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HomeMy WebLinkAbout2018.11.17.MM Commission Hearing Packet y�N S I NC Chris Swope f cH I G Pti' Lansing City Clerk Scoring & Ranking Timeline AEY Holdings LLC 3425 S Martin Luther King Jr Blvd Lansing, MI 48911 December 15, 2017 — Application submitted December 21 , 2017 — Department Review of Applications Begins August 3, 2018 — Scoring & Ranking Denial Letter Sent... ... ... ... ... ... ...... ..1 August 14, 2018 — Request for Hearing Officer Appeal submitted...............6 August 24, 2018 — Appeal to Hearing Officer September 19, 2018 — Hearing Officer Denial ... ... ... ... ... ... .... ... ... .........35 September 28, 2018 — Request for Application Clarification... ... ... ... .......43 October 5, 2018 — Adjusted Score Letter... ... ... ... ... ... ... ... ... ... ... ... ... ....45 October 24, 2018 — Commission Hearing Date letter... ... ... ... ... ... ... .......51 November 2, 2018 — Commission Appeal Submitted... ... ... ... ... ... ... .......53 Lansing City Clerk's Office Ninth Floor, City Hall, 124 W Michigan Ave, Lansing, MI 48933-1695 517-483-4131 517-377-0068 FAX www.lansingmi.gov/clerk city.clerk@lansingmi.gov = t ± ) 2a � / 13 0 � k{ ( / m �/\ j\ � DEL CL CL / o Q q �kk e§ m 5 % , E- , \ ® � 2 0 % bb 222 w � § o R q )=) { 2 a § o o _§ _ 0 / q � ) � ) �{ / g \ o ca � 2 \}7 } -k -0 e _ q « m U ! ±f A\ / CD r ® ° § CO \\j t { f § k 0 $ $ /§§ @ $ %2 � °-! / 2 � ƒ§ .0� & k e 2 t 0 q 2 ƒ 2 / ƒ {\ƒ � m ¥ ) ± [ So k E q \ƒ} 2 2 o � � A$2 2@77 co � b `o , \ » o= b E � : 2 \�} /\ EI / g[ / ° )) 2 2 ' \ # c w / 2k` W $� E « al �I co � ) 0 team 2 » 2 �\) . � < ± § / f= \et _ § 5 }/\� U « m m {� f{ 2 2bf E | °2 22 77 $ «f�\§ m §/)« ) ogE / ( /Rf / � a /\)k V » . l N S roc Chris Swope •• Lansing City Clerk r� xtG August 3, 2018 AEY Holdings, LLC 3481 Mound Rd. Suite 297 Sterling Heights, MI 48310 Dear Provisioning Center Applicant, The Lansing City Ordinance section 1300.6 discusses Provisioning Center license application evaluation. Your score of 74 out of 100 eliminates the possibility of scoring in the top twenty. Therefore, your application for licensure is denied. Attached are your sub-scores based on the criteria posted on https:Hlansingmi.gov/1637/Medical-Marijuana and a brief summary of determining factors for each sub-score. You will not be selected to receive a Provisioning Center license in the City of Lansing for the proposed business at 3425 S Martin Luther King Jr. Blvd. You have the right to appeal this denial of licensure within 14 days of the date of this letter by filing with the City Clerk's Office a written statement setting forth fully the grounds for the appeal pursuant to Chapter 1300.15(c). Please note that initial appeals are referred to a hearing officer appointed by the City Clerk who will review the appeal and information submitted by the City Clerk. The hearing officer will consider the information and make a recommendation to the City Clerk, who will make a decision on the appeal. To encourage efficiency, appeals will be conducted as a paper hearing without oral presentation. Please ensure that you include all information in your written appeal that you would like the hearing officer to consider. Appeals are limited to materials provided during the application process. No new application material will be considered on appeal. Chapter 1300 provides that should the applicant not receive a license, one-half the application fee shall be returned. This refund will be processed after all appeals are exhausted. Lansing City Clerk's Office Ninth Floor, City Hall, 124 W Michigan Ave, Lansing, MI 48933-1695 517-483-4131 517-377-0068 FAX www.lansingmi.gov/cler_2-:ity.clerk@lansingmi.gov If you have begun business operations pursuant to State Emergency Rule 19 and Executive Order 2017-02, you must cease operations. Operations may resume only if your appeal is granted and the requirements of the temporary operation are satisfied. Sincerely, (/" - ' / Chris Swope, Master Municipal Clerk Lansing City Clerk CC: City of Lansing Law Department Lansing City Clerk's Office Ninth Floor, City Hall, 124 W Michigan Ave, Lansing, MI 48933-1695 517-483-4131 517-377-0068 FAX www.lansingmi.gov/clei-3-.ity.clerk@lansingmi.gov City of Lansing Provisioning Center Ranking Total Applicant Name Possible AEY HOLDINGS,LLC AEY HOLDINGS,LLC Points Applicant Address -- — 342s s MILK Jr Blvd Marketing,Advertising and Applicant provides many detailed examples of marketing,advertising,promotion,and Promotion 4 4 minor minimization(e.g.,age verilled webslte,no ads designed for minors,social media, branded apparel,etc). Tangible Capital Investment in the City of Lansing Applicant Indicates they will lease the 3,724 sq.ft building at 3425 S.MILK for the Provisioning center(Investing approximately$1 million In improvements),operate a (Investment in applicants 15 9 second PC at 6001 S.PA Ave.,purchase 2 39K sq.ft.building for processing($900K)and other provisioning centers considering Investing In a 110K sq.ft.bulldine for growing(several$million), Lacks was not included in score) avmershlp and a definitive plan for Investing In a grow facility. Job Creation Applicant Indicates about 62 new Lansing Jabs and up to 120 newjobs if they pursue and (Integrated System) 5 3 open the larger grow facility.Types of jobs are detailed along and worker training Overall number ofjobs program. Falls shortofan optimal number of jobs and a definitive commitment tothe created larger grow facility. Applicant provides proof of access to$5 million with supporting documentation(e.g.,KIB Financial Structure and letter),linking this to their business plan and anticipated operating expenses.Note that Financing 3 3 one owner agrees to pay$70K by live business days of receiving business license to g operate the provisioning center(In addition to$40K already In place from the other owner).Existing liquid assets more than cover$100,000. Plans to Integrate Facility 2 2 Applicant Indicates they will integrate their provisioning center with a Class C(1,500 with Other Establishments plant)grow operation to be located at 1121 River Road. Applicant provides examples of organizations they would like to partner with(e.g.,adopt Charitable Plans and a park,wat drives,turkey giveaways,etc.)and discusses their long-term goal of spending Strategies 4 2 $25K/year to Community Mental Health,plus donate computers and equipment to schools.Falls short of optimal dollar commitment potential and lacks proof of actual payment or an executed agreement Number of Jobs at the Provisioning Center Category Thresholds:1=<6 jobs,insufficient details;2= Applicant Indicates the provisioning center will have at least 16 full-time salaried <6 jobs,sufficient details;3 5 4 employees and provides a description of job titles and salaries.Falls short of an optimal =6 jobs,sufficient details;4 level of details. =>6 jobs insufficient details; 5 =>6jobs,sufficient/good details. Amount and Type of 2 1 Applicant Indicates that not all provisioning center positions will pay at least$15 per Compensation(PC) hour.Falls short of the optimal amount of compensation and support details. Percent of Employees Earning At Least$15/Hour) 3 1 Applicant Indlcates 11 of 16(69%)provisloning center employees will earn at least $15/hour.Falls short of the optimal percentage. (PC) Applicant provides projected annual budget and revenue numbers(e.g.,$1.4 million In Projected Annual Budget 2 expenses and$1.6 mllllon In revenues)and generally describes the source of these and Revenue(PC) 1 numbers.However,they do not provide any line Item details(i.e.,financial spreadsheet) showing how these numbers were derived.Lacks sufficient details. -4- City of Lansing Provisioning Center Ranking Applicant provides litigation compliance verification forms for all key team members. Sufficient Financial Resources 5 5 Applicant proves they have more Ihan$100K In the bank,and access to 2$5 million line of credit from a respected lender. Applicant indicates they have at least 9 years of medical marihuana Industry experience, Business Experience 5 5 plus decades of other applicable business experience(retali management,highly regulated liquor Industry,etc),plus have access to an advisory board who have decades of applicable experience. Content and Sufficiency of Information;Professionalism of submitted documentation 5 3 Treasury letter for minor Issue and Facility Plan letter to cure from bullding safety including clear labeling of required items Buffering between residential zoned areas and 5 5 Good barriers&distance from residential establishment Increased traffic on side streets will be scored lower 5 5 Good plan Entrance and exit on main streets,adequate parking 10 10 Tier 1 A+Security Plan,Spts traffic,Strong traffic patterns,driveways,parking,and not on residential streets, chrculatlon Quality of Security Plan Plan to meet with 1 1 tab 10 Improvements made or proposed to building 3 2 Some changes are lndlcatedon the floor plans submitted Plan to minimize/eliminate 1 1 traffic Plan included traffic Plan to minimize/eliminate 2 0 inadequate noise plan noise Plan to minimize/eliminate 3 3 three independent air filtration technologies odor LPD Complaints 4 1 2MEalerms-I Bur check-IBdE report-Iriight=0-7 other-IMDOP call-7 medical calls-4 trouble cars-I trespassing This may be Villa strip mall,25 calls Demo of Regulatory 4 3 minor tax Issue Compliance Litigation History 2 o Inadequate history for Stakeholder Total 100 74 -5- AEY HOLDINGS, LLC ("APPELLENT") APPEAL Prepared by Michael D. Stein, Esq. Chad Proudlock Virg Bernero -6- TABLE OF CONTENTS Page(s) TABLEOF CONTENTS................................................................................................................ii STATEMENT OF ISSUES PRESENTED...................... iii .............................................................. I. INTRODUCTION.............................................................................................................. I II. STATEMENT OF FACTS................................................................................................. 1 III. STANDARD OF REVIEW................................................................................................ 2 IV. ARGUMENT...................................................................................................................... 2 V. CONCLUSION................................................................................................................. 12 VI. RELIEF REQUESTED..................................................................................................... 12 ii -7- STATEMENT OF ISSUES PRESENTED 1. WAS THE REVIEWER'S DECISION SUPPORTED BY COMPETENT MATERIAL, AND SUBSTANTIAL EVIDENCE? Appellant Answers: No 2. WERE THE APPLICANTS SCORES BASED ON CLEARLY ERRONEOUS FINDINGS Appellant Answers: Yes �. WERE THE APPLICANTS SCORES BASED ON IMPROPER/INCONSISTENT SCORING Appellant Answers: Yes 4. DID THE SCORING METHOD COMPLY WITH LANSING'S ORDINANCE Appellant Answers: No 5. SHOULD THIS CITY CLERK REVERSE THE DECISION TO DENY APPELLANTS APPLICATION? Appellant Answers: Yes iii -8- I. INTRODUCTION This appeal involves highly recognized and awarded local Michigan residents, and an internationally renowned cannabis consulting company who have been successful with cannabis licensure in California, Colorado, Arizona, Michigan, and Canada. The applicant has applied for a Provisioning Center license in the City of Lansing under its ordinance and in accordance with the Michigan Medical Marihuana Facilities Licensing Act however, Appellant's license was denied for purported insufficient material. Quite simply, the City of Lansing either did not fully review the entire application or ignored the sufficiency of the plans provided. Appellant has therefore filed the instant appeal as its only avenue to seek review of its score and status in the City of Lansing and asks this Clerk to reverse the City's decision due to lack of material, competent, and substantial evidence, erroneous and improper scoring and failure to score the application in accordance with its own ordinance. II. STATEMENT OF FACTS A. APPELLANT'S MMPC APPLICATION Appellant, AEY HOLDINGS, LLC ("AEY ") is owned by highly recognized and awarded local Michigan residents, and an internationally renowned cannabis consulting company who have been successful with cannabis licensure in California, Colorado, Arizona, Michigan, and Canada. AEY timely filed an application for an MMPC license with the City of Lansing for the location of 3425 S. MLK Blvd., Lansing, MI. B. PROCEDURAL HISTORY On or about July 31, 2018, AEY received an email from your office advising that it would not be selected to receive a Provisioning Center license. The correspondence from your office indicated -9- that the basis for the denial was as follows: "Your score of 74 out of 100 eliminates the possibility of scoring in the top twenty. Therefore, your application for licensure is denied." In addition, the denial correspondence included the applicant's sub-scores based on the ordinance criteria along with a brief summary of determining factors for each sub-score; this scoring sheet is also attached (Exhibit A). After this denial, AEY is left with no further avenues for reconsideration of the City's administrative decision. Therefore, AEY files the instant Appeal. III.STANDARD OF REVIEW The basis for this appeal is (1) the scoring is not based on competent, material and substantial evidence; (2) Scoring Insights are based on clearly erroneous findings; (3) Applicants scoring was based on improper/inconsistent scoring; (2) Scoring methods do not comply with the ordinance; and (3) Scoring was an abuse of discretion. Although Appellant recognizes the Clerk's office is not a court of law, the applicable standard of review is whether the decision is supported by competent, material, and substantial evidence on the record, and represents the reasonable exercise of the board's discretion. "Substantial evidence' is evidence that a reasonable person would accept as sufficient to support a conclusion." Edw C Levy Co v Marine City Zoning Bd of Appeals, 293 Mich App 333, 341-42; 810 NW2d 621 (2011) (quoting Dowerk v Charter Tp of Oxford, 233 Mich App 62, 72; 592 NW2d 724 (1998)). Furthermore, scoring must be proper, consistent, comply with the applicable ordinance and not an abuse of discretion. IV. ARGUMENT A. Tangible Capital Investment in the City of Lansing(Investment in applicants oticer provisioning centers was not Included in score). 