GM announces $7 billion EV Battery Investment in Michigan

On Jan. 25, General Motors announced a major electric-vehicle investment in Michigan, with plans to spend $7 billion and create up to 4,000 new jobs at two plants.

Earlier in the day, the Michigan Strategic Fund board approved GM’s requests for a Critical Industry Program grant and Strategic Site Readiness Program grant to incentivize the two projects.

The package includes $666.1 million in grants from a $1 billion economic development fund the Legislature recently created. The projects are set to take place in Lake Orion and Delta Township and could bring in anywhere from 3,200 to 4,000 jobs.

“General Motors battery plant investments are a big win for the state and reflect Michigan’s global leadership in automotive innovation and workforce talent,” said Glenn Stevens Jr., executive director MICHauto and vice president of automotive & mobility initiatives for the Detroit Regional Chamber. “Today’s announcement is also the result of bipartisan cooperation on economic development that MICHauto, the Detroit Regional Chamber, and partners across the state advocated for. Michigan is uniquely positioned to lead the electrification of the mobility industry and thrive in the knowledge-based economy.”

An 18-year Renewable Energy Renaissance Zone, which requires a minimum investment of $1.5 billion, was also approved by the board this morning for the Delta Township project. The renaissance zone exempts the company from certain city-levied taxes.

GM plans to expand its Orion Township facility to support the production of electric vehicles and is anticipated to have a capital investment of up to $4 billion. Ultimum Cells LLC, working with GM, will build a new volume battery cell manufacturing facility in Delta Township and is expected to bring in anywhere from $1.5 billion to $2.5 billion.

MICHauto and Chamber Economic Development Advocacy

GM’s announcement comes after last year’s historic bipartisan set of bills to support economic development in Michigan. The Chamber and MICHauto were instrumental in the passage of these bills and were standing side by side with Gov. Whitmer, Speaker Jason Wentworth, and Senate Majority Leader Mike Shirkey when they were signed.

“Big bipartisan wins for Michigan are increasingly rare, especially ones that have a transformative impact on our economy. Michigan created and owned the automotive industry since its inception, but leadership today does not ensure leadership into the future — especially in light of other states gunning for our assets,” said Sandy K. Baruah, president and chief executive officer of the Chamber. “The Chamber and MICHauto, along with partners across the state, are proud to have worked with the Legislature and Governor’s office to pass the biggest bipartisan deal in Michigan since the 2019 bill signing at the Mackinac Policy Conference, which will allow our state to compete and win the jobs of the future.”

What this means for Michigan

Tuesday’s announcement gives GM three U.S. battery cell manufacturing sites, with a fourth one coming. It also provides more EV production capacity at a plant already building the electric Chevrolet Bolt EV and EUV: Orion Assembly, which like Factory Zero at Detroit-Hamtramck Assembly Center will build the electric Chevrolet Silverado EV and GMC Sierra, giving GM capacity to build 600,000 electric pickup trucks when both plants are fully running.

“We’ll have over a million units of battery electric vehicle capacity in the United States by 2025, and that 600,000 is a major part of that,” GM President Mark Reuss said on a call with media Tuesday. “As we see the transition happening, we know the adoption rate has really increased over the last year or two. We’ve done that research and we see the acceptance of the newly introduced Silverado as very, very positive, and high as well.”

The Michigan investment is expected to create more than 1,700 new Ultium Cells jobs when the plant is fully operational. Work on the project will start this summer and battery cell production is scheduled to begin in late 2024. The plant will supply cells to the products made at Orion Assembly and other plants.

Ken Harris is looking to take Detroit’s Black-owned businesses to the next level

Detroit Free Press
Jan. 22, 2022
Scott Talley

A vegan. A yogi. A “meditation and breathwork advocate.” And an avid supporter of entrepreneurs.

Those descriptions, in his own words, apply to native Detroiter Ken Harris. And he wants it known that who he is as a total human being is what directly drives his work each day as national president and chief executive officer of the National Business League, the nation’s oldest and largest trade organization serving Black businesses.

“It’s holistic entrepreneurship; there can be no wealth without health — mind, body, soul and spirit,” stated Harris, who has an office in the National Business League’s Midwest Regional Office in downtown Detroit. “I make a concerted effort to prioritize self-care, just as the pursuit of Black economic freedom is my life’s purpose, design, and contribution during this lifetime and probably the next. It all ties in together as a lifestyle, channeling balance and alignment of right frequency, positive energy, and high vibrational activity daily, which is a part of ancient African traditions.”

Harris, 48, speaks fondly of growing up in the late 1970s and ’80s on West Buena Vista Street off Petoskey in the Russell Woods area. During his boyhood days, he was skilled enough in basketball to eventually earn a full basketball scholarship to Clark Atlanta University. And, as an adult, he has become adept at the advocacy game by being an active player in the movement to advance Black businesses. Prior to assuming the leadership of the National Business League in 2017, Harris created the International Detroit Black Expo, which became one of the largest showcases for Black businesses in the country.

Feeding off the Detroit Black Expo’s momentum, Harris went on to start the Michigan Black Chamber of Commerce, which grew to more than 26,000 members with chapters throughout the state. He also has been a featured speaker at numerous conferences across the country; and as a subject-matter expert, Harris is regularly quoted in national publications. But putting aside his resume and credentials, Harris is hoping that 2022 will be the year that his work, along with the entrepreneurs it serves, is seen and valued completely, because as he explains, the success of Black businesses should matter to our society as a whole.

“We have to create a conscious culture and cooperative mindset in supporting Black businesses, because the opportunity is here to return Detroit as one of the more preeminent epicenters for Black entrepreneurship in the country,” Harris said emphatically. “And that would be extremely important to our overall economic recovery and revitalization as a city.”

True to his academic background, which includes bachelor’s and master’s degrees in psychology from Clark Atlanta and a Ph.D. in African American/African Studies and economics from Michigan State University, it is Harris’ way to defend his statements with extensive supporting data. But when explaining the importance of Black businesses to Detroit as a whole, he makes his strongest case by focusing on just a few numbers.

“Most people wouldn’t believe this, but 80% of the roughly 62,000 (2019 census data) businesses operated in Detroit are Black-owned. But most of those businesses don’t have any additional employees beyond the owner,” Harris said. “We should be viewing those businesses as untapped potential for growth, because if those businesses were to add one, two, three, or four more people, we could quadruple our economy. It’s simple math.”

Harris said a major reason that corporations, entrepreneurs, and the community at large should support the National Business League is because of the organization’s recent track record. He points to the earlier stages of the pandemic, during which he proudly reports his organization generated more than $20 million to assist rebuilding and innovation for national and Detroit businesses.

“In October of 2019, when the experts began talking about this potentially deadly disease, our leadership, led by National Chairman Thomas W. Dortch Jr., began thinking about how we could best support Black businesses in the event of this economic crisis,” said Harris, whose organization sells tier-level memberships to businesses and corporate partners. “And then January (2020) it hit the fan. And in March (2020), we had statewide shutdowns. But the NBL had already been partnering with government agencies and companies (including the U.S. Department of Commerce Minority Business Development Agency, Stellantis, Comerica Bank, General Motors, and American Express) so that the organization could at least stand in the trenches for Black businesses.”

Along with expressing his gratitude to his governmental and corporate sponsors, Harris said Detroiters should be aware that long before the pandemic, there have been Black business and civic leaders across the city that have generously and strategically used the resources available to them to support Black businesses in Detroit for decades. When asked to name some of the more noteworthy supporters of Black businesses, Harris, not wanting to risk forgetting anyone, methodically took his time and put together a written list of deceased business and community leaders that he reveres. His list included: Brent Hamilton; Don Barden; Don Davis; Douglass Diggs; Glenn E. Wash; John Barfield; Kathie Dones-Carson; La-Van Hawkins; Marlowe Stoudamire; Mel Farr; Nathan Johnson; O’Neil D. Swanson; Ron Hall Sr.; Sam Logan; and Harris’ “personal mentor” William C. Brooks.

“If this was basketball, that list would make up my all-star team in the spiritual realm, and it’s fitting because each person supported the dreams of many Black entrepreneurs in this city,” said Harris, whose great uncle Dr. DeWitt T. Burton founded Wayne Diagnostic Hospital (later called Burton Mercy Hospital) at 271 Eliot with Dr. Chester Ames in 1939. “These people have joined the ancestors, but they should never be forgotten, especially by Detroit entrepreneurs and the community. And remembering these leaders is a part of holistic entrepreneurship. Sankofa means going back to reclaim to move forward. We as Black people need to take time and learn our history, because a people without knowledge of their history, origin, and culture is like a tree without roots.”

On the same evening that Harris discussed the importance of his list, he also shared his plans to visit Heritage Optical Center’s Livernois location on the morning of Jan. 21.

“As part of the NBL’s national platform, I have traveled extensively, lectured, and met with business leaders across the country; and it’s nothing like coming back home to your roots and visiting my tribe in Detroit’s Black business community like Heritage Optical, which has been in business for over 50 years.”

Harris said his visit to Heritage Optical would not be guided by an agenda, by choice. But if meeting with the Heritage Optical team leads to the implementation of new ideas down the road, he believes that would be a big win.

“Our organization doesn’t try to operate as CEOs for local Black businesses, instead we try to help the CEOs,” Harris explained. “But we always need to be looking for new and unconventional ways to support Black businesses as a whole, because the conventional ways simply haven’t worked well enough for everyone.”

Want to know more?

