Cannabis Businesses Claim Social Equity Fund Mismanaged

Four Grand Rapids cannabis companies have filed an amended lawsuit alleging that the City of Grand Rapids and a partnered nonprofit, Seeding Justice Grand Rapids, are sitting on more than $3 million in social equity funds that are "missing or unaccounted for."

The amended lawsuit, filed in Kent County Circuit Court on March 17, 2026, accuses the city and the nonprofit of fraud and conspiracy tied to Grand Rapids' Cannabis Social Equity Voluntary Agreement, known as CISEVA.

Nearly $2.3 Million Funneled to Nonprofit

The four cannabis companies — Fluresh, Ascend Cannabis, High Profile and Skymint Cannabis — say they collectively paid nearly $2.3 million between 2022 and 2024 into a social equity fund administered through Seeding Justice Grand Rapids.

The lawsuit alleges that city officials "weaponized" the social equity program to coercively extract millions of dollars from marijuana businesses through threats to their licenses.

"The city has retained and accounted for all funds, which remain designated for Seeding Justice," a Grand Rapids spokesperson said. "Due to the pending litigation, we are unable to comment further on plans moving forward."

The city previously told MLive it gave $100,000 to the nonprofit to cover costs related to forming the organization, but neither the administration nor elected officials responded to questions about how much money has been collected or when it might be spent.

Nonprofit Created Under 2022 Policy

Grand Rapids created the nonprofit under a 2022 city policy and named former City Commissioner Joseph Jones as the president. Seeding Justice Grand Rapids registered with the state as a "domestic nonprofit corporation" in July 2022, according to articles of incorporation.

However, it wasn't granted federal tax exempt status until February 3, 2026, according to a letter posted to the IRS website.

The nonprofit's board includes 11 listed directors. Brandy Kimbrel, who owns another nonprofit called Felons Do It Better, was signed up as a director when she attended a community roundtable event in 2022.

"I don't even know what this organization does," Kimbrel told MLive. "Me and another guy that were in that room … we ended up getting an email saying that we were board members. We called each other, like, how did this happen?"

Following the announcement that she was a board member, Kimbrel said she received periodic emails announcing meetings but they were always cancelled.

"There was just no communication on what was going on or what was next," she said. "And still, it's just kind of lingering around."

MLive attempted but was unable to reach other directors of the nonprofit for comment. The lawsuit claims "many" of the directors have close ties to city officials or are former employees and contractors.

Lawsuit Claims System Lacked Transparency

The lawsuit describes a system where money was "aggressively collected, loosely tracked, poorly safeguarded, and largely undistributed — without transparency, accountability, or meaningful charitable impact."

The cannabis companies are asking the court to declare the social-equity program invalid and order refunds with interest and damages.

Social Equity Background

Social equity is a concept built into Michigan's 2018 voter-passed recreational marijuana law. The intent is to proactively ensure that people and communities that were previously harmed by marijuana prohibition also benefit from the now-legal market.

State and local social equity programs regularly include fee breaks, hiring incentives and prioritized application processing for qualifying businesses, such as those with minority or local ownership.

The Grand Rapids model goes further by creating a cannabis-funded nonprofit to carry out social equity functions, including issuing grants or loans, funding approved neighborhood development projects and receiving donations.

So far, none of that has happened, according to the lawsuit.

City's Position

Seeding Justice President Joseph Jones issued a statement condemning the allegations as "false" and "slanderous."

"I want to be clear that the allegations in the complaint that I misused or misappropriated any funds could not be further from the truth due to the fact that neither Seeding Justice nor I have ever been in possession of or control of any of the funds at issue, all of which have always and still are in the City of Grand Rapids' possession," Jones said.

He declined to answer further questions.

Legal Challenge to Program

Beyond accounting issues, the lawsuit challenges the legality of how the nonprofit's funding is generated and collected. The city claims the payments are voluntary.

The cannabis companies equate it to an illegal tax or fine. Cannabis businesses present social equity plans prior to licensing that impact how they are ranked for licensing purposes. Those plans may contain commitments to local ownership, or hiring a diverse workforce and suppliers or contractors.

Businesses that don't meet their social equity commitments may face sanctions up to license revocation. But there is also an alternative, something called the "transfer option." In exchange for paying up to 3% of their sales revenue to the city for use by Seeding Justice, companies aren't required to comply with their social equity plan.

Attorney William Thompson with the Varnum law firm in Grand Rapids, who is representing the cannabis companies, said his clients remain "devoted to having diverse and inclusive workplaces" and "seek full accountability and transparency from all parties responsible for administering these funds."

He declined to answer further questions.

Initial Lawsuit Pending

The initial lawsuit was filed in February 2025. The defendants haven't filed responses to the amended complaint and no upcoming court dates are scheduled.