2 -10- The scoring insight for this category states, in part, as follows: "Applicant...lacks Ownership and a definitive plan investing in a grow facility." This is erroneous as the applicant clearly states it will be investing in a grow at the 1121 River St. location AS WELL AS another larger 110,000 square foot facility (See Exhibit B). The scoring in this section also fails to recognize applicant has already made a commitment via signed legal documents investing in two provisioning center locations (6001 Pennsylvania and 3425 S. MLK) AND a processing center located at 1121 River St. Applicant was punished significantly (9 out of 15 points) because of a misinterpretation of the plan by the reviewer. The reviewer acknowledged the lease cost and cost of improvements to the first provisioning center and the cost of the processing building but disregarded or misinterpreted that another $1,000,000 in property improvements will be made to the second dispensary and another $1,000,000 (could be as much as $5,000,000) would be made to the processing center whereby an old dilapidated eyesore will be turned into a viable facility, and further choose to punish the applicant for what it believes is a non-committal to a fourth cultivation facility. A plain reading of this section of the application demonstrates a full committal to a fourth building as it says "we have targeted two potential properties", one of which applicant has under contract and the second which they are actively pursuing (See Exhibit B). The reviewer interprets this as a wavering committal however it's a full committal which has since been acted upon as the building is currently under contract with applicant's affiliate company. In regards to the fourth building the plan states "we would invest several million dollars in upgrading and retrofitting the facility to accommodate at least one, and possibly three large grow operations" (See Exhibit B). The reviewer's note that this is not a definitive plan is erroneous, inaccurate and a blatant attempt to "deduct" points where they should not be deducted. Although a specific figure is not given, 3 -11- "several million dollars" indicates a figure of at least$2,000,00045,000,000 and the score needs to reflect this tremendous additional investment in Lansing. Lastly, in the "plans to integrate facility" category the reviewer notes the applicant will "integrate the PC with its Class C license." In other words, the class C license is recognized in one category but not the other. This type of scoring is improper and inconsistent and must be adjusted upward by 6 points. B. Job Creation (Integrated System) Overall number of jobs created In the category entitled "Job Creation", the reviewers determined that "62 new Lansing jobs and up to 120 new jobs will be created if they pursue and open larger grow facility.... Falls short of optimal number of jobs and definitive created commitment to the larger grow facility." The applicant was only awarded 3 out of 5 points due to this alleged deficiency. Again, the reviewers finding of non-committal is inaccurate. The plan details applicants desire to obtain the building and without giving the address, which would be made part of the public record, identified the building by is square footage (See Exhibit C). It's clear the applicant wants the building and was aggressively pursuing the purchase of the same. As further evidence of improper scoring, the reviewer determined the job range was 62-120 when in fact the number is 62 plus jobs for "architectural, electrical, flooring, mechanical and plumbing" all from Lansing based companies in addition to the 120 jobs brought about by the cultivation facility (See Exhibit C). The total planned jobs for all business's is not 62, it is 62 plus tradesman plus 120 cultivation jobs for a total of well over 182 jobs which is more than worthy of an additional 2 points and a perfect score in this category. C. Charitable Plans and Strategies. 4 -12- Applicant provides specific examples of what they will do (e.g., coat drives, turkey giveaways, etc.,) and discuss their long term financial contributions based on meetings with each specified company (See Exhibit D). In fact, applicant pledges to give $50,000.00 for 2018 even though the facilities might not be open and operational. The plan calls for a $50,000.00 charitable contribution for the 41h quarter of 2018 alone (See Exhibit D). This is a substantial figure for only one quarter of operation. Obviously, charitable contributions don't decrease, they increase, and that is the applicants plan moving forward. The principle responsible for transcribing the plan clearly made a typographical error when typing the figure of 125,000". The proper figure, and in congruence with the stated 4 h quarter 2018 donation is 1250,000"for the entire year with plans to increase it by 25% each year. As evidence of this scriveners error, the applicant, Steve Kesto, has attached an affidavit attesting to the typographical error (See Exhibit E). $250,000 in charitable contributions per year is substantial and merits being awarded the full amount of points. In addition to financial contributions, the principles also encourage its employees and owners to volunteer their time. Specific references to charitable organizations represent more than mere conjecture and demonstrate proof of a well thought out plan. This plan along with the appropriate figure of $250,000 in charitable contribution commitments per year and volunteering time demand an additional 2 points for full points in this category. D. Number of Jobs at the Provisioning Center. This category deals with the"number of jobs"at the provisioning center NOT job description even though applicant gives a job title for each role. AEY clearly indicates "16"jobs per PC as well as ancillary jobs for tradesmen. It is improper and an abuse of discretion to take away points for "lack of details." Furthermore, AEY gives a title for each job held. Is it that hard for a 5 -13- reviewer to discern what a "security guard", "executive", or "Patient Outreach Manager" does? AEY can only assume a Medical Marijuana Provisioning Center reviewer would have a cursory knowledge of these roles in a cannabis business and would be able to identify general job responsibilities based on titles. Does an attorney need to explain his duties or is this common knowledge amongst professions? Explaining job duties to reviewer's who should have common knowledge of the cannabis industry in a category simply asking the # of jobs is unfair and unnecessary. Based on the # of PC jobs created an additional point should be given as anything less than a perfect score is an improper score and further abuse of discretion. E. Amount and type of compensation and Percent of Employees Earning at least$15.00 per hour Applicants "Job Creation" analysis demonstrates at least 84% of its employees will make over $15.00 per hour not 69% as noted by the reviewer (See Exhibit Q. The only job for which applicant is responsible for setting wages who may not initially earn $15.00 per hour is a "Packing Representative". Generally, security guards are contracted from security companies such a LaGarda or Prudential Security. The security contractor is responsible for setting its employee's wages. Applicant is not in a position to set wages for employees of companies it contracts with and therefore cannot be deducted points because of a third parties set wages. Additionally, the lone position who's purported hourly rate is under $15.00 per hour actually makes $15.22 per hour. When you take into account the # of hours worked per year (1,920 hours) minus 2 week's vacation you get 1,840 hours per year and makes the hourly rate $15.22 per hour. This position, as stated in the job creation plan also receives supervisor training and employment education provided by management to help these individuals move up in the company hierarchy. 6 -14- Applicant received 2 out of 5 points solely because one listed position (the entry level position) had an inaccurately listed hourly rate of$13.00 per when in actuality it is $15.22 per hour. A 3 point deduction is an abuse of discretion and an improper score. Applicant deserves at least an additional 2 points for high paying positions its offering and for paying 84% of its staff more than$15.00 per hour. F. Projected Annual Budget and Revenue The scoring insight for this category states that "Applicant provides annual budget and revenue numbers....and generally describes the sources of these numbers". The question posed in the ordinance has been answered. The ordinance did not call for a "spreadsheet" but simply asks for the annual budget and revenue which has been provided. An additional point is warranted for providing the information G. Improvements made or proposed to building The scoring insight for this category states (incredibly) "Some changes are indicated on the floor plans submitted"Please review the following which contradicts this statement: • Please see the section entitled "Planned Tangible Capital Investment in the City." Over $1,000,000.00 in improvements are planned. This documentation was submitted in compliance with the ordinance at §1300(12)(IV). • A full set of architectural drawings was submitted with the application materials. Included are the site plans, floor plans and building permits along with accessibility (ADA) notes and details all of which show significant improvements will be made. • Although the reviewer does note "some" improvements will be made its actually several thousand dollars in improvements which merit an additional point. H. Plan to minimize noise, In spite of the voluminous submissions by applicant addressing this issues, the applicant was awarded zero points for this category. In regards to noise, the applicant provided a full set of 7 -15- architectural plans with city building permit approvals for all required categories and compliance with the applicable building codes and SOP's which state how noise is reduced. Please add 2 additional points in this category(See application SOP's). L LPD Complaints Every single complaint listed in the reviewers comments deals with the prior tenant. How can the applicant be held responsible for incidents that have occurred under completely different ownership and long before applicant even signed a purchase agreement to purchase the property? Individuals/entities are not and have never been held accountable or punished for the acts of other people outside of their control. This aforementioned principle is the bedrock of the legal system. To deduct points for a previous history of complaints completely unlinked to the applicant is astonishing and the most egregious abuse of discretion imaginable. Applicant demands an additional 3 points be added as no history of LPD complaints against it or its owners exists or has been cited. J. Demonstration of Regulatory Compliance Applicants own and operate several cannabis facilities generating sales and revenue over $10,000,000.00. No issues are cited by the reviewer accept for what is termed a "minor tax issue" that was noted as corrected by the reviewer. The stakeholders demonstrate not one single issue with its business operation yet the reviewer deems it necessary to deduct one point for a minor tax issue that was cured, which was $50 in taxes owed from over 10 years ago. The applicants run very successful businesses with thousands of transactions a year without any issues, own licens6s pertaining to liquor, alcohol, tobacco, construction etc... This is yet another blatant attempt to deduct points for no apparent reason and represents a gross abuse of discretion. 8 -16- There is no reason a full score should not be given to applicant for its stellar record of regulatory compliance across North America. Please add 1 point in this category. K. Litigation History 0 out of 2 points in this category is absurd. First, the litigation disclosure form was provided and showed no history of litigation. For a multi-million dollar company to have no litigation history is an anomaly and should be rewarded not punished erroneously. Furthermore, as part of its "experience"section, applicants attest to the fact they have no litigation history. The applicant& stakeholder's significant business history and lack of litigation history demand 2 out of 2 points in this category. V. CONCLUSION On behalf of the applicant, we request an immediate review of this appeal as we have raised serious concerns about the competency of this review and scoring that has missed many items that were actually supplied. VI. RELIEF REQUESTED It is clear in this case that AEY's application was wrongfully denied and that it has now been unfairly stripped of its ability to receive a license. The City's denial is clearly inappropriate and inaccurate. WHEREFORE, Appellant respectfully requests the City Clerk order the City of Lansing to reverse its decision, award 26 additional points and give applicant approval for its Lansing Medical Marijuana Provisioning Center. 9 -17- spect ly submitted, MAaV IEV Stein, Esq 10 -18- EXHIBIT A 11 -19- City of Lansing Provisioning Center Ranking 11 otal A IP n a M01. AEYHOLDINGS,LLC AEYHOLDINCsS,LLC : a p !lean dd — 3425 S MLK lr Blvd W k"l xm �`M Mttve G Appllcantprovldesmanydc• minor minlmliatfon le.L,ate vedr cl—bsle,no ads ddMe3 farnkton,nodal media, 1! Warded apparel,etc.]. Ta`lbr ifal Inver a t~sus I t •♦Mof L3ns in Applicant Indicates they win lease the 3,724 sq.tL Welling at3425 S.MLK(or the prov(donfng centw IkwestlnC appradmatcfy$l mNlon In(mprovcments).opmtc a t 1 vest" en a ur-A me 9 second PC at 6OOl S.PA Ave..purdim a 36K sq ft.bu4dinC(ar vwo-sir C(59WK)mw at rU on g•Cene considering imrestingIra Lacks il LlOKw kbuld rag fort awing(scvml$m10on(. T sy ovmcrshlra and a der"thec plan for Invwdne Ina grow fadity. s nots n ude n sco:el r L,, Area AppOonl Indiroles about62new landnglobs and upm 120 newlobsiftheypursue and 3openthel+ggwfaallty.program Falls short or an optimal number oflabs and a definitive commitment to the largergrowbd'dy. '• Applinrst provides praol al acauto SS m'Obn with supporting doamenulbn(c.I.%10 panel I Strom re lener),linking this to theirbussness plan and anodpatedoperatk,g espentsm Note that p, 3 a naovmcragrecstopay57CKWfebutkmltdayso(r cl%ingbudnns Ooenteto .Inan rag operate the provisioning center(in addd(onto 54OK akeadyln place from the other owned.UnInt kuld assets more than rover S30O,M. L _ ♦ � a r a Plays oIntegratel.a..1. O 1 AWp ntindlatethWwUintctnlc Uwkprovhlonk%CanLerrithaOas%C(1SpO t Mshmerits plant![owopmfontobeloalcdat1121OMerFbad s -v �R •p�S Applicant pro•^des a ples of srganitati—th"—.Id like to partner with(.[.adapt —t a park coat drives,turkN av givarays.et.I and dicassses their long-term goal of spendInc Charitable P,rans and , t r _5. •t 2 575K/year to Comm.nity Mental Health,plus d—le computers and equipment to Strategies 'o J { schools,Fans dwn of optimal dollar commdmcnl potential and lades pros(ofactual . . payment or an eseated agreement. 0. as Nu E!to Jobs_ta the Pi'ovls n •a rate Catego r � res olds- 6 UbS,1 V den taus .2. Apocant ksdfolcs the provittard g—Le,r will have Wean 16 fuO4tmo safaded e16 Job-, fi aen eta 4 employees and provides a description of lob titles and salaries.Falls short of an optimal —6-0 5 end i 4 Ievcl of decals = 6 0 a Ii en eta , od. 5-- 6 obsess aentJ g " 8eia1 ►p �Ri l Applicant lMletesthat rwtiaprovkfoning curler lwsLomvnll payatkxt$15W a to hour.Falls short or the optimal amount of compensation and support deull. Pe een n iElnpr� a s ran : / o e 1 ApPllamindlatesllo116(69XJpravislon4tgrentercmpioyeosw0leamasitars tyt .�P S15Rcot,Falls short of the optimal percenute. �+ :a 'y a1 ti7 -'/ ApPllont pravldes lxojeacd amuH!»+deaf and rtvrn+e slumbers(.gY 51.4 million In e ua 03 d e cape—and SL6 mllton lnreveraves)and genen0y de—b.the source d lhese Fla d Re'ven Ca PC"t 1 L numbers.However,LhN do not provide my fine llem details(Le,rinandal spreadsheet) cm inghowlhesenumbesswvedenccd Lickswrfidentdetals. a . -20- City of Lansing Provisioning Center Ranking .o' 4 0 Applfantprovideslidgalfon compliancev iflaOon forms for all icy teammcmben. ;U FIGILa t maneial), eso 5 Applluntpraves theyhave mwethan 51O0KIn the bank and access to a SS million One ' al of ue&t from a respected knder. S Appllant I.di.tet they have at least 9 years of medial manhuana Industry eapulencd, t- Bus et eta t 5 plus deadcs of other applloWe butinms ecpeden (retail management,highly _ regulated liquor Indunry,etc),dus hm aurae to an advfsary board who have dmdes of appfkabfe eepedenc. .acd aont I ortna o •P d to lis o m edd CI] e"ntato , Treasury kite fwmnorlssue and Faullry Planl<ster to cure hom bold ngsafery n dt g eala Ing o s t B ern be w en reside la) O edra gas. n s Good bankn&distance from retldentlal esta list] en �nere a tla o "d t y s Tee wit e s red owe 5 5 Gaaa plan �W. 1pec o a n e pat g 0 30 Tier IA♦Scwrhy Wary spit lraflc,5uong trafflepttcros,drfvcwao,parting,and al gets, d—Itlon ri .P a an to ee -I��_ 1 tab 10 �Elm ro� de or sr� %,3 osedto u z someatangnarerndateaon the n«oplancwbndntd an o "m ih ze a il'Ina te � 1 traffic plan Included a 'o r im elm Ew Hors a It o Inadquate nose plan .I to o nlmize.eli�Ina e i 0 0 A 3 three Independent air rdtration technologies m an y - 1 20EE W--1 BarNeck-1 OgErepan-t rgtd ta1.7 Dour-I MDOP a1.7 mrdfol ab-a _ , aa6e vosAb gals-I trtrpataiq Tbh may M Vita strip uu1.25 ah De o ofiRegu ato 3 minor tat tatue z' C?olrip lance' '� '* tlgaati.6 Histo a Inadequate hhtory for Stateholder Ota l a.to Q� 74 -21- EXHIBIT B 12 -22- PLANNED TANGIBLE CAPITAL INVESTMENT We are committed to heavily investing in the City of Lansing and bringing significant economic development to the area. To this end, our ownership group is seeking two provisioning center licenses in the City(one at 6001 South Pennsylvania Avenue and one at 3425 South Martin Luther King Jr. Boulevard),as well as one processor license(located at 1121 River Street)and at least one 1,500 plant Class C grower license (located at 1121 River Street), with a desire to increase this investment over time. Lansing has welcomed the medical marihuana industry,and we hope to establish a significant, long-term economic relationship with the City. Concerning our provisioning center operations, we anticipate that each facility will create approximately 16 