The National Business League 

What: “To promote the commercial and financial development of the Negro,” Booker T. Washington founded the National Negro Business League on Aug. 23, 1900, in Boston. Along with being the first, today the National Business League is the largest nonprofit, nonpartisan and nonsectarian Black business professional and trade association. 

Detroit Leadership Connection: Ken Harris, President and Chief Executive Officer, kharris@nationalbusinessleague.org

Location: National Business League Midwest Regional Headquarters, 1001 Woodward, Suite 910, Detroit. Phone number, 313-818-3017.

Membership: The National Business League reports having more than 120,000 members nationwide and 125 Fortune 500 corporate partners. The membership includes chapters in all 50 states, along with international chapters. 

For more information: Go to www.nationalbusinessleague.org.

View the original article.

Jan. 21 | This Week in Government: Election Audit Board, Abortion, Wage Petition Summaries OK’d; Varying Avenues Aside, Supreme Court Could Decide Fate Of Redistricting

Each week, the Detroit Regional Chamber’s Government Relations team, in partnership with Gongwer, will provide members with a collection of timely updates from both local and state governments. Stay in the know on the latest legislation, policy priorities, and more.

  1. Election Audit Board, Abortion, Wage Petition Summaries OK’d
  2. Varying Avenues Aside, Supreme Court Could Decide Fate Of Redistricting
  3. State Workforce Unchanged As Jobless Rates Decline In December
  4. Auditor General: No ‘Undercount’ In DHHS Nursing Home Death Data
  5. EGLE Releases Draft Climate Plan; Environmental Orgs Want More

Election Audit Board, Abortion, Wage Petition Summaries OK’d

The summaries for initiative petitions that would create an audit board to hire contractors to review statewide elections and enshrine the legal right to an abortion in the Constitution were approved by the Board of State Canvassers on Wednesday.

Canvassers also approved a petition summary for an initiative petition to raise the minimum wage.

Under the audit petition, election audit authority would be transferred from the Department of State and county clerks to an audit board of 10 Republican and 10 Democratic delegates selected by the House speaker and minority leader. The audit board would hire a third party to conduct audits of elections. The proposal also would set up a grand jury consisting of seven members of the audit board selected by the speaker and six selected by the minority leader and it could issue arrest warrants for noncompliance and criminal immunity for cooperation.

Audit MI, which is behind the petition, consists of staunch backers of former President Donald Trump who insist – despite no evidence showing substantial fraud – that he actually won the 2020 election. In reality, President Joe Biden won Michigan by 154,000 votes in a result that was canvassed and certified in all 83 counties on bipartisan votes and then backed up by multiple post-election audits.

The group’s goal is to gather the necessary valid signatures from registered voters to bring the proposal before the Republican-controlled Legislature and force the GOP majorities to act.

Attorney Jon Rocha, representing Audit MI, said the group believes in transparent elections and don’t want election counting to be affected by party politics. However, the audit board consists of individuals from the two major parties and excludes those who have no party affiliation or an affiliation with a smaller political party. The language also needed to include the phrase “to review 2020 and subsequent” so voters know if passed, the board could review the 2020 election results.

Vice President of Audit MI Tami Carlone said she and other members of her organization find the proposal and its language fair and nonpartisan. Carlone is the coalition’s vice chair of the Michigan Republican Party.

“You are putting into place the parties to decide and completely eliminating anyone that doesn’t identify as partisan,” Board Member Jeannette Bradshaw (D-Ortonville) said. “If you don’t trust either party as a voter…how are you going to trust them to audit an election?”

Carlone answered the job of the board is not to conduct the audit but rather to hire professionals to conduct the audit.

There was also much debate about what a forensic audit is and how the audit board would be funded. Elections officials have said for a year that there is no such thing as a “forensic audit.” Attorney Mark Brewer from Goodman Acker, a former chair of the Michigan Democratic Party, said to include this phrase in the language would be misleading. He called it circular, saying it is only forensic because the petitioners are calling it forensic. Scott Eldridge, representing the Michigan Democratic Party, called the petition a “sham.”

Funding for the board was also unclear. The 100-word summary simply stated private and public funding would support the board, however the amount of funding remains undefined. The language includes a non-disclosure requirement of private funding sources. Board Vice President Mary Ellen Gurewitz (D-Detroit) asked when taxpayer dollars would be used for the board.

Rocha said the private funding will go to pay for the contractors the audit board will hire and the public funding will pay for the audit the contractors conduct. Details about what triggers the audit is only viewable on the full text of the proposal.

The word “forensic” was deleted from the summary and the board unanimously approved the following:

“Initiation of legislation amending Michigan Election Law to: transfer election audit authority from secretary of state and county clerks to audit board of 10 Republican and 10 Democratic Party delegates selected by House speaker and minority leader; create grand jury of 7 Party delegates selected by speaker and 6 by minority leader; require audit board hire contractors to review, for the 2020 and subsequent statewide elections, protected election materials, equipment, and voters, and disclose findings; allow grand jury to issue subpoenas, arrest warrants for noncompliance, and criminal immunity for cooperation; require audit board raise funding for audit with no disclosure requirement for private funding sources.”

A summary for the Reproductive Freedom for All petition was also approved after much heated debate. Backers of a legal right to an abortion are pursuing the proposal because of the expectation the U.S. Supreme Court will overturn the Roe v. Wade precedent that legalized abortion nationally. If that happens, Michigan’s abortion ban, which dates to 1846, would come back into full force.

The summary language and petition would allow women to obtain an abortion and assure access to birth control and other reproductive care.

Right to Life of Michigan and the Michigan Catholic Conference are opposing the proposal to amend the Constitution to legalize abortion in Michigan law. Attorney Eric Doster representing Citizens to Support MI Women and Children said the board should remove the words “reproductive freedom” because it was not formally defined.

In the proposed version of the summary, the word “including” was used and Doster argued the language should say “is” or “defines.” He also argued the phrase should be deleted altogether because it is prejudicial language.

Board Chair Norm Shinkle (R-Williamston) said he wanted to delay voting on the language for the next meeting, which he said would fall within the deadline. However, Brewer objected, saying Shinkle should treat this summary similarly to the other summaries discussed.

Besides the delay, Board Member Tony Daunt (R-DeWitt) said he disliked the term “reproductive freedom” because he also found it to be prejudicial language, stating in his personal opinion the phrase was the same as inserting in the summary “this will allow people to kill babies.”

“Daunt, that is in the proposal and your job is to summarize the proposal,” Brewer said. Daunt countered him, asking if he was okay with indicating this will lead to the death of innocent children.

“Mr. Daunt… your duty is to summarize the proposal that’s presented to you. Whatever our personal beliefs are in these matters are irrelevant,” Brewer said.

Shinkle at one point said he would like the language to include the proposal “eliminates the right to life for the unborn” and he would not vote in approval of the summary if it did not. The board voted on the language and the summary failed 2-2.

Daunt said he would like to find a compromise and perhaps the summary would pass. During the recess he wrote and submitted his own proposed summary that included the words “so-called” before reproductive.  Gurewitz said the words so-called were unacceptable and the summary did a good job of explaining what reproductive freedom is and he agreed to remove those words.

The final summary edited by Elections Director Jonathan Brater passed 3-1, with Shinkle voting no:

“Constitutional Amendment to: establish new individual right to reproductive freedom, including right to make and carry out all decisions about pregnancy, such as prenatal care, childbirth, postpartum care, contraception, sterilization, abortion, miscarriage management, and infertility; allow state to prohibit abortion after fetal viability unless needed to protect a patient’s life or physical or mental health; forbid state discrimination in enforcement of this right; prohibit prosecution of an individual, or a person helping a pregnant individual, for exercising rights established by this amendment; and invalidate all state laws that conflict this amendment.”

Finally, the board also unanimously approved of a summary for a petition that would raise increase the minimum wage to $15 by 2027 on Wednesday.

The petition submitted by Raise the Wage would also increase the wage for employees who receive tips to match the wage of all employees over the next six years. The language was changed to include the urban wage-earners and clerical workers calculation to better adjust to inflation. The phrase disability was also debated being deleted due to stigma concerns. However the board determined the petition was effectively banning employers from discriminating against employees for having a disability and left the language intact. The board approved the following summary:

“Initiation of legislation amending Improved Workforce Opportunity Act 2018, PA 337, MCL 408.932 and 408.934, and adding MCL 408.934e, to: increase the minimum wage to $11/hour in 2023, $12 in 2024, $13 in 2025, $14 in 2026, $15 in 2027, regardless of unemployment rate; in following years, increase minimum wage based on inflation rate for urban wage-earners (CPI-W); adjust over 6 years the minimum employer-paid portion of pay for workers receiving tips until it matches minimum wage for all employees; provide that employees keep tips unless they agree to share them with other non-manager employees; remove state authority to approve lower minimum wage based on determination that minor, apprentice or disability status reduces productivity.”

Michigan’s minimum wage is currently $9.87 per hour and under existing statute schedule to rise to $12.05 per hour by 2030.

The minimum wage and audit proposals need to obtain at last 347,047 valid signatures from registered voters to be brought before the Legislature (the wage proposal presumably would not get support and then go to voters in November). The abortion proposal, as a constitutional amendment, needs at least 425,059 valid petition signatures from registered voters to go on the November ballot.


