome Center.

Some residents welcome the newcomers, saying they’re bringing jobs and refurbished buildings. They’re also helping the city government get closer to filling a $500,000 hole in its budget. The city received $295,000 in state taxes from the sale of marijuana products for 2023.

But others wonder if the businesses are worth the trouble, especially the legal fight that began in 2021 and continues with the trial in May.

Menominee City Council member Michael DeDamos supported a two marijuana dispensary limit in the city and doesn't like all of the litigation tied to regulating the industry in the city. “We didn’t sign up to be ‘Pot Town USA,'" DeDamos said.

Councilman Mike DeDamos, who wanted to keep the number of dispensaries at two, sometimes feels like that may be too many as well. He yearns for a simpler time when the only trouble caused by marijuana was getting caught with it by the police.

“We shouldn’t do any of this,” said DeDamos, 44, a gas station clerk. “We didn’t sign up to be ‘Pot Town USA.’”

Cross, the lawyer hired by the city to defend it against the lawsuits by the losing applicants, is now defending it against the legal action by the winning applicants.

He said Menominee isn’t the only example of a city being legally manhandled by dispensaries but, in his view, it may be the most egregious.

“It’s a clear example of large marijuana companies strong-arming local governments to ensure they make as much money as possible," Cross said.

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