full-time, salaried jobs. As discussed herein,those jobs include: • Executive—$80,000 annual salary • Chief Operations Officer/Facility Manager-$70,000 • Patient Outreach Manager-$60,000 • Quality Assurance/Control Technician-$55,000 - • Nurse Field Representative- $50,000 • Sanitation Specialist- $45,000 • Office Manager-$45,000 • Community Outreach and Patient Education Specialist-$40,000 • Addiction Prevention Directors-$40,000 • Inventory Control Manager- $35,000 • Order Fulfillment Representative-$34,000 • Security Guards -$30,000 x 4 • Packing Representative- $28,000 Thus,these 32 provisioning center positions would contribute approximately $1.4 million in new annual wages in the City, all of which would be subject to the City's income tax. These amounts are in addition to revenue related to property taxes, personal property taxes, application and renewal fees,and the City's share of excise tax revenue under the Medical Marihuana Facilities Licensing Act. Moreover, wherever possible, we will look to hire Lansing residents for each of 26259177.1 -23- these positions, meaning that these wages would stay in the City and that the City's income tax revenue would be greater than if we hired non-residents. To date, we have also targeted two potential properties within the City that can house our grow and processor facilities: one is a 39,000 square foot industrial building that is currently occupied and the other is a vacant 110,000 square foot facility. On October 10, 2017, our ownership entered into a purchase agreement for the 39,000 square foot building located at 1121 River Street in Lansing(tax parcel identification number 33- 01-01-21-279-041) for a price of$900,000. We are currently in the due diligence period with regard to this property, but intend to close shortly. As soon as we close on this property,we will submit an application for a Class C grow license and a processor license under 5273 LLC. Our intent is to invest approximately $1 million dollars in upgrading and building out this facility to accommodate one, and possibly two, Class C grower licenses, as well as a processor license. In undertaking this project,we are looking to partner with local contractors,architects,and engineers. To date, we have spoken to a number of Lansing-based companies and identified the following companies as those that we would retain for these projects: • Architectural—Rockwood Design, PC, East Lansing • Electrical—A/C Electric, Lansing • Flooring—Lansing Tile& Mosaic, Inc., Lansing • Mechanical—Superior Mechanical LLC, Lansing • Plumbing—Honeycutt Plumbing, Lansing In addition to the money spent on Lansing-based contractors,as a result of this project,we would create approximately 30 full-time employment positions, and would look to first hire Lansing residents. Depending upon skill, education, and experience, these positions will each pay approximately $20440 per hour in wages. This would result in approximately $1.25 million to $2.5 million per year in new wages paid in the Lansing area, in addition to increased property tax 26259177.1 -24- revenue, application and renewal fees, and the City's share of the excise tax revenue under the Medical Marihuana Facilities Licensing Act. Additionally,if we obtain the 110,000 square foot facility,our investment in the City would be even larger.The facility is currently vacant, so we would return it to productive status,thereby increasing tax revenue to the City. Additionally, we would invest several million dollars in upgrading and retrofitting the facility to accommodate at least one, and possibly three large grow operations.Again,we would look to hire local contractors,architects, and engineers in completing this construction. As a result of procuring this larger facility, we would likely create at least 60 full-time positions, also looking to first hire Lansing residents. Again, depending upon the circumstances, these positions would pay approximately$20440 per hour. In addition to property tax revenue,application and renewal fees, and the City's share of the Medical Marihuana Facilities Licensing Act excise tax, this facility would generate approximately $2.5 million to $5 million in new wages in the City. Overall, with our two provisioning centers, one grower,and one processor,we will create approximately 62 new jobs in Lansing, and contribute roughly $2.65 million to $3.9 million in annual wages. Additionally, if we are successful in opening our second, larger cultivation facility, we will contribute a total of approximately 120 new jobs with Lansing-based wages totaling approximately$3.15 million to $8.9 million annually. Few municipalities in the State are as well-positioned as Lansing to benefit from investment in the medical marihuana industry, and we are committed to being a positive part of that investment. We look forward to partnering with the City to create a long-term economic relationship that positively benefits us both. 26259177.1 -25- EXHIBIT C 13 -26- EXPECTED JOB CREATION ESTIMATES As discussed above,we are looking to make a significant investment in the City of Lansing, both in terms of job creation and economic development. Moreover, for all of our positions,we would look to hire residents of the City of Lansing wherever possible, and we are looking to offer competitive wages, salaries,and benefits to our employees. For each of our provisioning centers, we anticipate creating at least 16 full-time, salaried positions per facility,with the following titles and salaries: • Executive—$80,000 annual salary(438 per hour) • Chief Operations Officer/Facility Manager-$70,000 (—$34 per hour) • Patient Outreach Manager-$60,000 (429 per hour) • Quality Assurance/Control Technician- $55,000 (—$26 per hour) • Nurse Field Representative-$50,000 (424 per hour) • Sanitation Specialist- $45,000 (—$22 per hour) • Office Manager-$45,000 (—$22 per hour) • Community Outreach and Patient Education Specialist-$40,000 (—$18 per hour) • Addiction Prevention Directors -$40,000 (—$18 per hour) • Inventory Control Manager- $35,000 (—$17 per hour) • Order Fulfillment Representative- $34,000 (—$16 per hour) • Security Guards- $30,000 x 4(—$14 per hour) • Packing Representative-$28,000 (—$13 per hour) As noted above, we are applying for two provisioning center licenses in the City. This means we will create a total of 32 new jobs with annual wages of approximately $1.4 million. Additionally, nearly 70 percent of our employees will earn more than $15 per hour in wages. Additionally, as discussed above, we currently have a purchase agreement in place for a 39,000 square foot building located at 1121 River Street in the City. We will be applying for at least one Class C(1,500 plant) license at this facility,as well as a-processor license.Consequently, as discussed above, we will create at least 30 additional jobs,all of which will pay approximately $20-$40 per hour in wages. In total, we plan to create at least 62 new jobs in Lansing, and contribute roughly$2.65 million to$3.9 million in annual wages.Additionally,if we are successful 26259177.1 -27- in opening our second, larger cultivation facility, we will contribute a total of approximately 120 new jobs with Lansing-based wages totaling approximately$3.15 million to$8.9 million annually. 26259177.1 -28- EXHIBIT D 14 -29- CHARITABLE PLANS AND STRATEGIES Like all of our other businesses,we want to be good corporate citizens and good neighbors. We also understand that marihuana still has a stigma, and that, because of this, proactive and positive outreach is important. To this end, we have developed a comprehensive plan to engage in charitable activities that will benefit the Lansing medical marihuana community and the City at- large. All charity begins at home and,for us,that means investing our time,resources,and energy in our neighborhood. To this end, we are currently looking for local parks and playgrounds that we can"adopt" and maintain, whether that be landscaping, repairing or repainting equipment,or ensuring that the park is properly supported. We also wish to not only donate our time, but also our resources.To this end, we will actively look to sponsor events throughout the City of Lansing, whether that means sponsoring 5K races or golf outings. While we are not in the general vicinity of residential areas, we also want to help the residents of south Lansing. To this end, we will be organizing various events throughout the year that will help to benefit area residents. For example, we plan to organize a coat drive in order to provide needed winter clothing to many in the area. Similarly, we will be using our facility as a drop-off location for a number of charitable causes, including receiving gifts for Toys for Tots near the holidays,and also operating a canned food drive for our employees and customers.Finally, we are also planning to host a Thanksgiving turkey giveaway,with the hope of giving away more than 100 frozen turkeys to area families in need. As a medical marihuana retailer, we are also very sensitive to issues related to substance abuse in the community. As a result, we are committing to donate approximately $100,000 over the next five years to the Community Mental Health Authority of Clinton, Eaton, and Ingham 26259177,1 -30- County for its Substance Abuse Services and Corrections Mental Health programs. These donations will go to assist individuals suffering from drug and alcohol dependency in the Lansing area, and will also help individuals incarcerated in local jails to overcome substance abuse issues that may be the root cause of their criminality. Additionally, we plan on offering reduced prices to certain segments of our customers. First, we believe that marihuana is a beneficial medicine, and that it should be affordable to all who might benefit from its use.This is particularly important as insurance does not cover medical marihuana use, as it does with prescription medications. Recognizing the cost of this substance, we will offer reduced prices to individuals who are below certain income thresholds. Moreover, we will also be offering reduced prices to individuals who are veterans of the armed services.It is well-documented that many veterans who have returned from war zones suffer from Post- Traumatic Stress Disorder,and that the use of medical marihuana can greatly benefit many of these individuals. As such, in recognition of their service to our nation, we will be offering discounts to United States veterans. Finally,we are an industry that is heavily-reliant upon science and technology.To this end, we are absolutely dependent upon employees who are knowledgeable about those topics. Thus, we wish to partner with Lansing Public Schools in order to donate computer and laboratory equipment that can be used in teaching science, technology, engineering, and mathematics ("STEM") classes. 26259177.1 -31- EXHIBIT E 15 -32- AFFIDAVIT OF STEVEN KESTO STEVEN KESTO, first being duly sworn, states: 1. I am a Michigan resident;and owner of AEY HOLDINGS, LLC. 2. I spoke to the lawyer for AEY Holdings, LLC for our Medical Marijuana Provisioning Center application to the City of Lansing in regards 3. As part of the application I was in charge of advising the lawyer the charitable contribution plan. 4. The lawyer made a typographical error when transcribing the amount of charitable contribution AEY Holdings, LLC will provide each year.The figure written of "$25,000" per year is incorrect. The proper figure should have read"$250,000"per year as that was the commitment made by my client,AEY Holdings,LLC. FURTHER AFFIANT SAITH NOT. I declare under oath that the above statements are true to the best my knowledge, information and belief. $' /3 kax ATE Stev STATE OF MICHIGAN ) )ss MAY A TOU&JAS COUNTY OF OAKLAND ) FNOTARy PUBUC-STATE OF MICHICM CwN�of atxtArv2, Subscribed and sworn to 2, o County before me on this�Ziay - of August,2018 _ Notary Public oun •,Michigan, _ Acting in County - - My Commission Expires: 2 (00176930) 1 -33- Medical Marihuana Application: AEY Holding City Clerk Summary of Key Findings Tangible Capital Investment Because of the City's declared interest in promoting economic development, including job creation and training, and the protection of public health, safety, and welfare of the City and its residents, tangible capital does not include investment in other prospective provisioning centers because this is limited City resource and promoting the monopolization of provisioning centers inconsistent with the legislative intent of the ordinance. The Clerk's Office defines a tangible capital investment as an asset that has a physical form. Noise Plan In response to the Appeal statement that the "SOP" stated how the noise was reduced, an additional review of the six different "SOP" sections found no heading or details about a noise reduction plan. Floor and building plans were not reviewed in any application to determine for scoring noise reduction plan. Litigation History After further review, the missing stakeholder litigation form for the second stakeholders was found in the Net Worth and Bank Statement section, not in the Litigation History section. Two points should be added. However, the new score of 76 points is still too low to make it into the top 20. -34- kƒ// 0 , ƒ/ƒIƒ 0 § Kemp / 2Eo> 2� ee § _-_� E £ §m P om R - = <5 a#G: • e\=E7 < a] 2 §J ) § (Dj2 ° {}}/ /%� ƒ� nƒ � eg � n N) w \222E q \3 ƒ/ w0 / a /ƒ }}/ §_ @ a = k2 _7 � m4\ o \ qR CD}B E2 §ƒ ;ee y 3 ƒ $ ƒ in § §{f 2 \ / oo - ; moo_ -e» c o Q c ® , $ \ ocn ° � ® / � / & am ƒ 2 c § § §k ° o AcD \{( R E 5 K ƒ 2 2 \a c t r _ $ E ( o %#: a — m ®%§ 0 EQ ° _ �\ @� m8� \ \} \ CD \\\ / © § / / 2 / { / w 2 /\ \ / CO a) 7 / E < / W /\ \ }� /}\ 0 0 / , = o n CD R ; _ !; o c m c r m CD 5 [ m ; \ /!/ & w @ ( ] 0 (coW / C) \ƒ« q / 2 / \ �/ } } R (\/ . % .. } / \k2 \\ /\_\ & �� ° , @ / �k Cl) m J -35- SI �G Chris Swope r G Lansing City Clerk CHI September 19, 2018 AEY Holdings LLC 34841 Mound Road Suite 297 Sterling Heights, MI 48310 Dear Provisioning Center Applicant, I have reviewed the record for the application, and the report and recommendation of the Hearing Officer on your appeal of the Scoring and Ranking denial of your application to operate a Medical Marihuana Provisioning Center in the City of Lansing at 3425 S Martin Luther King Jr Blvd. I have determined your appeal is denied. You have the right to appeal this denial of licensure to the Medical Marihuana Commission within thirty (30) days of the date of this letter by filing a written statement to the Commission with the City Clerk's Office. The Medical Marihuana Commission Appeal will become a matter of public record. The Commission's review of an appeal shall not be de novo. The Commission shall only overturn, or modify, a decision or finding of the Clerk if it finds such decision or finding to be arbitrary or capricious and not supported by material, substantial, and competent facts on the whole record considered by the Clerk in arriving at such decision or finding. Chapter 1300 provides that should the applicant not receive a license, one-half the application fee shall be returned. This refund will be processed after all appeals are exhausted. If you have begun business operations pursuant to State Emergency Rule 19 and Executive Order 2017- 02, you must cease operations. Operations may resume only if your appeal is granted and the requirements of the temporary operation are satisfied. Sincerely, C;44- _ a� Chris Swope, CMMC City Clerk cc: M. Yankowski, Lansing Police Chief J. Smiertka, Lansing City Attorney Lansing City Clerk's Office Ninth Floor, City Hall, 124 W. MiChinar, Ave,, Lansing, MI 48933-1695 517-483-4131 -36-377-0068 FAX %AAAHA/ lnncinnmi nnWrlarlt rity rlerk(ny Innsinnmi nnv Hilary M. Barnard Attorney at Law CITY OF LANSING HEARING OFFICER DECISION RECOMMENDATION In Re: AEY Holdings, LLC Location: 3425 S. Martin Luther King Jr. Blvd. Provisioning Center License Scoring and Ranking Denial This decision is remitted to the Clerk of the City of Lansing by Hearing Officer,Hilary M. Barnard, Esq., having been read and informed on the issues recommends that in regard to AEY HOLDINGS, LLC and its license application for a Medical Marihuana Provisioning Center that the license application remain denied. FACTS AEY HOLDINGS, LLC ("Appellant") applied to the City of Lansing to operate a Medical Marihuana Provisioning Center within the city limits. This recommendation follows an appeal from Appellant's counsel in the form of