Varying Avenues Aside, Supreme Court Could Decide Fate Of Redistricting

The Michigan Supreme Court could shape out to be the primary venue for any and all claims made against the Independent Citizens Redistricting Commission and its newly adopted legislative and congressional maps, although several attorneys who practice election law said that the court and its majority of Democratic Party-nominated justices may not be a slam dunk for those challenging the plans.

That includes federal Voting Rights Act challenges or more localized challenges to things like partisan fairness or communities of interest considerations.

Several attorneys knowledgeable in election law spoke with Gongwer News Service for this story under the condition they not be named.

Some of them said that the Michigan Constitution is clear in its grant of original jurisdiction to the state Supreme Court on redistricting matters, so even if a related challenge is proffered in one of the federal district courts – or both – a federal judge could very well defer to the state court to answer those questions, much like it did in 2020 regarding Gov. Gretchen Whitmer’s recurring states of emergency to deal with the coronavirus pandemic.

Similarly, the state’s high court could very well defer to the federal courts and stay any case before them in anticipation of a ruling on federal redistricting challenges brought against the commission’s plans.

But as to how the court might decide these types of cases was anyone’s guess, said Michigan State University law professor John Pirich, a former longtime elections attorney.

“I’m not a fortune teller on this one, I have no idea what the court would do,” he said. “It has no case law or precedent attached to it at this point, in the sense of what the commission did, and whether they violated the standard by not having certain documents or proceedings open to the public (as the court ruled in a separate case unrelated to the final work product).”

Talk of which venue offered potentially the best outcomes for petitioners or how the two court systems might decide those challenges intensified as the ICRC adopted three plans for the state House, state Senate and U.S. House late last year. Speculation grew after Black Democrats filed the first lawsuit against the commission challenging the content of its maps.

While Detroit Caucus, et al v. MICRC is a direct challenge to the way the commission handled federal Voting Rights Act compliance, which is one of the top-ranked criterions in the Michigan Constitution, the state’s Supreme Court can still choose to hear it because federal compliance is baked into the amendment that created the commission.

It could be easy to assume that a group of Democratic Party lawmakers, organizations or voters challenging the commission’s handling of the Detroit districts might have a surer chance of success and a potentially swifter outcome moving through state court – which appears in one step because challenges must be directly filed to the Supreme Court.

The same could be assumed of Republican Party lawmakers, groups or voters seeking to challenge things like unequal population deviations on the maps, macro VRA claims or procedural challenges in federal court.

However, several attorneys said those assumptions may not ring true.

Some said they weren’t ready to assume that the Michigan Supreme Court’s Democratic Party-nominated majority was a surefire bet for a favorable ruling toward groups like the Detroit Caucus – made up entirely of Democrats – nor were they ready to assume that the justices would even take up certain cases as neither the previous (a GOP majority) nor the current bench seem inclined to deal with election issues at all.

Pirich called that expedited filing process an advantage, at least timing-wise, for potential plaintiffs as compared to the previous mode of taking challenges through the various stages of state court. But he was still wary about making predictions due to the lack of applicable case law.

“The old system, or the system that we had, in regard to most election challenges is very different than the constitutional amendment here. (There was) a degree of expertise and experience, everything was fully briefed and argued,” he said. “You then had a record that would go on to, in most cases, the Court of Appeals or could be bypassed to the Supreme Court. Now, it’s a clean slate, and it’s completely different. So, you’re not going to have the body of law that used to accompany these kinds of challenges, especially in redistricting, which is so unique, and so unusual, compared to so many of the other challenges. But both federal and state constitutional issues apply.”

Additionally, the urgency of resolving these kinds of challenges before the looming April filing deadline for candidates for both the Legislature and U.S. House was a reason for Pirich to say he believes the Supreme Court would act more swiftly than the federal courts.

“That is a completely different set of facts and circumstances. … I think the Supreme Court has been incredibly adroit in addressing these questions in a really quick way compared to other challenges historically, especially with regards to redistricting,” he said. “We would have a full panoply of challenges that would take a long period of time, as long as – I’m talking about months and months and months. I think here, they’d be much more expeditious and I think the goal of the of the amendment was to in fact provide that remedy. That if there were going to be challenges, they were going to go right to the Supreme Court and hopefully get them resolved as expeditiously as possible.”

There was also a sense among additional sources that a successful court challenge against the maps advanced by the commission was unlikely, or at the very least ranked low in probability. Some even said they doubted the success of certain challenges as the clock continued to tick closer toward March, when the maps are slated to become law.

Thus, some said they expect the courts to give the commission wider latitude and it would take an exceedingly important question for them to take on a case related to Michigan’s redistricting. That would be especially true for the state Supreme Court considering the commission is an independent body but one that works closely with the Department of State and the Bureau of Elections – both of which are executive branch agencies.

If the commission demonstrates that it has complied with its own standards, based on available data and expert analysis, as well as the precepts of the VRA as prescribed by previous precedent, it may be in a safer spot than some might assume.

Several of those who have followed the process have said that the advice given to the commission regarding the VRA may have been faulty – particularly bits about potentially not needing majority-minority districts because there were few instances of racially polarized voting, or because districts with at least 40-45 percent Black voting age population had enough bloc power to elect minority candidates of choice.

However, some who spoke to Gongwer said that while the commission may have poorly crafted Detroit’s districts, its VRA advice appeared to be sound.

From a GOP perspective, Small Business Association of Michigan President Brian Calley said similarly when asked on a radio program recently if he thought those in rural areas should sue the commission over the way it handled county and township splits.

The former lawmaker and lieutenant governor said that just because the maps were “bad,” it didn’t make them illegal, falling in line with the sentiment shared by some attorneys watching the process or contemplating litigation of their own.

Aiding the commission in its legal challenges is the fact that the body had done a great deal of bullet-proofing its decisions and has been writing those decisions down as they go to track compliance. That written record is by law to be turned over to the Department of State as a report once its work is officially over; or rather, when the maps become law and all legal disputes are settled.

That’s not to say that the commission hasn’t found itself in a trap of its own making before the Supreme Court, as the court has twice dinged the commission on procedural grounds, some attorneys noted.

The commission had asked the court this past spring to consider extending its constitutional deadlines because it feared it would not meet them due to unexpected U.S. Census data delays. The ask occurred around the same time when a litigant from Detroit sued the commission over the delays and to hold them accountable seeing as there was a real possibility that it would blow those deadlines.

The court in that instance declined to do so, noting that it had not yet crossed that threshold and that it wasn’t ripe as a matter of law. It also threw out the associated lawsuit. The commission did, however, blow their deadlines and was not sued.

In a second showing before the state’s highest court, the commission lost in a lawsuit brought by three newspapers and the Michigan Press Association that sought the release several memoranda kept private under attorney-client privilege. The court in that case ruled 4-3 to disclose the materials and a closed session minutes record tape because the majority ruled that the closed session should not have been held.

As to the court’s Democratic Party-nominated majority either helping or hurting those who file challenges, some attorneys said the perception could be deceiving and was far more complicated. Some cited that fact that Michigan’s highest court has a tradition of staying out of the state’s political squabbles – with a few exceptions, like the COVID-19 executive powers fight that played out in 2020, and the question of whether the constitutional amendment creating the commission should go on the ballot in 2018.

With politics out of the equation, a successful case, some said, would be one that could prove irrefutably that the commission violated the VRA and federal law on equal population standards, as well as other constitutional criteria. In turn, the commission could be successful if it presented a good-faith argument that they did their best to balance the at times conflicting constitutional criteria.

The former appears to be the more difficult one to make because of the way the criteria was written, especially if an argument alludes that the commission should have acted differently than it did.

The court has not granted oral arguments yet in Detroit Caucus, but they have asked for a reply brief, which was filed late Tuesday and made public on Wednesday. An aspect of the commission’s argument rests on the fact that the caucus has been unable to meet the three-tiered thresholds of vote dilution related to the commission’s maps.

Whether the court issues a swift and decisive ruling – and one that would override its deference to typically decline rulings of this nature – would also depend on whether a plaintiff of plaintiffs can demonstrate that there was a better way to redraw the maps.

That too could be difficult, but that effort may be aided by the glut of community-submitted maps that the commission used as a reference but had not adopted outright, citing issues with those maps and a feeling that they weren’t much better on the metrics than the commission’s collaborative maps.

In Detroit Caucus, the plaintiffs said the commission could have done a better job but provided no alternative direction, a point the commission makes in its reply brief.

That said, Republicans might also have cause to be wary of seeking challenges in state court because the remedy could be a redraw that would make them worse for the parties than they are now.

FEDERAL COURT CHALLENGES COULD FURTHER GUM UP THE PROCESS: The same cannot be said necessarily of the federal courts, which has a heavier GOP slant as it goes up the appellate chain, not only in the U.S. circuits but also on the U.S. Supreme Court – which are now stacked with appointees of former President Donald Trump.

Democrats could be wary to seek challenges in that venue because they might fear a partisan decision, one that could sink their claims, some attorneys said. They could also be concerned that the federal VRA is enforced by the U.S. Department of Justice, helmed by U.S. Attorney General Merrick Garland and overseen by Democratic President Joe Biden.

It could be difficult to convince the federal agency that the commission didn’t do its best to comply with the federal statute in a case where it appears there was no outright race-based political reason to crack or pack Detroit’s districts, some said. Others added that they haven’t seen anything in the commission’s work that would imply that it did so, either.

Conversely, the GOP might find itself in a better situation in federal court depending on the nature of the claim.

