ESCANABA — Earlier this year, a Ludington Street property owner became locked in a legal battle with the City of Escanaba over the types of activities allowed on its premises — specifically, consumption of cannabis (or “marihuana,” as it’s also referred to legally in Michigan) during private events.

State-licensed sales of recreational cannabis began in 2019, but municipalities continue to grapple with the finer points of the law, and some regulations themselves have led to contended interpretations, especially in the case of the Delft, which had been hosting cannabis-friendly events until receiving a thick stack of citations from the city.

The former Delft Theater, a 1914 building in downtown Escanaba’s Central Historic District, was purchased in 2022 by Delft Property Management LLC. Acting as the Delft’s prime spokesperson and managing its operations has been James Peterson, formerly of Wisconsin. The LLC itself is registered to Peterson’s two children, Ethan and Makenna, plus an investor called Jay Kraus.

Plans for the building — which previously had been vacant for almost a decade — changed several times since it came into the current ownership a couple years ago, but Peterson continually communicated with city officials his intentions for the building.

In August of 2022, when he attended an Escanaba Planning Commission meeting that featured a hearing on marihuana establishments and their zoning regulations within the city, Peterson described a cannabis microbusiness (grow operation) as part of the plan for the Delft in addition to a hydroponic vegetable farm.

As developments and hiccups arose along the way — the discovery of asbestos within the building, loss of funds to a contractor who failed to complete work, and deciding that opening a microbusiness in Michigan was “a race to the bottom,” in Peterson’s words — the vision was adjusted.

In February 2023, Peterson provided an update by email to City Council members Karen Moore, Ronald Beauchamp, Tyler DuBord and Todd Flath; Planning and Zoning Administrator Tyler Anthony; and then-in-the-running Delta County Commissioner Kelli van Ginhoven. The email stated that in the near future, the Delft would “be seeking approval to open a social use club at the Delft and offer it as a mid size venue for cannabis theme events.”

A few months later, in an email to Fire and Rental Inspector Jude van Damme that was also forwarded to Tyler Anthony in June, Peterson said that the Delft, which would not sell or provide marijuana, planned to allow consumption of cannabis flower in the main event hall for persons 21 and over.

“I look forward to learning what needs to be done to be compliant and allowed to open,” Peterson wrote. “We do not plan on applying for adult consumption lounge permit as the current ones downstate are having troubles monetizing a business model where they have to bring their own cannabis,” he said in the email, continuing to explain that the Delft intended to allow people to order from a nearby dispensary and have it delivered.

However, according to state law R 420.207(4), marihuana retailers are allowed to deliver their products only “at a residential address or at the address of a designated consumption establishment.”

There are different types of marihuana establishments, including grower, processor, retailer, microbusiness, and designated consumption establishment. All of the above are listed on the City of Escanaba’s marihuana special land use permit application.

There are many steps involved in opening a new business, and when the Delft accidentally took the wrong route to arrange an inspection in June 2023, Peterson emailed Anthony to say, in part, “The whole owning a commercial building and opening a retail type business is completely new to me,” explaining that his missing part of the process was due to unfamiliarity with the procedure and not disrespect.

Despite all of Peterson’s repeated statements that allowing cannabis use at the Delft was a major part of his intended business model and asking what needed to be done, none of the communication on record indicates that anyone ever said that cannabis events were not allowed to occur at the Delft or that a permit was needed.

By early 2024, events featuring marihuana were in full swing — openly. The Delft advertised itself as a venue with prices listed for cannabis events. Photos posted on social media showed the hall occupied by patrons, vendors, glass pipes and smoke. The Delft appeared in an article in Sensi Magazine that stated, “cannabis is not only celebrated on-site but also consumed,” and quoted Peterson as calling the Delft “an extension of all the area dispensaries…”

An event held at the Delft on February 10, 2024, hosted and organized by Elevated Exotics — a cannabis dispensary with locations in both Escanaba and Republic, Mich. — featured a “biggest dab competition,” multiple vendors, and charged a $35 entry fee at the door, according to a flyer. A Facebook post made by the Delft promoting the event read, verbatim, “Bring your own bud n booze to consume inside.”

Other advertised events, like a Wisconsin music festival held at the Delft on May 25, also encouraged attendees to bring their own pot and alcohol.

In the spring, the city began to crack down.

etter to Delft Property Management at 907 Ludington on May 21, 2024, asking for a reply within 21 days. The letter cited two apparent violations on the premises: a “consumption lounge” and a “carry-out restaurant,” neither of which are allowed in the Delft’s central commercial zoning district (E-3).

The restaurant that was temporarily operating on-site, Bellanasi, had obtained licenses from the Department of Public Health for Delta and Menominee Counties, but the city argued that serving food from the ticket window of the former theater was not allowed. Bellanasi has since ceased operations, and the charges that had been issued to the Delft regarding the restaurant have been dropped.

letter, action turned to citations beginning in June 2024. The city issued tickets on a daily basis, but still, no reply came until August, when Peterson emailed to say that the city was mistaken, that his events were legal. He also remarked that happenings at the Delft were a benefit to the area by bringing customers to places like the House of Ludington.

A response from Anthony rebutted that the Delft’s activities were defying “rules that took a great deal of time and effort to prove as reasonable to those who oppose legalization (of marijuana)” and putting “undue strain on the neighborhood.”

During the night of July 13, 2024, when the Delft had been rented out by Elevated Exotics for an event, Escanaba Public Safety answered a dispatch call and made contact with a few individuals outside the venue. Security guards were checking IDs and ensuring that guests had paid, according to a police report. The report states that officers told Peterson that consumption was not allowed within and that the Delft needed to apply for permits and bring paperwork to city hall, while Peterson argued that private events were exempt from licensing statutes.

When the Press contacted the State of Michigan’s Cannabis Regulatory Agency (CRA)’s enforcement division, a reply came from the Department of Licensing and Regulatory Affairs (LARA) quoting Michigan law R420.23: “A person who allows consumption of marihuana products on the premises of a non-residential location and charges a fee for entry, sells goods or services while individuals are consuming on the premises, or requires membership for entry shall acquire a designated consumption establishment or temporary marihuana event license.”

It’s possible that this section could be seen as containing a loophole for the Delft if the venue itself was not selling goods, requiring memberships, or charging entry fees. Though there was a hall rental cost of $800 for cannabis bookings, when Elevated Exotics organized events there, it was the dispensary that sold tickets.

Peterson said that Brett Blackburn with the CRA had told him that private events did not require consumption permits and that forthcoming state guidelines would exonerate the Delft further. The Press’s attempts to reach Blackburn were unsuccessful.

Though the City of Escanaba does not yet have procedures for permitting temporary marihuana events, other communities do.

The City of Marquette described the need for an orderly process in guidelines adopted in 2021: “Marihuana events … have the potential to require City resources to guarantee safety. In addition, marihuana events have the potential to adversely impact surrounding neighborhoods and may challenge the capacity of available manpower, facilities, and other necessary items needed to support the activity.”

Though Peterson expressed frustration with the city and believes local government officials are misinterpreting the law, he hopes to maintain positive relationships and said that events at the former theater are remaining cannabis-free until the court reaches a decision in the sticky legal battle of the City of Escanaba v. Delft Property Management LLC.

$35,000 worth of citations currently hang over the small business, all described as civil infractions of the zoning ordinance for the Delft’s having “operated unpermitted ‘designated consumption lounge’ land use.” The Planning and Zoning Department issued a total of 65 tickets — one per day, each for $500 — between June 11 and Aug. 14.

Proceedings have been handed off to Judge Parks with the 94th District Court.