a brief.' By letter dated August 3, 2018, Appellant was informed that its license application was denied because of its score and rank, having received a score of 74 out of 100. Appellant was informed that this score eliminated the possibility of scoring in the top twenty applicants and that it would not be receiving a provisioning center license. Appellant was also informed that it had the right to appeal the denial within 14 (fourteen) days of the letter's date by written statement with grounds for appeal. With the August 3 letter, Appellant was provided a copy of the City of Lansing Provisioning Center Ranking sheet for its business. On the document, Appellant is able to view the total possible points, its attained points, and short insight statements The largest deficiency on Appellant's ranking sheet is Tangible Capital Investment where Appellant earned a 9 out of possible 15. Appellant also has several point deductions in a variety of categories. Appellant's Position Appellant argues, through counsel, in its brief 5 (five) key issues: (1) That the reviewer's decision was not supported by competent material and substantial evidence; (2) Appellant's scores were based on clearly erroneous findings; (3) Appellant's scores were based on improper/inconsistent scoring; (4)The scoring did not comply with Lansing's ordinance; and(5)The clerk should reverse the decision to deny the application. There is no discernable date on Appellant's brief. Pa_37_f6 Hilary J1. Barnard Attorney at Law City Cleric Position In its summary, the City clerk iterated that tangible capital investment is an asset with a physical form. Further, that floor and building plans for this business location were not reviewed in the application to determine a score in Appellant's noise reduction plan. However, the missing litigation information was found in a different (incorrect) section of Appellant's application. Thus, Litigation History should have 2 points. No further documentation was received from Appellant regarding the subjects of this appeal. As the City Clerk's office recommends a 2 point addition to Appellant's score, this Hearing Officer will begin with Appellant's score at 76 out of 100. APPLICABLE LAW & REASONING The issue is whether Appellant's score and rank for a Provisioning Center License for the City of Lansing was erroneously calculated resulting in license application denial. In regard to the issuance of licenses and the appellate process for a license: "The City Council shall provide, by ordinance, a procedure for the issuance of licenses and permits. The ordinance shall, to the greatest extent possible, place the responsibility for the issuance of licenses and permits under one official in order that persons requesting specific licenses and permits will not have to contact more than one City office."2 At the denial of a license under City of Lansing Ordinance No. 1217, an applicant: May appeal to the city clerk,who shall appoint a hearing officer to hear and evaluate the appeal and make a recommendation to the clerk. Such appeal shall be taken by filing with the city clerk, within 14 days after notice of the action complained of has been mailed to the applicant's last known address on the records of the city clerk, a written statement setting forth fully the grounds for the appeal. The clerk shall review the report and recommendation of the hearing officer and make a decision on the matter. The clerk's decision may be further appealed to the commission if applied for in writing to the commission no later than thirty(30)days from the clerk's decision.3 2 See LANSING CITY CLERK'S OFFICE, City ?f Lansing City Charter(as amended)at 24(2015)available at: https://www.lansingmi.gov/DocumentCenter/View/2126/City-Charter?bidld=. In this instance,the license issuance is handled with the City Clerk's office. City of Lansing Ordinance No. 1217 Sec, 1300.15(C). Pe_38->f 6 Hilary Imo Barnard Attornev at I aw [The] [r]eview of an appeal shall not be de novo. The commission shall only overturn, or modify, a decision or finding of the clerk if it finds such decision or finding to be arbitrary or capricious and not supported by material, substantial, and competent facts on the whole record considered by the clerk in arriving at such decision or finding.4 The arbitrary or capricious standard of review is the commission's review and is adopted by this Hearing Officer.5 Arbitrary and capricious have generally accepted meanings.6 Arbitrary is "without adequate determining principle . . . [f]ixed or arrived at through an exercise of will or by caprice, without consideration or adjustment with reference to principles, circumstances, or significance, . . . decisive but unreasoned."' Capricious is "apt to change suddenly; freakish; whimsical; humorsome. ,8 Whether an applicant can submit supplemental materials on appeal, the Lansing Ordinance in Section 1300.5(B) states that "[a] complete application for a license or licenses required by this chapter shall be made under oath on forms provided by the city clerk, and shall contain all of the following[.] The ordinance then enumerates all the documents and information required for application submission. Under the City of Lansing Ordinance No. 1217 Section 1300.6, review of an application will consider: (13)(2) Whether the proposed establishment will be consistent with land use for the surrounding neighborhood and not have a detrimental effect on traffic patterns and resident safety. . . . (3) Planned outreach on behalf of the proposed establishment, and whether the applicant or its stakeholders have made, or plan to make, significant physical improvements to the building housing the medical marihuana establishment, including plans to eliminate or minimize traffic, noise, and odor effects on the surrounding neighborhood[.] (13)(3) Planned outreach on behalf of the proposed establishment, and whether the applicant or its stakeholders have made, or plan to make, significant physical improvements to the building housing the medical marihuana establishment, including plans to eliminate or minimize traffic, noise, and odor effects on the surrounding neighborhood[.] 4 Id. at 1300.3(E). s There is an inherent binary in license issuance: issued or denied, not a spectrum of decisions.Given that this is a licensing situation, and that the only prescribed review under Ordinance No. 1217 is arbitrary and capricious,that is the standard that will be observed here. e See Bundo v. Walled Lake,395 Mich. 679,703 (1976)(citing United States v. Carmack,329 U.S.230,243 (1946). Id. g Id. Pa.-39-f 6 Hilary IVI Barnard Attorney at Law (B)(4) Whether the applicant or any of its stakeholders have a record of acts detrimental to the public health, security, safety, morals, good order, or general welfare prior to the date of the application; whether the applicant or any of its stakeholders have previously operated an illegal business of any kind, including any violation of Lansing medical marihuana moratoriums. (D) In the event that there are more applicants for provisioning center licenses who meet the minimum requirements set forth in 1300.6(B) than there are licenses available in either phase one or two, the top scoring twenty(20)applicants in phase one and top scoring five (5) applicants in phase two, shall be eligible to receive provisioning center licenses in accordance with the assessment,evaluation,scoring, and ranking procedures established in this chapter[.] Pursuant to Section 1300.5, in its application an applicant is to include in its business plan: (12)(V) Expected job creation from the proposed medical marihuana establishment(s) . . . (X) Community outreach/education plans and strategies [and] (XI) [c]haritable plans and strategies, whether fiscally or through volunteer work. The Lansing Ordinance incorporates provisions and definitions of the Medical Marihuana Facilities Licensing Act, 2016 PA 281 (as amended) ("MMFLA") so as to: "not limit an individual's or entity's rights under the [Michigan Medical Marihuana Act (MMMA)], MMA or the [Michigan Tracking Act (MTA)]" and drafters intended that "these acts supersede [the] ordinance where there is a conflict."9 A Lansing applicant must then comply with the MMFLA.10 Pursuant to Sec. 402 of the MMFLA, in evaluating an applicant for licensure, an applicant's history of "noncompliance with any regulatory requirements in this state or any other jurisdiction" will be considered." Per Michigan Court rule, appeals are based on the record already in place.12 Further, an appellate body will generally not consider issues not raised in or ruled on by a lower review.13 The appellate review is limited to the record before the lower court at the time of the relevant decision. Here, this Hearing Officer will decline to review any supplemental materials provided by Appellant in effort to cure application deficiencies. Per requirements in the Lansing Ordinance in Section 1300.5(B)and general state appellate practice, review on appeal is to the record originally City of Lansing, Michigan Ordinance No. 1217 Sec. 1300.2(C). 10!d at Sec. 1300.2(D). " MMFLA, MCL §333.27402(3)(g). 1'See e.g., MCR 7.105(B)(4);(5)(d)(requiring that the appellate court receive a certified copy of a case's record and stating review of a trial court's decision was for legitimate reason based on"arguable support in the record[.]") "See Napier v.Jacobs,429 Mich. 222,232-35(1987). Pa_40 J 6 Hilary IV. Barnard Attorney at Law provided and reviewed. See e.g., Napier v. Jacobs, 429 Mich. 222, 232-35 (1987).14 Thus, this review will address the appeal on Appellant's first basis and the application as originally provided. Appellant addresses a standard of review. The arbitrary or capricious standard of review is the commission's review and is adopted by this Hearing Officer.15 Arbitrary and capricious have generally accepted meanings.16 Arbitrary is "without adequate determining principle . . . [f]ixed or arrived at through an exercise of will or by caprice, without consideration or adjustment with reference to principles, circumstances, or significance. . . . decisive but unreasoned."17 Capricious is "apt to change suddenly; freakish; whimsical; humorsome."18 Thus, here Appellant needs to demonstrate that the decisions are arbitrary or capricious, not as Appellant articulates under its Standard of Review. Appellant raises a Tangible Capital19 argument. Capital is understood to be "[m]oney or assets invested, or available for investment, in a business"20 Further, the City Clerk has articulated that Tangible Capital is rooted in a physical object. Appellant argues that two other locations have commitments. However, this application is related to this location. The tangible capital calculation did not include capital related to other facilities that are owned by Appellant. The calculation was related to the specific location of this facility. While capital exists for the organization it was not sufficiently addressed as to the location of this facility. The scoring and Appellant's arguments under tangible capital merit no further point allocation. It should be noted that under sufficient financial resources, Appellant did receive full marks. As to Appellant's other categorical arguments, any argument related to Appellant's other facilities which are not the primary subject of this application are without merit and will not be addressed further. In addition, under an arbitrary and capricious argument, Appellant has not met its burden. It is not enough for an appellant to"simply announce a position or assert an error[.],,2' Thus leaving the overseer of appeal to"discover and rationalize the basis for his claims, or unravel and elaborate for him his arguments, and then search for authority to either sustain or reject his position."'-2 Litigation History, as already addressed, merits 2 additional points for Appellant. " In this case it discusses that an"exception that review is permissible 'to prevent a miscarriage of justice."'"Most jurisdictions recognize the authority of an appellate court to review an issue,even where the issue was not preserved,when some fundamental error would otherwise result in some egregious result."However,that"such power of review is to be exercised quite sparingly.Napier,429 Mich.at 233. Under the facts presented,there is not a fundamental error so as to trigger exercising supplementing on appeal. 15 As discussed supra. See Bundo v. Walled Lake, 395 Mich. 679,703 (1976)(citing United States v. Carmack,329 U.S.230,243 (1946). " Id 18 Id "' Also encompassing Appellant's financial resources argument. 20 Capital, Black's Law Dictionary(7th ed.). 21 See People v. Kevorkian, 248 Mich. App. 373, 389(2001). '-Z Id. While Appellant has provided a brief, its brief falls short of the appropriate and necessary standard of review. Pa-41--f 6 Hilary t o Barnard Attornev at Law CONCLUSION For the foregoing reasons, it is recommended that Appellant be awarded 2 (two) more points in its scoring. However, seeing as this total would create a total score of 76/100, Appellant still would not meet the threshold for scoring in the top twenty applicants. Therefore, it is recommended that Appellant's application for a provisioning center license remain denied. Respectfully Submitted, Hilary 14. Barnard, Hearing Officer' Pa;-42-F6 9 / om � ) gEo> U. V) //_//0 / ®� /227k (n0 /$} G/&/\ F _J2 0 - —w � �_; O222. m Tie§ ; _§ Or 2 Q3ƒ§ m s� 3I ° � § G X a 7 CD § k § nEo a g ® m - o� @ 2 - ;z)0 o } // / \ 5mF co � § §\> 2� y o "' :-<cr ƒ/ 7 22 ° �& ) ( }2 = c= & m %/§ /g R ® \ Co m Q m 8 m _ / & 2 - / E/ 4 9( Fk; r S -J � / 2 m ƒ / / / D f f \ ƒ 2 ƒ CO 0 a / § 0 // / ��� ƒ 2 / / k / Cr \ ƒ 7 ' 7 / (D / /\ \ /\ }}/ \ k $ - ) -0 k & ® § E _ _ co CD Cl Zo / / ƒj =/k . m CD co ° ) f -43- y�N S I�C t Chris Swope r Lansing City Clerk September 28, 2018 AEY Holdings, LLC 34841 Mound Road, Suite 297 Sterling Heights, MI 48310 Dear Medical Marihuana Provisioning Center Applicant, The City Clerk's Office is requesting clarification of your provisioning center application at 3425 S. Martin Luther King Jr. Blvd in regards to Ordinance 1300.6 B (3) which states: "whether the applicant or its stakeholders have made, or plan to make, significant physical improvements to the building housing the medical marihuana establishment." In reviewing your application, clarification is requested on the following: Under Tab 10, Section 'Financial Stability and Experience and Stakeholder History'it states that the applicant has up to $5 million to begin renovations but also implies that this money will be used to help fund other operations. Under Tab 10, Section 'Short and Long-Term Goals and Objectives' (No Page Number) it is stated that the applicant plans to invest $1 million in upgrading all of their facilities, Please provide a detailed breakdown by category and location of the improvements that will be made with the $5 or $1 million in investment so your application can be accurately reviewed. We would appreciate your response within five days so that we can complete the review of this section. Any responses received later will be considered late and not eligible for consideration. Any questions about this request, please let me know. Sincer ly, Brian P. Jack n Chief Deputy City Clerk, CMMC Lansing City Clerk's Office Lansing City Clerk's Office Ninth Floor, City Hall, 124 W. Mic`:---i Ave., Lansing, MI 48933-1695 517-483-4131 S-44-377-0068 FAX � / ƒ M.I CD 0 m g g / § � 777A/£ \\\�\ ; ate Ee ( m § � )2 ~ /� E - /] U�2 \z){ . � ® ®S - Co. \ ® k ƒ � � Sy) 2= < �. CD / \_/ K o \ §ID /k ��! k 2 « k \ § k� \ 2 \ / /{ A2 \ 2R$ /}/ k ƒ *k ® j CD CCf C S o , R / Emm &! ƒ 3 § \ � o � � , = E � 4 2n90 �&c � / {E $ E } � ° / \\ƒ § R a 2 //% a 0 q � a � @% A �0 2 \ [- _\ }k\ g � =OL m 2 � @ Q / _ / C � �� « k © Z \ f ; 9 a Co.m � a k } � _(\� 2 CD Ti 2 \ k ( CD ) \ y (0 ° q (D c m I § / ; � ® }�} q ® co 0 §En wo \ /\ \/I § m / � � /§ CD « � � j � � 0 � � = 0C , 2Er m ƒ 3 3 p m COO -45- S r�G Chris Swope • Lansing City Clerk G. October 5, 2018 AEY Holdings, LLC 3481 Mound Rd. Suite 297 Sterling Heights, MI 48310 Dear Provisioning Center Applicant, Based upon your appeal and due diligence by the City Clerk to ensure the most accurate and appropriate scoring, please find enclosed an updated score sheet relating to your application for licensure. The attached revised sub-scores are based on the criteria posted on https://www.lansingmi.gov/1674/Medical-Mariivana-Application-Information and a