A redistricting lawsuit alleging a constitutional violation does not follow the usual system of discovery, briefs and potential trial at the district court level. Instead, the district judge receiving the case would then alert the 6th U.S. Circuit Court of Appeals, whose chief judge would appoint two other judges to a three-judge panel. When Democrats filed a challenge a few years ago, the chief judge was nominated to the bench by a Democratic president, and Democrats got a favorable panel.

Now, however, the chief judge was nominated by Republican former President George W. Bush. And if the Republican plaintiffs file in the Western District, as one would assume, they have a high likelihood of the assigned judge having been nominated by a Republican with only one Democratic judge in the district.

However, a lawsuit specific to the U.S. Voting Rights Act would go through the standard process. The challenge for Republicans would be that any such allegation would involve how the maps were drawn in southeast Michigan and that means filing in the Eastern District, where far more judges were nominated by Democratic presidents.

If such a lawsuit delayed a remedy close or up to the April filing deadline – assuming the Michigan Supreme Court hadn’t already ruled on a map-based challenge, kicked the maps back to the commission and extended to the deadline to May, for example – some said that a 6th Circuit panel could order that the old maps to be used in the 2022 election.

The likelihood of the GOP raising a VRA challenge is uncertain, however, as some thought it could be viewed skeptically by the courts. One Republican source said the topic is under debate in the party. There’s also the matter of standing.

In some cases, a federal judge could refer certified questions to the state Supreme Court to answer a question it may have initially passed on, setting the record in both state and federal court by proxy.

Pirich said such was the case in 2020 when the Supreme Court gutted Ms. Whitmer’s ability to unilaterally keep Michigan under a state of emergency related to COVID-19. The case emerged before Michigan’s justices from questions sent by U.S. District Judge Paul Maloney of the Western District.

“That’s overlaid again, with the federal Voting Rights Act issues. I just don’t know if anyone can predict the outcome of what would happen with those kinds of challenges,” he said. “I think we’re in new territory completely in regard to what would happen and when it would happen, or how what would happen.”


State Workforce Unchanged As Jobless Rates Decline In December

There was little change in the state’s workforce during the month of December as the seasonally adjusted jobless rate fell to 5.6 percent, the Department of Technology, Management and Budget said Thursday.

The number of those employed increased by 16,000 while the total unemployed decreased by 15,000. Total nonfarm employment increased by 11,000 for a statewide job total of 4.25 million.

“Labor market conditions in Michigan showed clear improvement in 2021,” Wayne Rourke, associate director of the Bureau of Labor Market Information and Strategic Initiatives, said in a statement. “The unemployment rate fell sharply over the year, and payroll jobs rose steadily throughout 2021.”

On the national side, the jobless rate went down significantly by three-tenths of percentage point to 3.9 percent. During the year, the reduction in the national and state jobless rate were similar: 2.8 percentage points nationally and 2.6 percentage points in Michigan.

The state’s workforce, though, decreased by 2 percent in 2021 while it increased by 1 percent nationally. The state’s unemployment rate remains two points higher than the February 2020 rate.

The Detroit area’s seasonally adjusted unemployment rate declined by 0.3 percentage point to 5.2 percent in December. Employment in the Detroit area rose by 15,000, while unemployment moved down by 6,000. The region’s labor force increased by 9,000 over the month.

Additionally, the area’s jobless rate dropped by 5.1 percentage points over the year. Employment advanced by 66,000 since December 2020.

Total payroll jobs advanced by 220,000, or 5.5 percent, during the year. However, total employment in December was 205,000 below the February 2020 pre-pandemic level.

The statewide leisure and hospitality industry exhibited the largest job reduction in December – down by 4,000 – as jobs declined in accommodation and food services. During the year, though, leisure and hospitality saw the largest job gains at 101,000.

However, this industry also accounted for nearly 30 percent of the jobs lost in the state since February 2020.

Still, Gov. Gretchen Whitmer in a statement praised the figures released Thursday, focusing on the eight consecutive month of job growth.

“I will work with anyone as we continue putting Michiganders first, getting more Michiganders back to work, and growing Michigan’s economy,” she said.


Auditor General: No ‘Undercount’ In DHHS Nursing Home Death Data

Despite the continued efforts of Republicans to paint the Whitmer administration and Department of Health and Human Services as deliberately underreporting COVID-19 deaths in care facilities across the state, Office of Auditor General personnel Thursday rebuffed that claim.

All week, Republicans have claimed the auditor report saying its staff found 2,386 more deaths at long-term facilities than DHHS was proof of a conspiracy by the Whitmer administration to downplay the number of deaths at nursing homes. In fact, the report drew no such conclusion, and the comments of Auditor General Doug Ringler at a committee hearing Thursday refuted those claims.

During a nearly four-hour joint meeting of the House Oversight Committee and the Senate Oversight Committee on Thursday, Ringler noted certain long-term care facilities were not required to report death data to DHHS.

“For the long-term care facility related deaths, or linked deaths, we know that the department wasn’t tracking all of the ones that we’ve reflected in our letter,” Ringler said. “We didn’t feel the word ‘underreport’ was fair. So, we cited it as a difference.”

The report Ringler cited was released by his agency this month and pertained to the number of care facility deaths during the COVID-19 pandemic being higher than what DHHS has reported. The OAG found that 2,386 deaths were not tallied when the DHHS reported COVID-19 fatalities in long-term care facilities.

That final OAG tally, gathered between when the pandemic began and July 2, 2021, stands at 8,061 deaths. The DHHS reported 5,675 deaths.

The difference is that DHHS did not include deaths at facilities not required to report to them and that auditors used different data systems to tally numbers than what DHHS used.

DHHS Director Elizabeth Hertel has maintained since the release of the report her agency has not concealed or altered the number of deaths at these facilities, instead saying the difference is owed to reviewing homes not required to report information and disputed methodology.

Auditors were also unable to analyze which deaths were specific to facilities where residents were transferred to a hub, a Whitmer administration policy from early in the pandemic Republicans criticized.

Among the points of contention between the OAG and DHHS is regarding long-term care facilities not required to report death information to Hertel’s agency, which includes adult foster care facilities licensed for 12 or fewer beds, exempt homes for the aged and hospice-only skilled nursing facilities. Between those entities lay 1,051 deaths, as indicated in the OAG’s report.

The DHHS did take some heat, though, from Ringler, who later in the committee hearing defended the OAG’s work from previous allegations by Hertel that it was somehow politically motivated. The auditor general is appointed by the Legislature, which is controlled by Republicans. The nursing home controversy has prompted some Democratic grumbling about the auditor’s report though historically audit reports have been seen as nonpartisan in nature.

“We did an analysis in black and white,” he said. “We have identified what it is we did. We identified the plusses of our work. We identified some of the warts that existed from trying to do data analytics – it’s right there, in black and white. We said what we mean, and we mean what we said. I guess I don’t know what else to say.”

It’s here that Republicans have latched on, in an effort to liken Michigan’s nursing home COVID-19 fatalities to the cover-up attempted in New York under former Governor Andrew Cuomo even though no evidence has surfaced to suggest anything in Michigan like what happened in New York where gubernatorial staff intervened to downplay that state’s nursing home death data, leading to a brief but since ended federal investigation.

That juxtaposition was brought up once again during Thursday’s hearing, with Republican senators and representatives pushing hard on Hertel for the actions her department took under EO 2020-50. Some on the panel even outright insinuated that the administration and DHHS killed thousands of elderly Michiganders from the outset of the pandemic.

Though ex-DHHS Director Robert Gordon oversaw the agency when the order was implemented, which lawmakers did acknowledge, they also questioned Hertel on whether she made an effort to call out the order as bad policy to which she said she was not working on that policy at the time.

That short lived executive order, among other things, explicitly calls for nursing homes to admit of residents positive for COVID-19 only if they could safely be isolated in one of the building’s wings with other proper safety procedures. The order was quickly amended and DHHS has said it was never fully implemented. Whitmer has said no nursing home was forced to take a COVID-19 patient.

Rep. Steve Johnson (R-Wayland), chair of the House committee, told reporters following the hearing that despite Mr. Ringler’s comments, he stood by his statement “that what the DHHS provided to us was an undercount.”

“The auditor general, they’re not political. They’re trying to stay out of a political fight here,” he said. “So, he was trying to be very careful in parsing his words. I get what he’s doing. … But if you look at what happened, the administration provided numbers that they knew didn’t include everything. And when we said ‘hey, how many nursing home deaths are there?’ That’s what they provided. They acted like, ‘well, that’s everything,’ even though they knew it wasn’t. It was misleading. Not saying they lied to anyone, but they definitely mislead.”

Hertel, for her part, did try to steer clear of many of the committee’s politically charged questions though again reiterated she felt the OAG report purposefully publishing misleading information. Her issue was with the scope of the data, which Ms. Hertel again said was wider and broader than what the DHHS was meant to collect and provide.

She also again reiterated that the DHHS “never placed COVID positive patients in a nursing home,” a point which the agency and Whitmer administration have upheld when defending EO 2020-50 as something that was rescinded before going into full effect. Stakeholders in the industry, including Health Care Association of Michigan President Melissa Samuel, have also stood by this as a truthful assessment.

That sparked incredulity from Republican lawmakers, some of whom said they had directly spoken to staff at care facilities who said they had.

Johnson was particularly adamant that even if the department never outright forced COVID-positive patients into nursing homes, then the existence of the executive order would have by way of fear.

