Fountain Square residents want to rein in CBD retail development

The Fountain Fletcher area doesn’t need any more smoke shops, many residents there agree.

The neighborhood, which includes a bustling entertainment district, has seen at least eight smoke shops open in the last decade.

That’s too many, some neighbors say. But currently, there’s no good mechanism for residents to weigh in on smoke shop openings.

In fall 2023, the Fountain Fletcher District Association—a nonprofit representing businesses that serve four neighborhoods on the southeast side of downtown—completed a land-use survey that received 135 responses. Over a quarter of residents and visitors surveyed—37—listed one type of business they don’t want to see more of: smoke shops. Mexican restaurants, hair salons and vintage stores also joined the list.

Neighborhood leaders want a mechanism in place that allows them to provide public comment when the next smoke shop owner wants prime real estate in Fountain Square. The products sold in these stores currently exist in a gray area that is still unregulated nationally—making it more difficult for state and local officials to make decisions about where and when they can operate.

“There’s nothing. There’s no opportunity for us to say, ‘We have too many of these,’” said Laura Giffel, manager of the Fountain Fletcher District Association.

Giffel said that because Fountain Square is in a historic district, residents get the opportunity, through the Indianapolis Historic Preservation Commission, to comment on issues as small as whether to change an exterior sign. It’s also typical that the Indiana Alcohol and Tobacco Commission provides the public with opportunities to comment on both new and renewed liquor licenses.

She said a similar process could be implemented for smoke shops.

The stores focus less on tobacco and nicotine products and instead sell products derived from cannabis. Justin Swanson, a partner at Indianapolis law firm Bose McKinney and Evans and chair of the firm’s cannabis practice group, told IBJ, “You can pretty much buy everything today in Indiana that you can in a dispensary at our neighboring states,” except for hemp flower.

In 2018, Indiana legalized the sale of cannabidiol, also known as CBD, a substance derived from the cannabis sativa plant. Cannabis refers to all products derived from that plant.

Marijuana, which is illegal in Indiana and on a federal level, refers to parts or products of the cannabis sativa plant that contain substantial amounts of THC—the psychoactive agent that causes intoxication. Cannabidiols sold and purchased in Indiana must contain less than 0.3% of THC.

The Federal Drug Administration announced in 2023 that existing regulatory frameworks for food and supplements aren’t appropriate for cannabidiol, but the agency has said it intends to work with Congress on specific regulations. Pro-cannabis organizations like The National Organization for the Reform of Marijuana Laws, or NORML, have said the FDA is pushing its responsibility onto Congress.

Swanson, co-founder of the Midwest Hemp Council, said the industry remains largely unregulated.

Setting up shop

When Dakotah Pawlicki moved into Fountain Square in 2017, the neighborhood had a bank, a library and a grocery store. Since then, all of those have disappeared. At the same time, he said, the density of smoke shops has become too much.

“It’s not great for the neighborhood by any means, and I think any reasonable person could argue that’s too many for a neighborhood our size,” Pawlicki told IBJ.

The influx was most apparent in spring 2023. During that time, Higher Grade announced plans to open at 1126 Prospect St. in August. Brandon Howard, the owner of Higher Life CBD Dispensary, also told IBJ that spring about his plans to move the shop to 1021 Virginia Ave. from its location at 901 N. Pennsylvania St.

Though it is a cannabis lounge rather than a store, WildEye Lounge opened in April at 1026 Shelby St. The same company has also taken over the former Turchetti’s Deli at 1106 Prospect St. as WildFyre Tap, which operates as a normal bar and grill but serves food to the WildEye Lounge.

Howard ultimately opened Higher Life just four months ago. He describes his shop as a “high-end, boutique smoke shop” with a dispensary feel—if Indiana does move to legalize marijuana, he hopes to make it into one.

Howard said the complaints have some merit. However, he said, each store is unique, and the market has supported them. He said his shop had at least 1,500 customers in its first two months.

Alex Ostrovsky, who co-owns Higher Grade with Ian Hull, opened the Fountain Square location as the chain’s seventh location.