brief summary of determining factors for each sub-score. The Lansing City Ordinance section 1300.6 discusses Provisioning Center license application evaluation. Your score of 75 out of 100 eliminates the possibility of scoring in the top twenty. Therefore, your application for licensure is denied. You have the right to appeal this denial of licensure to the Medical Marihuana Commission within thirty (30) days of the date of this letter by filing a written statement to the Commission with the City Clerk's Office. This letter supersedes your previous denial letter, and re-starts the 30 day period to request an appeal. The Medical Marihuana Commission Appeal will become a matter of public record. The Commission's review of an appeal shall not be de novo. The Commission shall only overturn, or modify, a decision or finding of the Clerk if it finds such decision or finding to be arbitrary or capricious and not supported by material, substantial, and competent facts on the whole record considered by the Clerk in arriving at such decision or finding. Chapter 1300 provides that should the applicant not receive a license, one-half the application fee shall be returned. This refund will be processed after all appeals are exhausted. Lansing City Clerk's Office Ninth Floor, City Hall, 124 W Michigan Ave, Lansing, MI 48933-1695 517483-4131 517-377-0068 FAX www.lansingmi.gov/cle_46_ty.clerk@lansingmi.gov If you have begun business operations pursuant to State Emergency Rule 19 and Executive Order 2017-02, you must cease operations. Operations may resume only if your appeal is granted and the requirements of the temporary operation are satisfied. Sincerely, C�4-1 iv-7w Chris Swope, Master Municipal Clerk Lansing City Clerk CC: City of Lansing Law Department Lansing City Clerk's Office Ninth Floor, City Hall, 124 W Michigan Ave, Lansing, MI 48933-1695 517-483-4131 517-377-0068 FAX www.lansingmi.gov/clef 47 :y.clerk@lansingmi.gov City of Lansing Provisioning Center Ranking 10/5/2018 Tota I Applicant Name Posslbl HOLDIANGS,LLC EY AEY HOLDINGS,LLC e Points Applicant Address ___ MARTIN 3425 S MARTIN LUTHER KING JR BLVD LUTHER KING Marketing, Advertising Applicant provides many detailed examples of marketing,advertising,promotion,and 4 4 minor minimization(e.g.,age verified website,no ads designed for minors,social media, and Promotion branded apparel,etc.). Tangible Capital Applicant indicates they will lease the 3,724 sq.ft.building at 3425 S.MLK for the Investment in the City of provisioning center(investing approximately$1 million in improvements),operate a 15 9 second PC at 6001 S.PA Ave.,purchase a 39K sq.ft.building for processing($900K)and Lansing considering investing in a 110K sq.ft.building for growing(several$million). Lacks ownership and a definitive plan for investing in a grow facility. Job Creation Applicant indicates about 62 new Lansingjobs and up to 120 new jobs if they pursue and (Integrated System) open the largergrow facility. Types ofjobs are detailed along and workertraining 5 3 program. Falls short of an optimal number ofjobs and a definitive commitment to the Overall number of jobs created larger grow facility. Applicant provides proof of access to$5 million with supporting documentation(e.g.,XIB Financial Structure and letter),linking this to their business plan and anticipated operating expenses.Note that 3 3 one owner agrees to pay$70K by five business days of receiving business license to Financing operate the provisioning center(in addition to$40K already in place from the other owner). Existing liquid assets more than cover$100,000. Plans to Integrate Facility with Other Z 2 Applicant indicates they will integrate their provisioning center with a Class C(1,500 plant) grow operation to be located at 1121 River Road. Establishments Applicant provides examples of organizations they would like to partner with(e.g.,adopt a Charitable Plans and park,coat drives,turkey giveaways,etc.)and discusses their long-term goal of spending 4 2 $25K/year to Community Mental Health,plus donate computers and equipment to Strategies schools. Falls short of optimal dollar commitment potential and lacks proof of actual payment or an executed agreement. -48- City of Lansing Provisioning Center Ranking 10/5/2018 Number of Jobs at the Provisioning Center Category Thresholds:1=<6 jobs,insufficient details;2=<6 jobs, Applicant indicates the provisioning center will have at least 16 full-time salaried sufficient details;3=6jobs,sufficient 5 4 employees and provides a description of job titles and salaries. Falls short of an optimal details;4=>6 jobs insufficient level of details. details;5 =>6 jobs,sufficient/good details. Amount and Type of 2 1 Applicant indicates that not all provisioning center positions will pay at least$15 per hour. Compensation (PC) Falls short of the optimal amount of compensation and support details. Percent of Employees Earning At Least 3 1 Applicant indicates it of 16(69%)provisioning center employees will earn at least $15/Hour) (PC) $15/hour. Falls short of the optimal percentage. Projected Annual Budget Applicant provides projected annual budget and revenue numbers(e.g.,$1.4million in 1 g 2 1 expenses and$1.6 million in revenues)and generally describes the source of these and Revenue (PC) numbers. However,they do not provide any line item details(i.e.,financial spreadsheet) showing how these numbers were derived. Lacks sufficient details. Sufficient Financial Applicant provides litigation compliance verification forms for all stakeholders. Applicant 5 5 proves they have more than$100K in the bank,and access to a$5 million line of credit Resources from a respected lender. Applicant indicates they have at least 9 years of medical marihuana industry experience, Business Experience 5 5 plus decades of other applicable business experience(retail management,highly regulated liquor industry,etc.),plus have access to an advisory board who have decades of applicable experience. Content and Sufficiency of Information;Professionalism of submitted documentation 5 3 Treasury letter for minor issue and Facility Plan letter to cure from buildingsafety, 2 points including clear labeling of deducted 8/20 update,lit history for stakeholder located in 2 separate sections 8/20/ig bpj required items Buffering between Good barriers&distance from residential residential zoned areas and 5 3 Updated score using a better measurement tool 9/18/18 610 ftfrom residential zoning establishment which falls short of the optimal distance of 1/4 mile(1320 feet)to receive full points. -49- City of Lansing Provisioning Center Ranking 10/5/2018 Increased traffic on side streets will be scored lower 5 5 Good plan Updated 9/25/18 high scores in all categories Entrance and exit on main streets, adequate 10 10 Tier 1 A+Security Plan,5pts traffic,Strong traffic patterns,driveways,parking,and parking not on cirrculation Updated 9/25/18 high scores in all categories 5 pts residential streets, P an to meet wit neighborhood 1 1 tab 10 Some changes are indicated on the floor plans submitted Updated 9/21/18 Using a more Improvements made or accurate measurement tool,listed$1 M to upgrade all their facilities,but unable to find proposed to building 3 3 specifics regarding 3425 S MLK so zero score. UPDATED 10/5/2018 Documents were provided to show in detail$1,060,958 in investment in the facility which is 769%of the $137900 SEV value Plan to minimize/eliminate 1 1 traffic plan included traffic Plan to minimize/eliminate noise 2 0 inadequate noise plan Plan to minimize/eliminate odor 3 3 Detailed plan including three independent air filtration technologies LPD Complaints 4 1 2ME alarms-1 Bar check-1ME report-1 fight call-7 other-1MDOP call-7 medical calls-4 trouble calls-1 trespassing This may be Villa strip mall,25 calls(9+calls adjust score to 1 pl) Demo of Regulatory 4 3 Updated 9/25/18 minor compliance 1 pt deducted,no code issues Compliance Revised 8/17/18 bpj litigation history found for both(tab 13 Litigation history&other in Litigation History 2 2 tab 21 Net Worth)All stakeholders have a complete litigation histry with no or minimal issue. Total 1 100 75 _ -50- ƒ :3.CD U @§ SJ R0, / / [/7 /(\# ! \#\\f E k� , ago / m � §_ \\ \k / }\\ O / }� m Q > r 2 Q E m[ Q �® cr Iƒ °f � - \}\ OD CD -< ƒ k / 7 G� § k/ o � \ \ & / 3 / \ \/ cn z 5 � § %\/ cp K � oR ) e :3 `!Q 7 � § ] p § 2jE ~ E2/ }J@ ƒ E 5 0 o \\c \ a w ]3a » / E kfƒ �? to §%/ c d E CD } }f ( ) 2 }(ƒ Cl) § / « �§� b » > q @ r / 0S 2 ° \ \&} 3 � n < 7 I 2 0 m ■ / : / m f 2 a R ( f z o 2 ( k // k (\\ 2 ƒ 2 = k CO ( ) \ #® o � ° ƒ 0 t ( ; rL � ® (k} 0 § C § -I \\ \ƒ. q / / \ §/ \ ƒ § (// _ . C \ / C) 'n /o- 77c . REto ƒ{ 23 @ m } \ -51- S1�C Chris Swope Lansing City Clerk cHIG �' October 24, 2018 AEY Holdings LLC 34841 Mound Road Suite 297 Sterling Heights, MI 48310 Dear Provisioning Center Applicant: If you wish to appeal the City Clerk's October 5th report and recommendation of the hearing officer before the City of Lansing Medical Marihuana Commission, your appeal will be held during a special scheduled meeting of the Commission on Saturday, November 17, 2018, at 10:00 AM in the City Clerk Conference Room in the Election Unit of the South Washington Office Complex, 2500 S Washington Avenue in Lansing. Per Lansing City Ordinance 1300.3(e), the Commission's review of the appeal shall not be de novo. The Medical Marihuana Commission Appeal will become a matter of public record. The Commission shall only overturn, or modify, a decision or finding of the Clerk if it finds such decision or finding to be arbitrary or capricious and not supported by material, substantial, and competent facts on the whole record considered by the Clerk in arriving at such decision or finding. The presentation timeline used by the Commission during the meeting for your appeal presentation is enclosed. No additional materials may be submitted for review. Chapter 1300 provides that should the applicant not receive a license, one-half the application fee shall be returned. This refund will be processed after all appeals are exhausted. If you have begun business operations pursuant to State Emergency Rule 19 and Executive Order 2017-02, you must cease operations. Sincerely, Chris Swope, Master Municipal Clerk Lansing City Clerk Lansing City ClPrk's Office Ninth Floor, City Hall, 124 W Mic_52_i Ave, Lansing, MI 48933-1695 517-483-4131 5-i t-377-0068 FAX AEY HOLDINGS,LLC ("APPELLENT") APPEAL Prepared by Michael D. Stein, Esq. Chad Proudlock Virg Bernero -53- TABLE OF CONTENTS Page(s) TABLEOF CONTENTS................................................................................................................ii STATEMENT OF ISSUES PRESENTED....................................................................................iii I. INTRODUCTION.............................................................................................................. 1 II. STATEMENT OF FACTS................................................................................................. 1 III. STANDARD OF REVIEW................................................................................................2 IV. ARGUMENT......................................................................................................................2 V. CONCLUSION................................................................................................................. 12 VI. RELIEF REQUESTED......................................................................... ................ 12 ii -54- STATEMENT OF ISSUES PRESENTED 1. WAS THE REVIEWER'S DECISION SUPPORTED BY COMPETENT MATERIAL, AND SUBSTANTIAL EVIDENCE? Appellant Answers: No 2. WERE THE APPLICANTS SCORES BASED ON CLEARLY ERRONEOUS FINDINGS Appellant Answers: Yes 3. WERE THE APPLICANTS SCORES BASED ON IMPROPER/INCONSISTENT SCORING Appellant Answers: Yes 4. DID THE SCORING METHOD COMPLY WITH LANSING'S ORDINANCE Appellant Answers: No 5. SHOULD THIS CITY CLERK REVERSE THE DECISION TO DENY APPELLANTS APPLICATION? Appellant Answers: Yes f:. 111 -55- I. INTRODUCTION This appeal involves highly recognized and awarded local Michigan residents, and an internationally renowned cannabis consulting company who have been successful with cannabis licensure in California, Colorado, Arizona, Michigan, and Canada. The applicant has applied for a Provisioning Center license in the City of Lansing under its ordinance and in accordance with the Michigan Medical Marihuana Facilities Licensing Act however, Appellant's license was denied for purported insufficient material. Quite simply, the City of Lansing either did not fully review the entire application or ignored the sufficiency of the plans provided. Appellant has therefore filed the instant appeal as its only avenue to seek review of its score and status in the City of Lansing and asks this Clerk to reverse the City's decision due to lack of material, competent, and substantial evidence, erroneous and improper scoring and failure to score the application in accordance with its own ordinance. II. STATEMENT OF FACTS A. APPELLANT'S MMPC APPLICATION Appellant, AEY HOLDINGS, LLC ("AEY ") is owned by highly recognized and awarded'local Michigan residents, and an internationally renowned cannabis consulting company who'have. been successful with cannabis licensure in California, Colorado, Arizona, Michigan, and Canada. AEY timely filed an application for an MMPC license with the City of Lansing for the location of 3425 S. MLK Blvd., Lansing, MI. B. PROCEDURAL HISTORY On or about July 31, 2018, AEY received an email from your office advising that it would not be selected to receive a Provisioning Center license. The correspondence from your office indicated -56- that the basis for the denial was as follows: "Your score of 74 out of 100 eliminates the possibility of scoring in the top twenty. Therefore, your application for licensure is denied." In addition, the denial correspondence included the applicant's sub-scores based on the ordinance criteria along with a brief summary of determining factors for each sub-score; this scoring sheet is also attached (Exhibit A). Thereafter, Appellant appealed and was assigned a "hearing officer" to review the score. The hearing officer determined another two points were warranted. On October 5n', 2018, after some further inquiry from the Clerk's office, AEY received an email from your office advising that it would not be selected to receive a Provisioning Center license. The correspondence from your office indicated that the basis for the denial was as follows: "Your score of 75 out of 100 eliminates the possibility of scoring in the top twenty. Therefore, your application for licensure is denied." In addition, the denial correspondence included the applicant's sub-scores based on the ordinance criteria along with a brief summary of determining factors for each sub-score; this scoring sheet is also attached (Exhibit A-2). The hearing officer decision recommendation addresses the standard of review which Appellant clearly stated in its appeal and only analyzes two of the eleven arguments Appellant raises as part of its appeal (See Exhibit A-3, Hearing Officer Letter). The hearing officer acknowledges the "Tangible Capital Investment" & "Litigation History" arguments(recommends 2 additional points) but does not provide any rational or response to Appellant's arguments in nine other categories. The Clerk office decided to issue an additional 3 points to the score however, it removed 2 points from the "Buffering Between Residential" category." The scorer claims a"better measuring tool" determined we were closer to residential. This issue was never mentioned in my appeal or in the hearing officer's letter. It appears AEY was punished via a 2 point deduction after it received an additional 3 points in other categories It `. -57- r., also raises the question as to whether every location of an application was also re-measured and deducted points? After this denial, AEY is left with no further avenues for reconsideration of the City's administrative decision. Therefore, AEY files the instant Appeal. III.STANDARD OF REVIEW The basis for this appeal is (1) the scoring is not based on competent, material and substantial evidence; (2) Scoring Insights are based arbitrary & capricious findings; (3) Applicants scoring was based on improper/inconsistent scoring; (2) Scoring methods do not comply with the ordinance; and (3) Scoring was an abuse of discretion. AIthough Appellant