“I know you guys said, ‘oh, we never enforced it,’ … people thought you were going to enforce it,” he said. “They’re worried about losing their license. They’re worried about a misdemeanor. So, they hear Executive Order 50, ‘it says it applies to me, I’ve got to follow it.’ We know this happened in facilities.”

Hertel, though, said that based on her knowledge of how the DHHS did work with facilities on the policy itself, the agency followed the science and “did provide the resources that they needed.”

“(What) we need to do is ensure that facilities are caring for patients and particularly the medically frail patients have the resources that they need to properly control for infectious diseases,” she said. “And that is the purpose of working with facilities: To make sure that they can safely take residents back and care for them at the facility that is most appropriate for them.”

Her remarks also continuously emphasized that she felt the OAG report utilized the wrong forms of databases in determining a final death count in these care facilities, telling the panels that one of her biggest issues was that definitions within the report “do not align with federal and state statutory and regulatory requirements, and appear to have no basis in these, or any other, standards.”

It was at this point lawmakers, notably Sen. Lana Theis (R-Brighton) and Rep. Michele Hoitenga (R-Manton), took a swipe at the DHHS for failing to take ownership of EO 2020-50’s implementation or the harm they said it caused elderly Michiganders and their families.

“This was bad policy,” Hoitenga said. “And everybody knew it on both sides of the aisle, and we just kept going down that bad road.”

The hearing marked a clear and sharp partisan divide, with remarks from Democratic lawmakers looking to defend the DHHS’s reporting while critiquing the OAG’s efforts as remarks from Republican lawmakers sought to do the opposite.

That was true outside of the committee as well.

“Whitmer’s orders to place COVID positive patients in nursing homes essentially became a state ordered death,” Gustavo Portela, communications director for the Michigan Republican Party, said in a statement. “This administration underreported 2,400 deaths in long term care facilities. What else could they be hiding? One thing is for sure – this governor has blood on her hands and she must be investigated for incompetence and gross negligence for willingly putting some of the most vulnerable people in danger.”

But the party provided no evidence to back up this unsupported claim – and there is no evidence that the Whitmer administration’s policies led to the deaths of individuals in nursing homes or long-term care facilities, nor has any proof been brought forward to confirm such.

A constellation of Republican organizations, however, has pounded Whitmer on similar claims this week, suggesting a coordinated political strategy on the issue.

Michigan Democratic Party Chair Lavora Barns, naturally, issued an opposing statement where she called Johnson a liar looking to “push his baseless, political narrative.”

“Steve Johnson is twisting the report’s findings … instead of accepting the auditor general’s conclusion – that Michigan ‘accurately posted’ COVID-19 deaths as reported directly from facilities,” Barnes said. “Johnson is wasting tax dollars and exploiting the lives lost and families devastated, all to promote a dishonest, partisan narrative that ignores the real transparency of a full audit, relying instead on a political ‘review.'”

Democrats, however, have offered no evidence that politics infiltrated the Office of the Auditor General’s work.


EGLE Releases Draft Climate Plan; Environmental Orgs Want More

The draft of the MI Healthy Climate Plan to address climate change and achieve Gov. Gretchen Whitmer’s 100 percent carbon neutrality goal by 2050 was released last week by the Department of Environment, Great Lakes and Energy, but environmental groups say the proposed goals are not enough.

The draft composed by EGLE’s MI Air MI Health collaborative also strives to reduce greenhouse gas emissions from 2005 levels by 28 percent in 2025 and 52 percent in 2030.

EGLE Director Liesl Clark wrote in a letter the proposed changes present Michigan with the chance to advance equity, create good paying jobs, increase economic competitiveness and improve the quality of life by protecting air quality and the Great Lakes.

The plan will focus on reducing greenhouse gas emissions in transportation, electricity, industry, agriculture and commercial and residential buildings. It listed transportation as the biggest contributor to emissions making up 27 percent of the state’s emissions, with electricity generation also at 27 percent.

For energy production, the department wants to take a holistic statewide energy planning approach, including consideration of new and emerging resources. State-owned facilities would use 100 percent in-state renewable energy by 2025 and reduce energy intensity in state facilities 40 percent by 2040.

Electric vehicles are a main focal point of the draft as well. EGLE is aiming to build the infrastructure to support two million electric vehicles by 2030 and should include at least 50 percent of light duty vehicle sales, 30 percent of medium-duty and heavy-duty vehicle sales and 100 percent of public transit vehicles and school bus sales.

Businesses and homes would be encouraged to adopt a 2 percent energy waste reduction target for electricity and 1 percent for natural gas. The department would also explore programs and funding opportunities to help families and small businesses invest in clean energy projects such as weatherization, renewables and building decarbonization.

Public comment on the plan is now open and in addition to their own statements, many environmental advocacy groups are encouraging others to comment as well. The Michigan Climate Action Network recommended closing all coal plants by 2035 and setting a goal to reach 50 percent renewable energy by 2030. The group also requests sections of the plan need strengthening, especially when looking to decarbonize buildings. It suggests including stronger energy efficiency standards for gas and a plan to transition to electric heat pumps.

“This draft Climate Plan is a good start for our state toward a stable climate, but it needs improvements if we are to achieve the ambitious and necessary goal for Michigan to be carbon neutral,” Michigan Climate Action Network Executive Director Kate Madigan said in a statement. “This decade is a critical time to keep the climate impacts we are now seeing from getting much worse. We urge people to make public comment urging the state to strengthen this plan to ensure Michigan is on track to fully decarbonize.”

Elizabeth Del Buono, a physician advocate for the Michigan Clinicians for Climate Action, said similar sentiments to Ms. Madigan in a statement. Del Buono also called the draft plan a good starting point but said it should be improved before a final recommendation is made to Whitmer.

“In order to ensure that we achieve the emissions reductions necessary to protect the health of all Michiganders, we strongly encourage a more rapid transition to clean, renewable energy, including explicitly stated increasing, renewable energy goals for Michigan utilities,” Del Buono said.

The clinicians recommended the plan devote resources to better infrastructure and respond to extreme weather events. In 2020 and 2021 several regions of Michigan experienced heavy rainfall resulting in historic flooding which closed sections of I-94 in Southeast Michigan. The plan states roughly $800 million is needed to fully upgrade water and sewer infrastructure systems, but there is little mention of how to improve weatherization.

Charles Griffith, Climate and Energy Program director for the Ecology Center, praised the electric vehicle recommendations, but also said the plan will need much follow-through.

“It’s a tall task, but absolutely essential if we hope to avoid the worst impacts of climate change, as well as reduce other sources of dangerous pollution in our air and water while creating thousands of new advanced automotive and clean energy jobs,” Griffith said in a statement.

Laura Sherman, president of the Michigan Energy Innovation Business Council, recommended in a statement the final plan prioritize investments in electrifying transportation and building sectors.

“This will help attract more businesses to the state, ensuring Michigan is competitive for thousands of good-paying advanced energy jobs for hard-working Michiganders,” Sherman said. “Today’s draft plan is a critical step for Michigan’s future, and we look forward to working with the administration, the Legislature and other key stakeholders to improve the report and implement the final recommendations.”

Jon Meacham

Jon MeachamPresidential historian and Pulitzer Prize-winning author Jon Meacham is one of America’s most prominent public intellectuals. With a depth of knowledge about politics, religion, and current affairs, Meacham has the unique ability to bring historical context to the issues and events impacting our daily lives. Named a “Global Leader for Tomorrow” by the World Economic Forum, he is a member of the Council on Foreign Relations, a fellow of the Society of American Historians, and chairs the National Advisory Board of the John C. Danforth Center on Religion and Politics at Washington University. Meacham is a Distinguished Visiting Professor of History at The University of the South and a Visiting Distinguished Professor at Vanderbilt. He is currently at work on a biography of James and Dolley Madison.  

Panel: Legal, Finance, and Community Engagement Professionals Servicing the Cannabis Industry Talk Creative Solutions for Finding Funding

Key Takeaways:

  • The cannabis industry in Michigan is booming, bringing in more than $3 billion in sales since the beginning of the regulated market.
  • Finding traditional funding for cannabis businesses is difficult because it is still federally considered a Schedule I drug; however, there are creative legal solutions to overcome this challenge, including the Cannabis Safe Harbor and SAFE Banking Act.
  • Nontraditional funding opportunities, such as Eaze, help cannabis businesses with grants and low-interest loans.
  • Being licensed and creating a robust compliance program are essential for finding funding.

In December 2021, sales of cannabis in the adult-use market in Michigan hit a record. According to the state of Michigan, there were more than $135 million in recreational cannabis purchases and about $33 million in medical marijuana sales.

“The cannabis industry in Michigan is booming,” said Jeffrey Schroder, founding member and co-founder of the Cannabis Industry Group at Plunkett Cooney. “Michigan has now exceeded $3 billion in cannabis sales since the beginning of the regulated cannabis market.”

Schroder joined a panel of two other professionals engaged in the cannabis industry on Jan. 13 during the Detroit Regional Chamber’s webinar, CannaBusiness: Find Your Funding. Moderated by Chamber Chief Operating Officer Tammy Carnrike, the panel also included:

  • Susan Cobello, Commercial Relationship Specialist, Public Service Credit Union
  • Jennifer Lujan, Director, Social Impact, Eaze

Creative Solutions for Overcoming Funding Challenges

Although the cannabis industry is doing so well, there are still challenges legislators and business owners are working to overcome. Finding funding to open a business in the industry is one challenge.

