No Substantive-Due-Process Property Interest Arises from a City Clerk’s Unauthorized “Grandfathering” Assurances for Marijuana Licensure

Introduction

In Naturale & Co. v. Bruce Eck, Hamtramck Investment Group, Inc. (“HIG”) attempted to enter the City of Hamtramck’s emerging adult-use marijuana market in early 2021—just as the City moved to bar new marijuana retailers after a specified effective date. HIG leased a property and met with the City Clerk, August Gitschlag, who signed an “Attestation 2-C” form used in Michigan’s state marijuana-licensing process. HIG contended that the Clerk also represented that HIG would be “grandfathered in” despite the impending municipal ban. After Hamtramck enacted an ordinance prohibiting new marijuana establishments after February 12, 2021, the City later notified the State of Michigan that HIG’s proposed establishment was not compliant with the City’s ordinance, and the State withheld licensure.

HIG sued the City under 42 U.S.C. § 1983, asserting a substantive due process claim. The central legal issue on appeal was whether HIG had a constitutionally protected property interest in municipal approval (or in a “grandfathered” entitlement) based on the clerk’s attestation and alleged assurances—such that the City’s later disapproval could constitute an arbitrary deprivation under the Fourteenth Amendment.

Summary of the Opinion

The Sixth Circuit affirmed summary judgment for the City. The court held that HIG failed the threshold requirement for a substantive-due-process claim because it did not possess a constitutionally protected property interest in operating a marijuana dispensary contrary to the City’s ordinance. Under Michigan law, the City Clerk lacked authority to bind the municipality or exempt HIG from ordinances. Accordingly, any expectation created by the clerk’s alleged “grandfathering” statement was not a “legitimate claim of entitlement,” but at most a unilateral expectation. Without a protected property interest, HIG’s substantive-due-process claim necessarily failed.

Analysis

Precedents Cited

  • Puskas v. Delaware County, 56 F.4th 1088 (6th Cir. 2023)
    Cited for the standard of review: de novo review of summary judgment, and the Rule 56 requirement that no genuine dispute of material fact exist and the movant be entitled to judgment as a matter of law. It frames the procedural posture and emphasizes that the dispute turns on a legal entitlement question rather than credibility determinations.
  • Dep't of State v. Muñoz, 602 U.S. 899 (2024)
    Used to reaffirm that due process has both procedural and substantive components. The opinion uses this as an organizing principle to note that HIG pressed only substantive due process, narrowing the doctrinal pathway.
  • Zinermon v. Burch, 494 U.S. 113 (1990)
    Supplies the canonical definition: substantive due process bars certain arbitrary government actions regardless of the procedures used. The court uses it to identify the nature of the claim and its demanding threshold requirements.
  • Golf Vill. N., LLC v. City of Powell, 42 F.4th 593 (6th Cir. 2022)
    Provides the Sixth Circuit’s two-part framework: (1) a constitutionally protected interest; and (2) arbitrary and capricious deprivation of that interest. The court resolves the case at step one, never reaching arbitrariness.
  • Bd. of Regents of State Colls. v. Roth, 408 U.S. 564 (1972)
    Anchors the property-interest inquiry: the Constitution does not create property interests; they come from independent sources such as state law. The court also draws Roth’s key distinction between a “unilateral expectation” and a “legitimate claim of entitlement,” which becomes decisive against HIG.
  • Sittler v. Bd. of Control of Mich. Coll. of Mining & Tech., 53 N.W.2d 681 (Mich. 1952)
    The core Michigan authority invoked to reject HIG’s reliance on the clerk’s representations: persons dealing with municipal officers must take notice of the officer’s authority, and municipalities are not bound by acts beyond that authority. The Sixth Circuit treats this as fatal to any claimed entitlement stemming from the clerk.
  • Manning v. City of Hazel Park, 509 N.W.2d 874 (Mich. Ct. App. 1993)
    Reinforces the municipal-authority principle: an officer can bind the municipality only if empowered by charter, ordinance, or other law. The court uses Manning to stress the absence of any charter/ordinance delegation to the clerk to “overrule” the council or create exemptions.
  • Nursing CE Central LLC v. Colibri Healthcare, LLC, No. 5:23-232, 2024 WL 329523 (E.D. Ky. Jan. 29, 2024)
    Raised by HIG but rejected as inapposite: it involved a Kentucky tortious-interference claim, not substantive due process or Michigan municipal authority. The court’s handling illustrates its insistence on doctrinal and jurisdictional fit when importing lower-court reasoning.
  • Menosky v. City of Flint, No. 10-CV-11804, 2012 WL 5818330 (E.D. Mich. Oct. 18, 2012)
    HIG relied on Menosky for the proposition that promissory estoppel can establish a constitutional property interest. The Sixth Circuit did not adopt that proposition here; instead it emphasized that even if estoppel concepts are discussed in federal due process contexts, Michigan law does not recognize a vested right to use property in a way forbidden by law.
  • Fass v. City of Highland Park, 39 N.W.2d 336 (Mich. 1949)
    The Michigan Supreme Court’s rule that a license issued contrary to a zoning ordinance does not create a vested right; estoppel cannot validate a use forbidden by law. The Sixth Circuit treats Fass as the closest state-law analogue: even repeated past approvals cannot transform unlawful use into an entitlement. Applied here, the clerk’s signature and alleged assurances could not create a right to operate in violation of the City’s post-February 12 ordinance.