recognizes the Clerk's office is not a court of law, the applicable standard of review is whether the decision is supported by competent, material, and substantial evidence on the record, and represents the reasonable exercise of the board's discretion. "Substantial evidence' is evidence that a reasonable person would accept as sufficient to support a conclusion."Edw C Levy Co v Marine City Zoning Bd of Appeals, 293 Mich App 333, 341-42; 810 NW2d 621 (2011) (quoting Dowerk v Charter Tp of Oxford, 233 Mich App 62, 72; 592 NW2d 724 (1998)). Furthermore, scoring must be proper, consistent, comply with the applicable ordinance and not an abuse of discretion. IV. ARGUMENT A. Tangible Capital Investment in the City of Lansing(Investment in applicants other provisioning centers was not Included in score). The scoring insight for this category states, in part, as follows: "Applicant...lacks Ownership aced _ a definitive plan investing in a grow facility." This is erroneous as the applicant clearly states`-ft will be investing in a grow at the 1121 River St. location AS WELL AS another larger 110,000 3 -58- square foot facility (See Exhibit B). The scoring in this section also fails to recognize applicant has already made a commitment via signed legal documents investing in two provisioning center locations (6001 Pennsylvania and 3425 S. MLK) AND a processing center located at 1121 River St. Applicant was punished significantly (9 out of 15 points) because of a misinterpretation of the plan by the reviewer. The reviewer acknowledged the lease cost and cost of improvements to the first provisioning center and the cost of the processing building but disregarded or misinterpreted that another $1,000,000 in property improvements will be made to the second dispensary and another $1,000,000 (could be as much as $5,000,000) would be made to the processing center whereby an old dilapidated eyesore will be turned into a viable facility, and further choose to punish the applicant for what it believes is a non-committal to a fourth cultivation facility. A plain reading of this section of the application demonstrates a full committal to a fourth building as it says "we have targeted two potential properties", one of which applicant has under contract and the second which they are actively pursuing (See Exhibit B). The reviewer interprets this as a wavering committal however it's a full committal which has since been acted upon as the building is currently under contract with applicant's affiliate company. In regards to the fourth building the plan states "we would invest several million dollars in upgrading and retrofitting the facility to accommodate at least one, and possibly three large grow operations" (See Exhibit B). The reviewer's note that this is not a definitive plan is erroneous, inaccurate and a blatant attempt to "deduct" points where they should not be deducted. Although a specific figure is not given, "several million dollars" indicates a figure of at least$2,000,00045,000,000 and the score needs to reflect this tremendous additional investment in Lansing. Lastly, in the "plans to integrate facility" category the reviewer notes the applicant will "integrate the PC with its Class C license." In other words, the class C license is recognized..in 4 ;- one category but not the other. This type of scoring is improper and inconsistent and must be adjusted upward by 6 points. B. Job Creation (Integrated System) Overall number of jobs created In the category entitled "Job Creation", the reviewers determined that "62 new Lansing jobs and up to 120 new jobs will be created if they pursue and open larger grow facility.... Falls short of optimal number of jobs and definitive created commitment to the larger grow facility." The applicant was only awarded 3 out of 5 points due to this alleged deficiency. Again, the reviewers finding of non-committal is inaccurate. The plan details applicants desire to obtain the building and without giving the address, which would be made part of the public record, identified the building by is square footage (See Exhibit C). It's clear the applicant wants the building and was aggressively pursuing the purchase of the same. As further evidence of improper scoring, the reviewer determined the job range was 62-120 when in fact the number is 62 plus jobs for "architectural, electrical, flooring, mechanical and plumbing" all from Lansing based companies in addition to the 120 jobs brought about by the cultivation facility (See Exhibit C). The total planned jobs for all business's is not 62, it is 62 plus tradesman plus 120 cultivation jobs for a total of well over 182 jobs which is more than worthy of an additional 2 points and a perfect score in this category. C. Charitable Plans and Strategies. Applicant provides specific examples of what they will do (e.g., coat drives;- turkey ' giveaways, etc.,) and discuss their long term financial contributions based on meetings with each specified company (See Exhibit D). In fact, applicant pledge!i to give $50,000.00 for 2018 een though the facilities might not be open and operational. The plan calls for a $50,000.00 charitable contribution for the 41h quarter of 2018 alone (See Exhibit D). This is a substantial 5 -60- figure for only one quarter of operation. Obviously, charitable contributions don't decrease, they increase, and that is the applicants plan moving forward. The principle responsible for transcribing the plan clearly made a typographical error when typing the figure of 125,000". The proper figure, and in congruence with the stated 4`h quarter 2018 donation is "$250,000"for the entire year with plans to increase it by 25% each year. As evidence of this scriveners error, the applicant, Steve Kesto, has attached an affidavit attesting to the typographical error (See Exhibit E). $250,000 in charitable contributions per year is substantial and merits being awarded the full amount of points. In addition to financial contributions, the principles also encourage its employees and owners to volunteer their time. Specific references to charitable organizations represent more than mere conjecture and demonstrate proof of a well thought out plan. This plan along with the appropriate figure of $250,000 in charitable contribution commitments per year and volunteering time demand an additional 2 points for full points in this category. D. Number of Jobs at the Provisioning Center. This category deals with the"number of jobs" at the provisioning center NOT job description _ even though applicant gives a job title for each role. AEY clearly indicates "16"jobs per:PC'as well as ancillary jobs for tradesmen. It is improper and an abuse of discretion to take away poufs for "lack of details." Furthermore, AEY gives a title for each job held. Is it that hard for a reviewer to discern what a "security guard", "executive", or "Patient Outreach Manager" does? AEY can only assume a Medical Marijuana Provisioning Center reviewer would have a cursory knowledge of these roles in a cannabis business and would be able to identify general job responsibilities based on titles. Does an attorney need to explain his duties or is this common knowledge amongst professions? Explaining job duties to reviewer's who should have common 6 -61- knowledge of the cannabis industry in a category simply asking the # of jobs is unfair and unnecessary. Based on the # of PC jobs created an additional point should be given as anything less than a perfect score is an improper score and further abuse of discretion. E. Amount and type of compensation and Percent of Employees Earning at least$15.00 per hour Applicants "Job Creation" analysis demonstrates at least 84% of its employees will make over $15.00 per hour not 69% as noted by the reviewer (See Exhibit Q. The only job for which applicant is responsible for setting wages who may not initially earn $15.00 per hour is a "Packing Representative". Generally, security guards are contracted from security companies such a LaGarda or Prudential Security. The security contractor is responsible for setting its employee's wages. Applicant is not in a position to set wages for employees of companies it contracts with and therefore cannot be deducted points because of a third parties set wages. Additionally, the lone position who's purported hourly rate is under $15.00 per hour actually makes $15.22 per hour. When you take into account the # of hours worked per year (1,920 hours) minus 2 week's vacation you get 1,840 hours per year and makes the hourly rate $15.22 per hour. This position, as stated in the job creation plan also receives supervisor training and employment education provided by management to help these individuals move up in the company hierarchy. Applicant received 2 out of 5 points solely because one listed position (the entry level position) had an inaccurately listed hourly rate of$13.00 per when in actuality it is $15.22 per hour. A 3 point deduction is an abuse of discretion and an improper score. Applicant deserves at least an additional 2 points for high paying positions its offering and for paying 84% of-its staff more than$15.00 per hour. -62- F. Projected Annual Budget and Revenue The scoring insight for this category states that "Applicant provides annual budget and revenue numbers....and generally describes the sources of these numbers". The question posed in the ordinance has been answered. The ordinance did not call for a "spreadsheet" but simply asks for the annual budget and revenue which has been provided. An additional point is warranted for providing the information G. Plan to minimize noise, In spite of the voluminous submissions by applicant addressing this issues, the applicant rvaS ,N awarded zero points for this category. In regards to noise, the applicant provided a full s6f-of architectural plans with city building permit approvals for all required categories and compliance with the applicable building codes and SOP's which state how noise is reduced. Please add 2 additional points in this category (See application SOP's). H. LPD Complaints Every single complaint listed in the reviewers comments deals with the prior tenant. How can the applicant be held responsible for incidents that have occurred under completely different ownership and long before applicant even signed a purchase agreement to purchase the property? Individuals/entities are not and have never been held accountable or punished for the acts of other people outside of their control. This aforementioned principle is the bedrock of the legal system. To deduct points for a previous history of complaints completely unlinked to the applicant is astonishing and the most egregious abuse of discretion imaginable. Applicant 8 -63- demands an additional 3 points be added as no history of LPD complaints against it or its owners exists or has been cited. I. Demonstration of Regulatory Compliance Applicants own and operate several cannabis facilities generating sales and revenue over $10,000,000.00. No issues are cited by the reviewer accept for what is termed a "minor tax issue" that was noted as corrected by the reviewer. The stakeholders demonstrate not one single issue with its business operation yet the reviewer deems it necessary to deduct one point for a minor tax issue that was cured, which was $50 in taxes owed from over 10 years ago. The applicants run very successful businesses with thousands of transactions a year without any issues, own licenses pertaining to liquor, alcohol, tobacco, construction etc... This is yet another blatant attempt to deduct points for no apparent reason and represents a gross abuse of discretion. There is no reason a full score should not be given to applicant for its stellar record of regulatory compliance across North America. Please add 1 point in this category. J. Litigation History 0 out of 2 points in this category is absurd. First, the litigation disclosure form was provided and showed no history of litigation. For a multi-million dollar company to have no litigation history is an anomaly and should be rewarded not punished erroneously. Furthermore, as part of its "experience" section, applicants attest to the fact they have no litigation history. The applicant& stakeholder's significant business history and lack of litigation history demand 2 out of 2 points in this category. K. Buffering between residential zoned areas and establishment. The applicant was initially awarded 5 out of 5 points in this category. Mysteriously,upon Appellants appeal, even though the issue was never brought into controversy and:_without 9 -64- mentioning anything to Appellant or referencing the action in the hearing officers decision, the Clerk's office, nine months later & several months after sending AEY its score, re-measured the distance from residential zoning with a"better measurement tool" and 2 points were taken away. Appellant seriously questions the motives behind this unordinary conduct wonders whether all distances for all applicants have been re-measured with a "better tool". The "re-measurement" that occurred on 9/18/18 is both highly unusual and not permitted under the ordinance in any manner. Moreover, both scoring sheets still list the buffering as "Good Barriers & distance from residential". The reviewer cites no complaints or issues from adjacent residential properties. The city council did not adopt a setback or buffering requirement for residential properties adjacent to a provisioning center in and F-1 Commercial zone, and there is no basis to administratively take away points based on a "new measurement" with a "better tool".. An additional point 2 points should be added. V. CONCLUSION On behalf of the applicant, we request an immediate review of this appeal as we have.raised serious concerns about the competency of this review and scoring that was arbitrary&capricious; and missed many items that were actually supplied. VI. RELIEF REQUESTED It is clear in this case that AEY's application was wrongfully denied and that it has now been unfairly stripped of its ability to receive a license. The City's denial is clearly inappropriate and inaccurate. 10 -65- WHEREFORE, Appellant respectfully requests the City Clerk order the City of Lansing to reverse its decision, award 25 additional points and give applicant approval for its Lansing Medical Marijuana Provisioning Center. RespectUl submitted, Michael D. Stein, Esq 11 -66- EXHIBIT A -67- tiT.j:t1� ' J141.... .:�• •� �?1LS.��'}7i'tr5v.f'"..r"I_!G'xiy.'�..+F•-.`,�' I �sri"-�i"r'r::i=i�.�t�K�S••ac> r.c��-�c`;!:'r�::l �.'✓-� _' � tg•. :Sri.-}%` Pmvw�;m -- :�y�,}='��'r� ti.-.r^e�,iiV�:�l.�e. t-"•;Fitt•^t ryr :Y kE�,y_,ti� �%•+`.`� ram.4r.�T..� .•„�ha F�iaA:�-.ti���.�:�y�i.t��A}�c�`5f%i�.ys cy1t•�:.•'.':iyt _ '�L:•C.�:Z:a�'t`.haa=.. 75F!_:.Id'IY;FN'�^.71�:� '•�;'`��l3Y�. '4 `mot.: ,�� ���--'r'` 451-�-.y'T�n`„hcNrin�tT7�i=.7::�`•_`� �:^ff7ryj� �i��'��^'?-`Cr.•jt'�.���'�,�l i�^a�y�,Siir:E tit.��`'�• f,•"t'-:'ti:icj'=;ryJ'�1•!��"ri.r.^r. mil"•-'F':.:f�.., .��+w��,. .t��:v-.�.5 4.Sr;%.z���`�••ls�'f�s�Y-.-`.'.-'�,''r= ;�i:`.