One of the main reasons for this challenge is because marijuana is still looked at on the federal level as a Schedule I drug, which is not accepted for medical use and is considered high potential for abuse. It’s in the same category as heroin, LSD, and mushrooms.

However, according to Schroder, there are creative solutions and reforms to assist with overcoming this.

(Click here for tips for finding funding as a women entrepreneur in the industry.)

Cannabis Safe Harbor

One of the creative solutions is the safe harbor that the U.S. Congress has adopted for businesses that operate legally in a state where medical and adult-use cannabis is legal.

“Congress has the power of the purse. Congress funds the Department of Justice every year, including the FBI and U.S. Attorney, and they have in their appropriations bills that fund that department that told them, ‘You cannot prosecute individuals or businesses in states that are operating legally under their state law licensing system for cannabis.’ It’s what we call a safe harbor,” Schroder said.

While the safe harbor gives a bit of reprieve for legal businesses in the industry, it is not a permanent solution and can change. Congress has to go through the appropriations process every year, and the risk of the safe harbor not being included remains. In addition, Schroder shared a caveat: if someone makes an allegation against a legal business that they’re doing something outside the scope of their license, the federal government can still investigate you.

“[But] the reality is, the federal government has limited resources. The immediate ex-U.S. Attorney for the Eastern District of Michigan stated publicly that it wasn’t a priority for his office to do this,” Schroder said, “That’s just a little bit of comfort when they say it’s not a priority.”

SAFE Banking Act

The second creative solution Schroder mentioned is the SAFE Banking Act. This gives protection to financial institutions to allow them to provide traditional banking and financial services to cannabis businesses without the threat of being investigated and prosecuted.

“Under the current laws, theoretically, if a financial institution provided banking to a cannabis business and they were using that business for some other money laundering scheme or other illegal scheme, then the bank potentially has liability there,” Schroder said. “This SAFE Banking Act would remove a lot of that potential liability for the banks and allow the financial institution system to service all these traditional banking services.”

This includes banks like Public Service Credit Union (PSCU), a full-service credit union. According to Cobello, the SAFE Banking Act would better position financial institutions like PSCU to do business, although PSCU provides loans to cannabis businesses already. Their loans are just more conservative, which protects them but provides less than ideal terms to borrowers.

“The terms given by cannabis lenders are more expensive and may look less attractive than traditional funding and business lending because of the additional legal risk present and the imbalance for the demand for funding and available capital,” Cobello said.

As of September 2021, the SAFE Banking Act has received much bipartisan support and has been passed through the House of Representatives five times. Nevertheless, it is having difficulties getting through the Senate. According to Schroder, there are three reasons why:

  1.  The Senate typically moves slower than the House.
  2. Some ultraconservatives do not want to “open the door to further legalization of marijuana.”
  3. Some legislators feel like the SAFE Banking Act is a half-measure, and they want to hold out for a more comprehensive solution, including decriminalizing cannabis at the federal level. At this point, the SAFE Banking Act would be rendered obsolete.

The Marijuana Opportunity Reinvestment and Expungement (MORE) Act was recently passed out of the House Committee, and this would address the last point against the SAFE Banking Act by removing the federal prohibition on cannabis. It would also work to expunge crimes related to cannabis and create a federal tax and social equity programs.

Schroder cautioned that the likelihood of more comprehensive reform like the MORE Act passing both House and Senate right now is not favorable and is probably a little farther in the future. This is because of the additional nuances of it, such as interstate commerce, which decriminalizing cannabis on the federal level would allow.

“In Michigan, we have a growing industry that supports a lot of local farmers. We have a lot of small growers in Michigan, craft growers – they have 500 plants, 1,000 plants – and they can only sell in Michigan. That’s the restriction of your Michigan license. It’s its own market. You cannot bring this stuff across state lines. That [the MORE Act] would open the door to that,” Schroder said, “But what would that do to the small growers in Michigan who have invested a lot of money and have a lot of clientele here in Michigan? Would it open the door to multimillion-square-foot massive grow somewhere in the country that would maybe hurt the small and midsize growers that have been established in all these states?”

Nontraditional Funding Sources

While the legal system works on these reform measures, Schroder pushed nontraditional sources as one of the top options for now. For example, partnering with others interested in the cannabis industry to secure certain elements, such as real estate or equipment.

“Nontraditional sources of funding are being pursued by most of the operators. You have a lot of partners coming together, [and] a lot of entrepreneurs forming partnerships and bringing investment capital to these CannaBusinesses in Michigan,” Schroder said.

One nontraditional funding source is available through Eaze, one of the largest cannabis delivery marketplaces in the nation. Eaze offers Momentum, a national cannabis business accelerator that provides grants to already licensed businesses or those in the process of applying for licenses but are beyond the concept phase.

Eaze accepts 10 businesses for each cohort, providing them a $50,000 grant with no equity taken. They also get 12 weeks of curriculum taught by industry experts throughout the country, ranging from legal and compliance, marketing, and data and analytics. The businesses also get paired with Eaze mentors and access Eaze business services during the 12 weeks. At the end of the program, each company pitches itself to investors, retailers, and strategic partners.

According to Lujan, Eaze focuses on helping and sustaining small businesses and identifying the barriers of entry for underrepresented entrepreneurs, specifically social equity. They are also looking at the communities harmed by the war on drugs and seeing how they can best support them.

Lujan said they try to find other ways to support the businesses that aren’t accepted into Momentum, whether they are not developed enough or are too far along. For example, they may share other grant opportunities, which many private companies are starting to provide, in addition to very low-interest loans.

“You also have a lot of other investors who are looking at funding companies, specifically a lot of social equity investors,” Lujan said. “That’s really interesting to see that this trend is starting to come up. You don’t really see that as much in other industries, but it’s really nice to see that companies are really starting to build this out as part of their social impact or social equity programs.”

And none of these social equity programs are the same. Social equity is different everywhere based on state and municipality requirements. If businesses want an adult-use license in Michigan, they have to submit a social equity plan as part of their application. According to Schroder, many communities also require it as part of the local license and permit process.

“It’s [social equity] important because it’s about a new industry that’s being created and expanded and ensuring that everyone has an opportunity to get involved,” Schroder said. “Typically, it’s making a commitment to give job opportunities to local residents, giving back to the community – not just the turkey giveaway at Thanksgiving but being part of that community – and also making sure that your business doesn’t impact the community in a negative way.”

Considering social equity is also important because of the disproportionate effects cannabis has had on minority communities.

“Cannabis prohibition over the decades has disproportionately affected persons of color and persons of lower income, and now that this is being accepted as a legal product, we have a responsibility as a society to ensure that they’re taking part in this and receiving a lot of the benefits because it’s a changing government policy that’s allowing this to happen,” Schroder said.

Traditional Funding Sources

Despite nontraditional funding opportunities being the most sought after in the cannabis industry currently, for those who want to pursue traditional funding options, Cobello offered advice for how to go about it. Her main tips are to be prepared, be sure that you understand the cost of the total project from start to finish, and know the amount of cash flow you’ll have available before the business becomes profitable – and do all of this before speaking with a lender. It’s important to have this information because lenders look for specific things from qualified borrowers:

  • The strength of the borrower and guarantors
  • The amount of borrower liquidity, existing equity, and collateral (Cobello said lenders typically look for 30% and more of the total project)
  • Experience of the group needing the lending
  • How well the borrower can articulate their plan and instill confidence in executing it

“If you are new to cannabis business, I suggest that you find someone successful in the business and spend some time with them, if possible. Also, if you have a partner with more experience, be sure to let the lenders know that as well,” Cobello said. “It really helps to invest the time on the front end and be prepared before meeting with the lender.”

Schroder echoed Cobello’s advice and shared that getting licensed and making sure you have a robust compliance program are the initial steps cannabis businesses should make before looking for funding. This helps assure banks that a company has all its checks and balances in place because, according to Schroder, “the bank is putting its neck on the line.”

Being upfront with the bank is also very important.

“Don’t walk into the local bank branch and tell them you’re starting a new farming or agriculture business and beat around the bush about what you’re really trying to do,” Schroder said.

Thank you to Plunkett Cooney for sponsoring CannaBusiness: Find Your Funding. 

Panel: Legal, Finance, and Community Engagement Professionals Servicing the Cannabis Industry Talk Creative Solutions for Finding Funding

Key Takeaways:

  • The cannabis industry in Michigan is booming, bringing in more than $3 billion in sales since the beginning of the regulated market.
  • Finding traditional funding for cannabis businesses is difficult because it is still federally considered a Schedule I drug; however, there are creative legal solutions to overcome this challenge, including the Cannabis Safe Harbor and SAFE Banking Act.
  • Nontraditional funding opportunities, such as Eaze, help cannabis businesses with grants and low-interest loans.
  • Being licensed and creating a robust compliance program are essential for finding funding.

In December 2021, sales of cannabis in the adult-use market in Michigan hit a record. According to the state of Michigan, there were more than $135 million in recreational cannabis purchases and about $33 million in medical marijuana sales.

“The cannabis industry in Michigan is booming,” said Jeffrey Schroder, founding member and co-founder of the Cannabis Industry Group at Plunkett Cooney. “Michigan has now exceeded $3 billion in cannabis sales since the beginning of the regulated cannabis market.”