The Higher Grade founders have similar aspirations to Howard: to get in at the ground floor of a potential dispensary market. Ostrovsky told IBJ that neighbors can tell theirs isn’t a “fly by night” operation. That’s in part due to the company’s investment in purchasing and revamping the 1920s building that formerly housed heating, ventilation and air-conditioning business Koehring & Sons. The real estate alone cost $1.1 million.

Ostrovsky agreed that the neighborhood doesn’t need more shops like his. Still, he said, the current mix provides variety. Higher Grade, for example, aims to provide “upscale” products in a space that has an almost “Apple Store vibe.”

Giffel said the business association tries to balance the neighborhood’s wishes with small-business development.

For example, when Ostrovsky and Hull had to go before the Indianapolis Historic Preservation Commission for changes they planned to make to the 100-year-old building for Higher Grade, the Fountain Fletcher District Association had an opportunity to speak out against the plans. And some individuals wanted the FFDA to remonstrate against Higher Grade.

But it wouldn’t have been fair to put a hurdle in front of a small-business owner who had purchased the building specifically for that purpose, Giffel said.

The Fountain Fletcher District Association did provide correspondence to the commission, but it related only to the building’s planned signage and the historic structure.

Search for solutions

Elected officials representing the area say they’ve heard concerns from constituents about the proliferation of these stores but aren’t sure yet how to regulate them.

Democratic Councilor Kristin Jones told IBJ that she began discussing the proliferation of smoke shops in her district with the Department of Metropolitan Development in 2023. She told IBJ a solution would have to come from that department, which deals with zoning.

But the department has experienced some turnover in leadership over the past year and no changes have been proposed.

Jones, through a spokesperson, said Wednesday that she had connected with DMD leadership and the department is looking into the issue.

Indianapolis isn’t the only community impacted by the trend.

In Terre Haute, councilors are considering an ordinance prohibiting new vape shops within a mile radius of another vape shop. The proposal also includes the creation of a registry so city leaders can track the businesses.

At the state level, it’s unlikely to be a top priority during the upcoming session, during which lawmakers have to craft the two-year state budget. Still, Rep. Blake Johnson, an Indianapolis Democrat who represents the Fountain Fletcher area, told IBJ he is concerned about the saturation of these businesses because the commercial corridor has limited space and he has been exploring methods to give neighbors some say.

But the small area is represented by Democratic lawmakers, who have very limited power in the Legislature, where Republicans have a supermajority.

“In the grand scheme of things, you know, issues with the expansion of child care and road funding, you can imagine the volume of issues that come forward,” Johnson said. “I wouldn’t say this is popping up all the time in terms of legislator-to-legislator conversations, but it does pop up a lot in [my] conversations with neighborhood groups.”

Other trendy Indianapolis corridors haven’t been hit as hard by the increase in smoke shops. There are three within the most popular areas of Broad Ripple. The only one in the main strip of the Mass Ave Cultural District is a WildEye location at 739 Massachusetts Ave.

Giffel pointed to a strategy established by the Broad Ripple Village Association as a potential way for neighbors to take the issue into their own hands.

Jordan Dillon, BRVA president, said that when property owners come to the nonprofit’s land use committee for support on a variance or rezone, they are asked to sign a “restrictive use clause.” That clause lists businesses like vape shops, strip clubs and others that the organization has determined are unattractive or oversaturated.

This paperwork is clipped to BRVA’s letter of support for the property owner’s request to the Indianapolis Department of Metropolitan Development. Dillon said this provides a record that the group would not support the requested change if the real estate establishes one of these uses. If the property owner violated the clause, the BRVA would look to the Indy DMD to potentially enforce it.

So far, Dillon said, the BRVA has not had to explore what enforcement looks like. The owners that have signed the clause have kept their word, and signing the clause isn’t required.

But it’s not often that a commercial property owner in Broad Ripple has to go to the city for a rezone or a variance. Those that don’t, don’t need BRVA’s support, limiting the reach of the clause.•