+7�a?Ftii' l%. ti z; City of Lansing Provlsloning Center Ranking Mptk.n v—Qa Glfgation—plL nee foam fpr.Y tey Ut mcmbae t CFd eso S lypr"nt proud they hate more ttun$100C N fit bank,and a test to ass m on Faw er trcdtftom a rcspected lender. Apoaat InRot.a they hate A1.aa 9 y.,ra.1 mcsol—aww Wd "e.pnlmcq e s *-decades ofotlwr apprl=We b.Lxse..p q—(rcW nunag—t.MgWy reguhted Mr—hdusery,etel,Plot hays—a an ad.Fwry bond M.ba.e dcoda d apprraW...pcla • n clen 1 o do o a O u Owl e ] Tacaawyknarlormlro lauc"FaoliryPlankt to aar.fsombugdic ufty n dI ear a I g o a be e res de n e s Good butkas 4cGy—faom midendd esta en e tra c 0 d s Acopd ptan d awe ntra a a a eC5 a e uat a g Tw 1 A•scpnM Flu spa IaafrK st anL traMwpan a u driveway;pa u g and 0 o e tral eels to dsoaktlan Qu 1 Se Fan a to Y_E l tab In Im rode a ade or 2 some Plunges u.4�di�tN pn the floor Ptah udtmmlltted p o osed to u I a tTn n miz fiminate 1 anfk plan Lxludaf r la o m nit I. �.e Iminat �IS 0 YaadeWat.nou.ptan la o n m el ntioate a Lf—L�dcpendentak ntrarion ledvt.lodes a or ' Crom t zeat:.wmt-ttw ee..k-t ttaE a.pw-t rqM e.a-1'.ew-a aaoop as-y m.aalew-a _ aouak oa-t tnpa..'p itn may a vm aap na;>3 oh De o Rep a 3 nLaartaabwe p an- r ga o dlstoWON o tnad.wat.hhtwyrpr sta6dwlder + 0 1 Ta -69- EXHIBIT A-2 -70- City of Lansing Provisioning Center Ranking 10/5/2018 Total AEY Applicant Name Possibl HOLDINGS,LLc AEY HOLDINGS,LLC e Points Applicant Address ___ MARTIN 3425 5 MARTIN LUTHER KING JR BLVD LUTHER KING Marketing, Advertising Applicant provides many detailed examples of marketing,advertising,promotion,and 4 4 minor minimization(e.g.,age verified website,no ads designed for minors,social media, and Promotion branded apparel,etc.). Tangible Capital Applicant indicates they will lease the 3,724 sq.ft.building at 3425 S.MLK for the Investment in the City of provisioning center(investing approximately$1 million in improvements),operate a 15 9 second PC at 6001 S.PA Ave.,purchase a 39K sq.ft.building for processing($900K)and Lansing considering investing Ina 1101(sq.ft building for growing(several$million). Lacks ownership and a definitive plan for Investing in a grow facility. Job Creation Applicant Indicates shout 62 new Lansing jobs and up to 120 new jobs if they pursue and (integrated System) 5 3 open the larger grow facility. Types ofjobs are detailed along and worker training Overall number of jobs program. Falls short of an optimal number of jobs and a definitive commitment to the created larger grow facility. Applicant provides proof of access to$5 million with supporting documentation(e.g.,XIB Financial Structure and letter),linking this to their business plan and anticipated operating expenses.Note that 3 3 one owner agrees to pay$70K by five business days of receiving business license to Financing operate the provisioning center(in addition to$40K already In place from the other owner). Existing liquid assets more than cover$100,000. Plans to Integrate Facility with Other Z 2 Applicant indicates they will integrate their provisioning center with a Class C(1,50Oplant) grow operation to be located at 1121 River Road. Establishments Applicant provides examples of organizations they would like to partner with(e.g.,adopt a Charitable Plans and park,coat drives,turkey giveaways,etc.)and discusses their long-term goal of spending 4 2 $25K/year to Community Mental Health,plus donate computers and equipment;to Strategies schools. Falls short ofoptimal dollar commitment potential and lacks proof of actual payment or an executed agreement City of Lansing Provisioning Center Ranking 10/5/2018 Number of Jobs at the Provisioning Center Category Thresholds;I=<6 jobs,insufficient details;2=<6 Jobs, Applicant indicates the provisioning center will have at least 16 full-time salaried sufficient details;3=6 Jobs,sufficient 5 4 employees and provides a description of job titles and salaries. Falls short of an optimal details;4=>6 Jobs Insufficient level of details. detalls;5 =>6 Jobs,sufficient/good details. Amount and Type of 2 1 Applicant Indicates that not all provisioning center positions will pay at least$15 per hour. Compensation (PC) Falls short of the optimal amount of compensation and support details. Percent of Employees Earning At Least 3 1 Applicant indicates 11 of 16(69%)provisioning center employees will earn at least $15/Hour) (PC) $15/hour. Falls short of the optimal percentage. Applicant provides projected annual budget and revenue numbers(e.g.,$1.4 million In Projected Annual Budget 2 1 expenses and$1.6 million in revenues)and generally describes the source of these and Revenue(PC) numbers. However,they do not provide any line item details(i.e.,financial spreadsheet) showing how these numbers were derived. Lacks sufficient details. Sufficient Financial Applicant provides litigation compliance verification forms for all stakeholders. Applicant 5 5 proves they have more than$100K In the bank,and access to a$5 million line of credit Resources from a respected lender. Applicant indicates they have at least 9 years of medical marihuana industry experience, Business Experience 5 5 plus decades of other applicable business experience(retail management,highly regulated liquor industry,etc),plus have access to an advisory board who have decades of applicable experience. Content and Sufficiency of Information;Professionalism of submitted documentation 5 3 Treasury letter for minor Issue and Facility Plan letter to cure from building safety,2 points including clearlabelingof deducted 8/20 update,lit history for stakeholder located in 2 separate sections 8/20/18 bpi required items & Buffering between Good barriers&distance from residential f1J residential zoned areas and 5 3 Updated score using a better measurement tool 9/18/18 610 ft from residential toning establishment which falls short of the optimal distance of 1/4 mile(1320 feet)to receive full points. Ac 71-1,S S0 -72- City of Lansing Provisioning Center Ranking 10/5/2018 Increased traffic on side 5 5 Goad plan Updated 9/25/18 high scores In all categories streets will be scored lower Entrance and exit on main Streets,adequate 10 10 Tier 1 A+Security Plan,Sots traffic,Strong traffic patterns,driveways,parking,and parking not on cirrculation Updated 9/25/18 high scores in all categories 5 pts residential streets, Pan to meet with neighborhood 1 1 tab 10 organizations Some changes are indicated on the floor plans submitted Updated 9/21/18 Using a more Improvements made or accurate measurement tool,listed$1 M to upgrade all their facilities,but unable to rind 3 © specifics regarding 3425 5 MLK so zero score. UPDATED 30/5/2018 Documentswere proposed to building provided to show In detail$1,060,959 In Investment in the facility which is 769%of the $137900 SEV value Plan to minimize/eliminate 1 1 traffic plan Included traffic Plan to .. -"-- 2 0 inadequate noise plan minimize/eliminate noise - - r Plan to f =' 3 3 Detailed plan including three independent air filtration technologies ! ' minimize/eliminate odor 1 — LPD Complaints !� 288E alarms-18archeck-1 MEreport-1 right cal-7other-1 MDOPcall-7medicalcalls-4 p trouble calls-1 trespassing This may be Vila strip mall,25 calls(9+cab adjust score to 1 pi) Demo of Regulatory 4 3 Updated 9/75/18 minor compliance 1 pt deducted,no code Issues Compliance f� � Revised 8/17/18 bpi litigation history found for both(tab 13 Utigation history&other in Litigation History 2 (2 tab 21 Net Worth)All stakeholders have a complete litigation histry with no or minimal Issue. Total 100 75 - -73- EXHIBIT A-3 19 -74- Hilary M. Barnard Attorney at Law CITY OF LANSING HEARING OFFICER DECISION RECOMMENDATION In Re: AEY Holdings, LLC Location: 3425 S. Martin Luther King Jr. Blvd. Provisioning Center License Scoring and Ranking Denial This decision is remitted to the Clerk of the City of Lansing by Hearing Officer,Hilary M.Barnard,-=> Esq.,having been read and informed on the issues recommends that in regard to AEY HOLDINGS, LLC and its license application for a Medical Marihuana Provisioning Center that the license application remain denied. FACTS AEY HOLDINGS, LLC ("Appellant") applied to the City of Lansing to operate a Medical Marihuana Provisioning Center within the city limits. This recommendation follows an appeal from Appellant's counsel in the form of a brief.' By letter dated August 3, 2018, Appellant was informed that its license application was denied because of its score and rank, having received a score of 74 out of 100. Appellant was informed that this score eliminated the possibility of scoring in the top twenty applicants and that it would not be receiving a provisioning center license. Appellant was also informed that it had the right to appeal the denial within 14 (fourteen) days of the letter's date by written statement with grounds for appeal. With the August 3 letter, Appellant was provided a copy of the City of Lansing Provisioning Center Ranking sheet for its business. On the document, Appellant is able to view the total possible points, its attained points, and short insight statements The largest deficiency on Appellant's ranking sheet is Tangible Capital Investment where Appellant earned a 9 out of possible 15. Appellant also has several point deductions in a variety of categories. Appellant's Position Appellant argues,through counsel, in its brief 5 (five) key issues: (1)That the reviewer's decision was not supported by competent material and substantial evidence; (2) Appellant's scores were based on clearly erroneous findings; (3) Appellant's scores were based on improper/inconsistent scoring;(4)The scoring did not comply with Lansing's ordinance;and(5)The clerk should reverse the decision to deny the application. There is no discemable date on Appellant's brief. Page 1 of 6 -75- Hilary M. Barnard Attorney at Law City Clerk Position In its summary, the City clerk iterated that tangible capital investment is an asset with a physical form. Further, that floor and building plans for this business location were not reviewed in the application to determine a score in Appellant's noise reduction plan. However, the missing litigation information was found in a different (incorrect) section of Appellant's application. Thus, Litigation History should have 2 points. No further documentation was received from Appellant regarding the subjects of this appeal. As the City Clerk's office recommends a 2 point addition to Appellant's score, this Hearing Officer will begin with Appellant's score at 76 out of 100. APPLICABLE LAW& REASONING The issue is whether Appellant's score and rank for a Provisioning Center License for the City of Lansing was erroneously calculated resulting in license application denial. In regard to the issuance of licenses and the appellate process for a license: "The City Council shall provide, by ordinance, a procedure for the issuance of licenses and permits.The ordinance shall, to the greatest extent possible, place the responsibility for the issuance of licenses and permits under one official in order that persons requesting specific licenses and permits will not have to contact more than one City office. 12 At the denial of a license under City of Lansing Ordinance No. 1217,an applicant: May appeal to the city clerk,who shall appoint a hearing officer to hear and evaluate the appeal and make a recommendation to the clerk. Such appeal shall be taken by filing with the city clerk, within 14 days after notice of the action complained of has been mailed to the applicant's last known address on the records of the city clerk, a written statement setting forth fully the grounds for the appeal. The clerk shall review the report and recommendation of the hearing officer and make a decision on the matter. The clerk's decision may be further appealed to the commission if applied for in writing to the commission no later than thirty(30)days from the clerk's decision 3 Z See LANSING CITY CLERK'S OFFICE,City of Lansing City Charter(as amended)at 24(2015)available at: https://www.lansingmi.gov/DocumentCenter[View/2126/City-Charter?bidId=.In this instance,the license issuance is handled with the City Clerk's office. ' s City of Lansing Ordinance No. 1217 Sec. 1300.15(C). Page 2 of 6 -76- Hilar IV. Barnard Attorney at Law [The] [r]eview of an appeal shall not be de novo. The commission shall only overturn, or modify, a decision or finding of the clerk if it finds such decision or finding to be arbitrary or capricious and not supported by material, substantial, and competent facts on the whole record considered by the clerk in arriving at such decision or finding.4 The arbitrary or capricious standard of review is the commission's review and is adopted by this Hearing Officer.5 Arbitrary and capricious have generally accepted meanings.' Arbitrary is "without adequate determining principle . . . [f]ixed or arrived at through an exercise of will or by caprice, without consideration or adjustment with reference to principles, circumstances, or significance, . . . decisive but unreasoned."' Capricious is "apt to change suddenly; freakish; whimsical; humorsome."8 Whether an applicant can submit supplemental materials on appeal, the Lansing Ordinance in Section 1300.5(B) states that "[a] complete application for a license or licenses required by this chapter shall be made under oath on forms provided by the city clerk, and shall contain all of the following[.] The ordinance then enumerates all the documents and information required for application submission. Under the City of Lansing Ordinance No. 1217 Section 1300.6, review of an application will consider: (13)(2) Whether the proposed establishment will be consistent with land use for the surrounding neighborhood and not have a detrimental effect on traffic patterns and resident safety. . . . (3) Planned outreach on behalf of the proposed establishment, and whether the applicant or its stakeholders have made, or plan to make, significant physical improvements to the building housing the medical marihuana establishment, including plans to eliminate or minimize traffic, noise, and odor effects on the surrounding neighborhood[.] (13)(3) Planned outreach on behalf of the proposed establishment, and whether the applicant or its stakeholders have made, or plan to make, significant physical improvements to the building housing the medical marihuana establishment, including plans to eliminate or minimize traffic, noise, and odor effects on the surrounding neighborhood[.] a Id at 1300.3(E). s There is an inherent binary in license issuance:issued or denied,not a spectrum of decisions.Given that thisis a licensing situation,and that the only prescribed review under Ordinance No. 1217 is arbitrary and capricious,that is the standard that will be observed here. e See Bundo v.Walled Lake,395 Mich.679,703(1976)(citing United States v.Carmack,329 U.S.230,243 (1946). Id. s Id. Page 3 of 6 -77- Hilary H. Barnard Attomey at Law (13)(4) Whether the applicant or any of its stakeholders have a record of acts detrimental to the public health, security, safety, morals, good order, or general welfare prior to the date of the application; whether the applicant or any of its stakeholders have previously operated an illegal business of any kind, including any violation of Lansing medical marihuana moratoriums. (D) In the event that there are more applicants for provisioning center licenses who meet the minimum requirements set forth in 1300.6(13) than there are licenses -. available in either phase one or two,the top scoring twenty(20)applicants in phase one and top scoring five (5) applicants in phase two, shall be eligible to receive provisioning center licenses in accordance with the assessment,evaluation,scoring, and ranking procedures established in this chapter[.] - Pursuant to Section 1300.5, in its application an applicant is to include in its business plan: (12)(V) Expected job creation from the proposed medical marihuana establishment(s) . . . (X) Community outreach/education plans and strategies [and] (XI) [c]haritable plans and strategies, whether fiscally or through volunteer work. The Lansing Ordinance incorporates provisions and definitions of the Medical Marihuana Facilities Licensing Act, 2016 PA 281 (as amended) ("MMFLA") so as to: "not limit an individual's or entity's rights under the [Michigan Medical Marihuana Act (MMMA)], MMA or the [Michigan Tracking Act (MTA)]" and drafters intended that "these acts supersede [the] ordinance where there is a conflict." A Lansing applicant must then comply with the MMFLA.10 Pursuant to Sec.402 of the MMFLA, in evaluating an applicant for licensure, an applicant's history of "noncompliance with any regulatory requirements in this state or any other jurisdiction"will be considered.11 Per Michigan Court rule, appeals are based on the record already in place.12 Further, an appellate body will generally not consider issues not raised in or ruled on by a lower review.13 The appellate review is limited to the record before the lower court at the time of the relevant decision. Here, this Hearing Officer will decline to review any supplemental materials provided by Appellant in effort to cure application deficiencies. Per requirements in the Lansing Ordinance in Section 1300.5(B)and general state appellate practice, review on appeal is to the record originally 9 City of Lansing, Michigan Ordinance No. 1217 Sec. 1300.2(C). 10 Id. at Sec. 1300.2(D). MMFLA,MCL §333.27402(3xg). 12 See e.g.,MCR 7.105(B)(4);(5)(d)(requiring that the appellate court receive a certified copy of a case's record and stating review of a trial court's decision was for legitimate reason based on"arguable support in the record[.]") 