Schroder joined a panel of two other professionals engaged in the cannabis industry on Jan. 13 during the Detroit Regional Chamber’s webinar, CannaBusiness: Find Your Funding. Moderated by Chamber Chief Operating Officer Tammy Carnrike, the panel also included:

  • Susan Cobello, Commercial Relationship Specialist, Public Service Credit Union
  • Jennifer Lujan, Director, Social Impact, Eaze

Creative Solutions for Overcoming Funding Challenges

Although the cannabis industry is doing so well, there are still challenges legislators and business owners are working to overcome. Finding funding to open a business in the industry is one challenge.

One of the main reasons for this challenge is because marijuana is still looked at on the federal level as a Schedule I drug, which is not accepted for medical use and is considered high potential for abuse. It’s in the same category as heroin, LSD, and mushrooms.

However, according to Schroder, there are creative solutions and reforms to assist with overcoming this.

(Click here for tips for finding funding as a women entrepreneur in the industry.)

Cannabis Safe Harbor

One of the creative solutions is the safe harbor that the U.S. Congress has adopted for businesses that operate legally in a state where medical and adult-use cannabis is legal.

“Congress has the power of the purse. Congress funds the Department of Justice every year, including the FBI and U.S. Attorney, and they have in their appropriations bills that fund that department that told them, ‘You cannot prosecute individuals or businesses in states that are operating legally under their state law licensing system for cannabis.’ It’s what we call a safe harbor,” Schroder said.

While the safe harbor gives a bit of reprieve for legal businesses in the industry, it is not a permanent solution and can change. Congress has to go through the appropriations process every year, and the risk of the safe harbor not being included remains. In addition, Schroder shared a caveat: if someone makes an allegation against a legal business that they’re doing something outside the scope of their license, the federal government can still investigate you.

“[But] the reality is, the federal government has limited resources. The immediate ex-U.S. Attorney for the Eastern District of Michigan stated publicly that it wasn’t a priority for his office to do this,” Schroder said, “That’s just a little bit of comfort when they say it’s not a priority.”

SAFE Banking Act

The second creative solution Schroder mentioned is the SAFE Banking Act. This gives protection to financial institutions to allow them to provide traditional banking and financial services to cannabis businesses without the threat of being investigated and prosecuted.

“Under the current laws, theoretically, if a financial institution provided banking to a cannabis business and they were using that business for some other money laundering scheme or other illegal scheme, then the bank potentially has liability there,” Schroder said. “This SAFE Banking Act would remove a lot of that potential liability for the banks and allow the financial institution system to service all these traditional banking services.”

This includes banks like Public Service Credit Union (PSCU), a full-service credit union. According to Cobello, the SAFE Banking Act would better position financial institutions like PSCU to do business, although PSCU provides loans to cannabis businesses already. Their loans are just more conservative, which protects them but provides less than ideal terms to borrowers.

“The terms given by cannabis lenders are more expensive and may look less attractive than traditional funding and business lending because of the additional legal risk present and the imbalance for the demand for funding and available capital,” Cobello said.

As of September 2021, the SAFE Banking Act has received much bipartisan support and has been passed through the House of Representatives five times. Nevertheless, it is having difficulties getting through the Senate. According to Schroder, there are three reasons why:

  1.  The Senate typically moves slower than the House.
  2. Some ultraconservatives do not want to “open the door to further legalization of marijuana.”
  3. Some legislators feel like the SAFE Banking Act is a half-measure, and they want to hold out for a more comprehensive solution, including decriminalizing cannabis at the federal level. At this point, the SAFE Banking Act would be rendered obsolete.

The Marijuana Opportunity Reinvestment and Expungement (MORE) Act was recently passed out of the House Committee, and this would address the last point against the SAFE Banking Act by removing the federal prohibition on cannabis. It would also work to expunge crimes related to cannabis and create a federal tax and social equity programs.

Schroder cautioned that the likelihood of more comprehensive reform like the MORE Act passing both House and Senate right now is not favorable and is probably a little farther in the future. This is because of the additional nuances of it, such as interstate commerce, which decriminalizing cannabis on the federal level would allow.

“In Michigan, we have a growing industry that supports a lot of local farmers. We have a lot of small growers in Michigan, craft growers – they have 500 plants, 1,000 plants – and they can only sell in Michigan. That’s the restriction of your Michigan license. It’s its own market. You cannot bring this stuff across state lines. That [the MORE Act] would open the door to that,” Schroder said, “But what would that do to the small growers in Michigan who have invested a lot of money and have a lot of clientele here in Michigan? Would it open the door to multimillion-square-foot massive grow somewhere in the country that would maybe hurt the small and midsize growers that have been established in all these states?”

Nontraditional Funding Sources

While the legal system works on these reform measures, Schroder pushed nontraditional sources as one of the top options for now. For example, partnering with others interested in the cannabis industry to secure certain elements, such as real estate or equipment.

“Nontraditional sources of funding are being pursued by most of the operators. You have a lot of partners coming together, [and] a lot of entrepreneurs forming partnerships and bringing investment capital to these CannaBusinesses in Michigan,” Schroder said.

One nontraditional funding source is available through Eaze, one of the largest cannabis delivery marketplaces in the nation. Eaze offers Momentum, a national cannabis business accelerator that provides grants to already licensed businesses or those in the process of applying for licenses but are beyond the concept phase.

Eaze accepts 10 businesses for each cohort, providing them a $50,000 grant with no equity taken. They also get 12 weeks of curriculum taught by industry experts throughout the country, ranging from legal and compliance, marketing, and data and analytics. The businesses also get paired with Eaze mentors and access Eaze business services during the 12 weeks. At the end of the program, each company pitches itself to investors, retailers, and strategic partners.

According to Lujan, Eaze focuses on helping and sustaining small businesses and identifying the barriers of entry for underrepresented entrepreneurs, specifically social equity. They are also looking at the communities harmed by the war on drugs and seeing how they can best support them.

Lujan said they try to find other ways to support the businesses that aren’t accepted into Momentum, whether they are not developed enough or are too far along. For example, they may share other grant opportunities, which many private companies are starting to provide, in addition to very low-interest loans.

“You also have a lot of other investors who are looking at funding companies, specifically a lot of social equity investors,” Lujan said. “That’s really interesting to see that this trend is starting to come up. You don’t really see that as much in other industries, but it’s really nice to see that companies are really starting to build this out as part of their social impact or social equity programs.”

And none of these social equity programs are the same. Social equity is different everywhere based on state and municipality requirements. If businesses want an adult-use license in Michigan, they have to submit a social equity plan as part of their application. According to Schroder, many communities also require it as part of the local license and permit process.

“It’s [social equity] important because it’s about a new industry that’s being created and expanded and ensuring that everyone has an opportunity to get involved,” Schroder said. “Typically, it’s making a commitment to give job opportunities to local residents, giving back to the community – not just the turkey giveaway at Thanksgiving but being part of that community – and also making sure that your business doesn’t impact the community in a negative way.”

Considering social equity is also important because of the disproportionate effects cannabis has had on minority communities.

“Cannabis prohibition over the decades has disproportionately affected persons of color and persons of lower income, and now that this is being accepted as a legal product, we have a responsibility as a society to ensure that they’re taking part in this and receiving a lot of the benefits because it’s a changing government policy that’s allowing this to happen,” Schroder said.

Traditional Funding Sources

Despite nontraditional funding opportunities being the most sought after in the cannabis industry currently, for those who want to pursue traditional funding options, Cobello offered advice for how to go about it. Her main tips are to be prepared, be sure that you understand the cost of the total project from start to finish, and know the amount of cash flow you’ll have available before the business becomes profitable – and do all of this before speaking with a lender. It’s important to have this information because lenders look for specific things from qualified borrowers:

  • The strength of the borrower and guarantors
  • The amount of borrower liquidity, existing equity, and collateral (Cobello said lenders typically look for 30% and more of the total project)
  • Experience of the group needing the lending
  • How well the borrower can articulate their plan and instill confidence in executing it

“If you are new to cannabis business, I suggest that you find someone successful in the business and spend some time with them, if possible. Also, if you have a partner with more experience, be sure to let the lenders know that as well,” Cobello said. “It really helps to invest the time on the front end and be prepared before meeting with the lender.”

Schroder echoed Cobello’s advice and shared that getting licensed and making sure you have a robust compliance program are the initial steps cannabis businesses should make before looking for funding. This helps assure banks that a company has all its checks and balances in place because, according to Schroder, “the bank is putting its neck on the line.”

Being upfront with the bank is also very important.

“Don’t walk into the local bank branch and tell them you’re starting a new farming or agriculture business and beat around the bush about what you’re really trying to do,” Schroder said.

Thank you to Plunkett Cooney for sponsoring CannaBusiness: Find Your Funding. 

Business Leaders for Michigan Releases Top 10 Benchmarks

Michigan has progressed over the last decade, but needs strategic improvements to become competitive

Business Leaders for Michigan today released its updated benchmarking report comparing Michigan’s performance against the Top 10 states. While the state has made significant gains since the Great Recession, moving from 49th to 29th, the metrics show that Michigan is struggling to grow faster than other states.

“Michigan is much better off and has come a long way since 2009. However, despite 10 years of economic growth prior to COVID-19, we’re struggling to grow faster than our competitors. As we continue to see economic disruptions from the pandemic, talent shortages and shifts in our economy, including to vehicle electrification and advanced mobility, it’s even more critical that we examine Michigan’s competitiveness and make sure that in the decades ahead we focus on investments and actions that drive growth,” said Business Leaders for Michigan President and CEO Jeff Donofrio.