Legal Reasoning

  1. Substantive due process requires a protected property interest before arbitrariness matters.
    The court followed Golf Vill. N., LLC v. City of Powell: a plaintiff must first identify a constitutionally protected interest. This prioritization is outcome-determinative; without an entitlement, the court does not ask whether the City’s conduct was arbitrary.
  2. Property interests are state-law entitlements, not reliance-based expectations.
    Applying Bd. of Regents of State Colls. v. Roth, the court asked whether Michigan law gave HIG a “legitimate claim of entitlement” to municipal approval or an exemption from later-enacted restrictions. The answer depended on municipal authority rules and the legality of the proposed use under the ordinance.
  3. The City Clerk lacked authority to “grandfather” HIG; unauthorized municipal statements cannot bind the City.
    Under Sittler v. Bd. of Control of Mich. Coll. of Mining & Tech. and Manning v. City of Hazel Park, persons dealing with municipalities must ensure the official has authority to bind the city. The record showed the clerk’s duties were administrative (elections, minutes, licensing tasks) and did not include power to override ordinances or create exemptions. Therefore, even if the “grandfathering” statement was made, it could not create an entitlement.
  4. Even a license/approval cannot create a vested right to violate law; estoppel is limited where the use is forbidden.
    By invoking Fass v. City of Highland Park, the court treated HIG’s claimed entitlement as categorically inconsistent with Michigan law: one cannot acquire a vested right to use property for a purpose “forbidden by law.” That foreclosed attempts to convert reliance on municipal conduct into a property interest where the ordinance bars the use.
  5. HIG’s other permits and the business-license disclaimer undermine any entitlement narrative.
    The court noted HIG received various building/utility permits, but those did not alter the clerk’s authority or guarantee final licensure. Critically, HIG signed a disclaimer acknowledging that approvals from one department/entity do not guarantee approvals from others and that funds expended before obtaining all licenses are at the applicant’s risk. This supported the conclusion that HIG’s expectations were not “legitimate” in the Roth sense.

Impact

  • For § 1983 land-use/cannabis disputes: The decision reinforces a common dispositive gatekeeper: plaintiffs must identify a concrete state-law entitlement, not merely reliance on informal assurances, preliminary paperwork, or partial approvals. Claims framed as “revocations” will fail if the plaintiff never held a legally cognizable entitlement.
  • For municipal governance and administrative interactions: The opinion underscores that clerks and other administrative officials generally cannot create exemptions from ordinances absent explicit delegation. Applicants are on notice to verify authority through charters/ordinances rather than conversations or signatures on forms that merely acknowledge present compliance.
  • For regulated markets with time-sensitive windows (like cannabis): The case highlights the fragility of “race-to-apply” strategies. Prequalification, property investment, and local paperwork do not necessarily vest rights against subsequent or newly effective local restrictions, particularly where state licensing hinges on municipal compliance notifications.
  • Doctrinal narrowing: By resolving the case on the “property interest” element, the court avoids expanding substantive due process into a generalized fairness remedy for disappointed business expectations in heavily regulated licensing regimes.

Complex Concepts Simplified

Substantive due process
A constitutional doctrine that can invalidate certain government actions that are fundamentally arbitrary. But it is not triggered unless the plaintiff first shows a protected “life, liberty, or property” interest.
Property interest (for due process purposes)
Not “property” in the everyday sense. It means a state-law-backed entitlement—something the government must give you if you meet defined criteria, leaving little or no discretion. Mere hope, expectation, or reliance is not enough.
Legitimate claim of entitlement vs. unilateral expectation
From Bd. of Regents of State Colls. v. Roth: an entitlement is a legally enforceable right; a unilateral expectation is merely what someone believes will happen.
Municipal officer authority
Under Michigan law (as described through Sittler and Manning), a city is bound only when the official had legal authority (e.g., from a charter or ordinance). If the official lacked authority, the city is not bound—even if the official spoke confidently or signed a document.
“Grandfathering”
A common term meaning an older project is allowed to proceed despite a new rule. But “grandfathering” must come from the law itself (or authorized decisionmakers), not from an unofficial assurance by someone without power to grant exemptions.
Promissory estoppel
A doctrine that can sometimes enforce a promise when someone reasonably relies on it. The opinion’s analysis—via Fass v. City of Highland Park—reflects a key limit: reliance typically cannot create a right to do something the law forbids.

Conclusion

The Sixth Circuit’s decision affirms a stringent threshold for substantive-due-process claims in the municipal licensing context: a plaintiff must show a state-law entitlement, not reliance on informal assurances. Applying Michigan municipal-authority principles and Michigan’s refusal to recognize vested rights in uses forbidden by law, the court held that a city clerk’s alleged promise to “grandfather” a dispensary could not create a constitutionally protected property interest. As a result, HIG’s § 1983 substantive-due-process claim failed at the first step, leaving the City’s later disapproval outside substantive due process scrutiny.