13 See Napier v.Jacobs,429 Mich.222,232-35(1987). Page 4 of 6 -78- Hilary M. Barnard Attorney at Law, provided and reviewed. See e.g., Napier v. Jacobs, 429 Mich. 222, 232-35 (1987).14 Thus, this review will address the appeal on Appellant's first basis and the application as originally provided. Appellant addresses a standard of review. The arbitrary or capricious standard of review is the commission's review and is adopted by this Hearing Officer.15 Arbitrary and capricious have generally accepted meanings.16 Arbitrary is "without adequate determining principle. . . [f]ixed or arrived at through an exercise of will or by caprice, without consideration or adjustment with reference to principles, circumstances, or significance. . . . decisive but unreasoned."17 Capricious is "apt to change suddenly; freakish; whimsical; humorsome."18 Thus, here Appellant needs to demonstrate that the decisions are arbitrary or capricious, not as Appellant articulates under its Standard of Review. Appellant raises a Tangible Capital19 argument. Capital is understood to be "[m]oney or assets invested, or available for investment, in a business"20 Further, the City Clerk has articulated that Tangible Capital is rooted in a physical object. Appellant argues that two other locations have commitments. However,this application is related to this location.The tangible capital calculation did not include capital related to other facilities that are owned by Appellant.The calculation was related to the specific location of this facility. While capital exists for the organization it was not sufficiently addressed as to the location of this facility. The scoring and Appellant's arguments under tangible capital merit no further point allocation. It should be noted that under sufficient financial resources, Appellant did receive full marks. As to Appellant's other categorical arguments,any argument related to Appellant's other facilities which are not the primary subject of this application are without merit and will not be addressed further. In addition, under an arbitrary and capricious argument,Appellant has not met its burden. It is not enough for an appellant to"simply announce a position or assert an error[.]"-' Thus leaving the overseer of appeal to"discover and rationalize the basis for his claims,or unravel and elaborate for him his arguments, and then search for authority to either sustain or reject his position."22 Litigation History, as already addressed, merits 2 additional points for Appellant. In this case it discusses that an"exception that review is permissible`to prevent a miscarriage of justice."'"Most jurisdictions recognize the authority of an appellate court to review an issue,even where the issue was not preserved,when some fundamental error would otherwise result in some egregious result."However,that"such power of review is to be exercised quite sparingly.Napier,429 Mich.at 233.Under the facts presented,there is not a fundamental error so as to trigger exercising supplementing on appeal. Is As discussed supra. is See Bundo v. Walled Lake,395 Mich.679,703(1976)(citing United States v.Carmack,329 U.S.230,243 (1946). 17 Id is Id iv Also encompassing Appellant's financial resources argument. 20 Capital,Black's Law Dictionary(7th ed.). Z� See People v.Kevorkian,248 Mich.App.373,389(2001). - zz Id. While Appellant has provided a brief,its brief falls short of the appropriate and necessary standard of review._:-' Page 5 of 6 -79- Hilar M. Barnard Attorney at Law CONCLUSION For the foregoing reasons, it is recommended that Appellant be awarded 2 (two)more points in its scoring. However, seeing as this total would create a total score of 76/100, Appellant still would not meet the threshold for scoring in the top twenty applicants. Therefore, it is recommended that Appellant's application for a provisioning center license remain denied. Respectfully Submitted, Hilary .Barnard,Hearing Officer' Page 6 of 6 -80- EXHIBIT B 12 - : -81- PLANNED TANGIBLE CAPITAL INVESTMENT We are committed to heavily investing in the City of Lansing and bringing significant economic development to the area. To this end, our ownership group is seeking two provisioning center licenses in the City(one at 6001 South Pennsylvania Avenue and one at 3425 South Martin Luther King fr. Boulevard),as well as one processor license(located at 1121 River Street)and at least one 1,500 plant Class C grower license (located at 1121 River Street), with a desire to increase this investment over time. Lansing has welcomed the medical marihuana industry, and we hope to establish a significant, long-term economic relationship with the City. Concerning our provisioning center operations, we anticipate that each facility will create approximately 16 full-time,salaried jobs. As discussed herein,those jobs include: • Executive—$80,000 annual salary • Chief Operations Officer/Facility Manager 470,000 • Patient Outreach Manager-$60,000 • Quality Assurance/Control Technician-$55,000 r • Nurse Field Representative-$50,000 • Sanitation Specialist-$45,000 • Office Manager-$45,000 • Community Outreach and Patient Education Specialist-$40,000 • Addiction Prevention Directors-$40,000 • Inventory Control Manager-$35,000 • Order Fulfillment Representative-$34,000 • Security Guards -$30,000 x 4 • Packing Representative-$28 000 Thus, these 32 provisioning center positions would contribute approximately$1.4 million in new annual wages in the City, all of which would be subject to the City's income tax. These amounts are in addition to revenue related to property taxes, personal property taxes, application and renewal fees,and the City's share of excise tax revenue under the Medical Marihuana Facilities Licensing Act. Moreover, wherever possible, we will look to hire Lansing residents for each of 26259177.1 -82- these positions, meaning that these wages would stay in the City and that the City's income tax revenue would be greater than if we hired non-residents. To date, we have also targeted two potential properties within the City that can house our grow and processor facilities: one is a 39,000 square foot industrial building that is currently occupied and the other is a vacant 110,000 square foot facility. On October 10, 2017, our ownership entered into a purchase agreement for the 39,000 square foot building located at 1121 River Street in Lansing(tax parcel identification number 33- 01-01-21-279-041) for a price of$900,000. We are currently in the due diligence period with regard to this property, but intend to close shortly. As soon as we close on this property,we will submit an application for a Class C grow license and a processor license under 5273 LLC. Our intent is to invest approximately$1 million dollars in upgrading and building out this facility to accommodate one, and possibly two, Class C grower licenses, as well as a processor license. In undertaking this project,we are looking to partner with local contractors,architects,and engineers. To date, we have spoken to a number of Lansing-based companies and identified the following companies as those that we would retain for these projects: • Architectural—Rockwood Design,PC,East Lansing • Electrical—A/C Electric, Lansing • Flooring—Lansing Tile&Mosaic, Inc., Lansing • Mechanical—Superior Mechanical LLC,Lansing • Plumbing—Honeycutt Plumbing, Lansing - In addition to the money spent on Lansing-based contractors,as a result of this project;We - would create approximately 30 full-time employment positions, and would look to first hire Lansing residents. Depending upon skill,education,and experience, these positions will each pay approximately $20-$40 per hour in wages. This would result in approximately $1.25 million to $2.5 million per year in new wages paid in the Lansing area, in addition to increased property tax 26259177.1 -83- revenue, application and renewal fees, and the City's share of the excise tax revenue under the Medical Marihuana Facilities Licensing Act. Additionally,if we obtain the 110,000 square foot facility,our investment in the City would be even larger.The facility is currently vacant, so we would return it to productive status,thereby increasing tax revenue to the City. Additionally, we would invest several million dollars in upgrading and retrofitting the facility to accommodate at least one,and possibly three large grow operations.Again,we would look to hire local contractors,architects,and engineers in completing this construction. As a result of procuring this larger facility, we would likely create at least 60 full-time positions, also looking to first hire Lansing residents. Again, depending upon the circumstances,these positions would pay approximately$20440 per hour.In addition to property tax revenue,application and renewal fees,and the City's share of the Medical Marihuana Facilities Licensing Act excise tax, this facility would generate approximately$2.5 million to$5 million in new wages in the City. Overall,with our two provisioning centers,one grower,and one processor,we will create approximately 62 new jobs in Lansing, and contribute roughly $2.65 million to $3.9 million in annual wages. Additionally,if we are successful in opening our second,larger cultivation facility, we will contribute a total of approximately 120 new jobs with Lansing-based wages totaling approximately$3.15 million to $8.9 million annually. Few municipalities in the State are as well-positioned as Lansing to benefit from investment in the medical marihuana industry, and we are committed to being a positive part of that investment. We look forward to partnering with the City to create a long-term economic relationship that positively benefits us both. 26259177.1 -84- EXHIBIT C 13 -85- EXPECTED JOB CREATION ESTIMATES As discussed above,we are looking to make a significant investment in the City of Lansing, both in tetras of job creation and economic development. Moreover, for all of our positions, we would look to hire residents of the City of Lansing wherever possible,and we are looking to offer competitive wages,salaries,and benefits to our employees. For each of our provisioning centers, we anticipate creating at least 16 full-time,salaried positions per facility,with the following titles and salaries: • Executive-$80,000 annual salary(438 per hour) • Chief Operations Officer/Facility Manager 470,000(-$34 per hour) • Patient Outreach Manager-$60,000 (-$29 per hour) • Quality Assurance/Control Technician-$55,000 (-$26 per hour) • Nurse Field Representative-$50,000(424 per hour) - • Sanitation Specialist-$45,000(422 per hour) • Office Manager-$45,000(422 per hour) - • Community Outreach and Patient Education Specialist-$40,000(-$18 per hour) - • Addiction Prevention Directors-$40,000 (-$18 per hour) • Inventory Control Manager-$35,000(;-$17 per hour) • Order Fulfillment Representative-$34,000(-$16 per hour) '.:-, • Security Guards-$30,000 x 4(-$14 per hour) • Packing Representative-$28,000(-$13 per hour) As noted above, we are applying for two provisioning center licenses in the City. This means we will create a total of 32 new jobs with annual wages of approximately $1.4 million. Additionally,nearly 70 percent of our employees will earn more than$15 per hour in wages. Additionally, as discussed above, we currently have a purchase agreement in place for a 39,000 square foot building located at 1121 River Street in the City. We will be applying for at least one Class C(1,500 plant)I icense at this facility,as well as a-processor license.Consequently, as discussed above,we will create at least 30 additional jobs,all of which will pay approximately $20-$40 per hour in wages. In total, we plan to create at least 62 new jobs in Lansing, and contribute roughly$2.65 million to$3.9 million in annual wages.Additionally,if we are successful 26259177.1 -86- in opening our second, larger cultivation facility, we will contribute a total of approximately 120 new jobs with Lansing-based wages totaling approximately$3.15 million to$8.9 million annually. 26259177.1 -87- EXHIBIT D I 14 -88- CHARITABLE PLANS AND STRATEGIES Like all of our other businesses,we want to be good corporate citizens and good neighbors. We also understand that marihuana still has a stigma, and that, because of this, proactive and positive outreach is important.To this end, we have developed a comprehensive plan to engage in charitable activities that will benefit the Lansing medical marihuana community and the City at- large. All charity begins at home and,for us,that means investing our time,resources,and energy in our neighborhood. To this end, we are currently looking for local parks and playgrounds that we can"adopt" and maintain,whether that be landscaping, repairing or repainting equipment, or ensuring that the park is properly supported. We also wish to not only donate our time, but also our resources.To this end,we will actively look to sponsor events throughout the City of Lansing, whether that means sponsoring 5K races or golf outings. While we are not in the general vicinity of residential areas, we also want to help the residents of south Lansing. To this end,we will be organizing various events throughout the year that will help to benefit area residents. For example, we plan to organize a coat drive in order to provide needed winter clothing to many in the area. Similarly, we will be using our facility as a drop-off location for a number of charitable causes, including receiving gifts for Toys for Tots near the holidays,and also operating a canned food drive for our employees and customers.Finally, we are also planning to host a Thanksgiving turkey giveaway,with the hope of giving away more than 100 frozen turkeys to area families in need. As a medical marihuana retailer, we are also very sensitive to issues related to substance abuse in the community. As a result, we are committing to donate approximately $100,000 over the next five years to the Community Mental Health Authority of Clinton, Eaton, and Ingham 26259177.1 1 -89- County for its Substance Abuse Services and Corrections Mental Health programs. These donations will go to assist individuals suffering from drug and alcohol dependency in the Lansing area, and will also help individuals incarcerated in local jails to overcome substance abuse issues that may be the root cause of their criminality. Additionally, we plan on offering reduced prices to certain segments of our customers. First, we believe that marihuana is a beneficial medicine, and that it should be affordable to all who might benefit from its use.This is particularly important as insurance does not cover medical marihuana use, as it does with prescription medications. Recognizing the cost of this substance, we will offer reduced prices to individuals who are below certain income thresholds. Moreover, we will also be offering reduced prices to individuals who are veterans of the armed services. It is well-documented that many veterans who have returned from war zones suffer from Post- Traumatic Stress Disorder,and that the use of medical marihuana can greatly benefit many of these individuals. As such, in recognition of their service to our nation,we will be offering discounts to United States veterans. Finally,we are an industry that is heavily-reliant upon science and technology.To this end, we are absolutely dependent upon employees who are knowledgeable about those topics. Thus, we wish to partner with Lansing Public Schools in order to donate computer and laboratory - -- equipment that can be used in teaching science, technology, engineering, and mathematics ("STEM") classes. 26259177.1 -90- EXHIBIT E 15 :. -91- AFFIDAVIT OF STEVEN KESTO STEVEN KESTO,first being duly sworn,states: 1. I am a Michigan resident;and owner of AEY HOLDINGS,LLC. 2. I spoke to the lawyer for AEY Holdings, LLC for our Medical Marijuana Provisioning Center application to the City of Lansing in regards 3. As part of the application I was in charge of advising the lawyer the charitable contribution plan. ' C: 4. The lawyer made a typographical error when transcribing the amount of charitable contribution AEY Holdings,LLC will provide each year.The figure written of "S25,000" per year is incorrect. The proper figure should have read"S250,000"per year as that was the commitment made by my client,AEY Holdings,LLC. FURTHER AFFIANT SAITH NOT. I declare under oath that the above statements are true to the best my knowledge, information and belief. ATE Stevrzw STATE OF MICHIGAN ) )ss MAY A TOUMAS COUNTY OF OAKLAND ) NOTARY PtBUC-STATE OFM'CNIGAN COUNTY OFQ ME) Subscribed and sworn to ActhVh� z before me on this fz— ! - of August,2018 Notary Public �oun ,Michigan, Acting in ounty - My Commission Expires: 2 (00176930) 5 -92-