Business Leaders for Michigan’s state-by-state analysis includes an expanded set of benchmark metrics, along with a growth gauge, to determine where Michigan sits nationally under these rapidly changing and competitive conditions, and where it might be headed. The Business Leaders’ data includes its traditional output metrics such as GDP, median household income and business climate perception, and adds growth and economic health indicators such as education, labor force participation, net migration, poverty, and business creation. These updated metrics provide a more holistic view of how well all Michiganders are succeeding rather than just a snapshot of the state’s economy.

The benchmarking allows business leaders and policy makers to focus on Michigan’s strengths and weaknesses to develop specific, data-driven solutions that will help Michigan’s people, businesses and communities compete and win for jobs, income and growth. The states currently in the Top 10 are Utah, Washington, Colorado, Texas, Massachusetts, Virginia, California, Oregon, Florida and Arizona.

“The recent bipartisan economic development legislation is exactly the kind of ongoing action we need. We’re in a unique moment in our history. Rarely do we have both economic uncertainty and a once-in-a-generation opportunity to invest in our future,” Donofrio said. “We need smart investments in the coming months and consistent long-term strategies that focus on decades-long growth that won’t fall to the wayside depending on who is in office. Systemic, sustained changes,

including in workforce and talent development and customer service, are necessary to change our trajectory from being an average state, to being Top 10.”

Other states are passing Michigan in a number of growth metrics. For example, while the nation as a whole saw a dip in the labor force participation rate over the past three years, Michigan’s decline was greater than Top 10 states (-2.7% for Michigan compared to -1.1% for Top 10). And, while the educational attainment rate climbed at a slightly faster pace than the Top 10 states (5.4% compared to 5.2%), additional work needs to be done to close the gap. Steps taken thus far include strong bipartisan measures to invest in training and degree programs and setting a goal of having 60% of the working-age population with a degree or credential by 2030.

Business Leaders for Michigan’s eight key metrics provide a snapshot of what it takes to be a Top 10 state, and Michigan’s rankings for each (three-year growth rank shows Michigan’s pace of change over the last three years relative to all other states):

The data shows that the Top 10 states have fundamental strengths in two areas: 1) Education and talent – which correlates to higher labor force participation, lower poverty rates and higher median household income; and 2) Economic growth – which correlates to higher net migration and new business creation.

Based on the benchmarking, Business Leaders for Michigan has identified the following areas of opportunity for Michigan:

Developing Talent

Greatly increase growth in degrees and credentials – Use American Rescue Plan Act (ARPA) funding to leapfrog other states in credential growth, attract talent to the state

Remove barriers to work – Drive additional labor force participation by removing barriers to work with investments in childcare, broadband access, and affordable housing, among others

Improve our education system – Implement systemic improvements to the K-12 system that balance outcomes, resources and accountability. Use ARPA funding to drive efficiencies, putting more money into the classroom for years to come, expanding teacher training and recruitment, and investing in before/after school support and summer learning programs

Investing in growth

Implement a long-term economic development strategy that focuses on improvements to our competitiveness in four areas: site development, customer service, incentives and talent

Use one-time American Rescue Plan Act funds for:

• Regional economic development, site development matching funds, transition to electric vehicles and support for entrepreneurship/innovation/scale up activities

• Workforce training programs that fill talent gaps preventing business growth, support new job/sites and provide pathways for career progression

When developing additional measures to drive growth, Michigan should look to other states’ successes. Tennessee has moved from 34th to 16th in the past five years, driven by improvements to its community college system, universal free college tuition programs, decades of investments in economic and site development, and a focus by its leaders on landing more emerging industries.

“States have been investing for years to attract businesses, jobs and talent – and many states that aren’t Top 10 today are well ahead of Michigan when it comes to investing for future growth. We can learn valuable lessons from them,” Donofrio said. “Unless Michigan urgently addresses our economic and educational challenges, we may fall so far behind that we will never catch up. If we invest and work today to overcome these challenges, we can build a prosperous state with a healthy economy and widely shared prosperity.”

Detroit Regional Chamber Announces Leadership Detroit Class XLII

Today, the Detroit Regional Chamber announced the participants in Leadership Detroit Class XLII, a six-month transformational leadership program designed to challenge emerging and existing leaders from Southeast Michigan to bring about positive change. View the Class XLII roster here.

“We are excited to be back with Leadership Detroit Class XLII. This program offers a unique experience that takes leaders on a journey out of their comfort zones to challenge long-held assumptions and to embrace multiple and diverse perspectives on quality-of-life issues in the Detroit region,” said Dan Piepszowski, senior director of Community Leadership Development at the Detroit Regional Chamber. “Change is inevitable, as we have experienced in the past two years. The leaders that will best manage change and seize the opportunities that lie beneath the surface are those who are emotionally intelligent and can tap into the passion and concerns of others. Real changemakers not only inspire others but, they lean in and choose to walk with us down new paths.”

Class XLII features 60 executives from across the Detroit region, representing a cross-section of the community, including business, organized labor, government, education, media, civic groups, health services and community organizations.

Leadership Detroit provides opportunities for participants to foster and spark problem-solving discussions, while providing new views on key issues to lead the region to success. As it has since 1979, Leadership Detroit will continue its role in addressing, discussing and leading conversations important to the Detroit region.

A complete Leadership Detroit Class XLII roster is available online at this link.

About Leadership Detroit 
Leadership Detroit is a community leadership program for executives in Southeast Michigan led by the Detroit Regional Chamber with more than 2,000 alumni. Launched in 1979, the program aims to create awareness of key issues that affect the Detroit region and to challenge emerging and existing community leaders to bring about positive change in the community through informed leadership. For more information, please visit leadershipdetroit.com.

About the Detroit Regional Chamber
Serving the business community for more than 100 years, the Detroit Regional Chamber is one of the oldest, largest, and most respected chambers of commerce in the country. As the voice for business in the 11-county Southeast Michigan region, the Chamber’s mission is carried out by creating a business-friendly climate and providing value for members. The Chamber leads the most comprehensive education and talent strategy in the state. The Chamber also executes the statewide automotive and mobility cluster association, MICHauto, and hosts the nationally recognized Mackinac Policy Conference.

Butzel attorney featured during 2022 Michigan Cybersecurity Conference

ANN ARBOR, Mich. – Butzel attorney and shareholder Claudia Rast will be a featured panelist during the (virtual) Michigan Cybersecurity Conference on January 21, 2022. The topic is “The Power of a Functioning Incident Response Plan.”

Rast, who chairs Butzel’s Intellectual Property, Cybersecurity and Emerging Technology Practice Department, blends her expertise in law, business, and science to assist companies in their strategic use of technology, counseling clients in the areas of privacy, cybersecurity, data security and governance, intellectual property licensing and registration, and the forensic preservation and analysis of electronically stored information.

The unchecked growth of cyber threats combined with the heightened vulnerability of businesses as employees continue to work from home has made Rast’s background in digital forensics and data breach response invaluable when counseling companies both on how best to defend against, and respond to, the inevitable cyber attack.

Similarly, over the past several years, she has worked within both the IT entrepreneur community and the automotive supplier network to negotiate contracts covering innovative technologies associated with autonomous and connected vehicles, addressing security, privacy, IP ownership, and to counsel on the impacts of new laws and regulations, ranging from the General Data Protection Regulation in the EU to the new consumer privacy laws in California, Virginia and Colorado.

Rast was appointed to a three-year term to co-chair the American Bar Association (ABA) Cybersecurity Legal Task Force in 2020. Prior to that, she had been appointed to successive one-year terms since 2013.

About Butzel

Butzel is one of the leading law firms in Michigan and the United States. It was founded in Detroit in 1854 and has provided trusted client service for more than 160 years. Butzel’s full-service law offices are located in Detroit, Troy, Lansing and Ann Arbor, Mich.; New York, NY; and, Washington, D.C., as well as an alliance office in Beijing. It is an active member of Lex Mundi, a global association of 160 independent law firms. Learn more by visiting www.butzel.com or follow Butzel on Twitter: https://twitter.com/butzel_long

Butzel adds attorney to firm’s growing International Business Practice Group; Everardo Tapia’s practice is focused on automotive, business, commercial litigation and IP

DETROIT, Mich. – Butzel continues to grow to meet client needs with the addition of associate attorney Everardo Tapia to the firm’s International Business Practice Group.

Based in Butzel’s Detroit office, Tapia focuses his practice in the firm’s Automotive, Business and Commercial Litigation, and Intellectual Property Groups.

His practice has included serving as national discovery counsel for clients in the automotive industry in addition to representing major telecommunications and energy companies in intellectual property litigation.

Tapia earned a B.S. in Petroleum and Natural Gas Engineering from Pennsylvania State University and a Juris Doctor in two and a half years from Chicago-Kent College of Law. While in law school, he was the associate editor of the Journal of Intellectual Property and a member of the Hispanic-Latino Law Student Society & Intellectual Property Law Society.

Notably, Tapia has earned recognition for pro bono work representing underserved members of the community in family and criminal matters. He is admitted to practice law in the State of Missouri.

About Butzel

Butzel is one of the leading law firms in Michigan and the United States. It was founded in Detroit in 1854 and has provided trusted client service for more than 160 years. Butzel’s full-service law offices are located in Detroit, Troy, Lansing and Ann Arbor, Mich.; New York, NY; and, Washington, D.C., as well as an alliance office in Beijing. It is an active member of Lex Mundi, a global association of 160 independent law firms. Learn more by visiting www.butzel.com or follow Butzel on Twitter: https://twitter.com/butzel_long