In 2020, Michiganders bought projection damaging amounts of marijuana. Now the local communities are starting to see their share of the profit.
Where is Michigan’s marijuana tax money going?
With state cannabis sales approaching $ 1 billion in 2020 and a significant percentage of recreational marijuana, it is clear that Michigan residents have a keen interest in the marijuana market. Add in a 10% excise tax and 6% sales tax on adult cannabis products and it seems that the state of Michigan has a pretty strong interest, too.
Last year, we received $ 31 million from 10% excise tax and over $ 14 million from various royalties related to the market – a total of $ 45.7 million for distribution.
As set out in the Michigan Regulation and Taxation of Marijuana Act, the Michigan Marijuana Regulation Fund is distributed in various directions. 15% of the revenue goes to local authorities, 15% to counties, 35% to the School Aid Fund and Michigan Transportation Fund. With Michigan’s total tax revenue for 2020, the distribution of marijuana recreational funds looks like this:
- Parishes and Counties: $ 9.8 million
- School Aid Fund for K-12 Education: $ 11.6 million
- Michigan Transportation Fund: $ 11.6 million
- Start-up / administrative costs: $ 12.5 million
The nearly $ 10 million allocated to local parishes and counties will be distributed to more than 100 parishes – including 38 cities, 7 villages, 21 parishes, and 38 counties across Michigan. And those numbers are sure to increase in the years to come as Michigan’s funds are not distributed evenly or randomly. The payment from the Marihuana Regulation Fund depends solely on the participation of the municipalities in the state marijuana market.
Andrew Brisbo, executive director of the Marijuana Regulatory Agency (MRA) said the MRA “did an excellent job getting the adult licensing program up and running and working efficiently. Injecting more than $ 28,000 per retailer and micro-business into municipal budgets across the state is very powerful and shows how strong and successful the industry is becoming. “
Under Michigan state law, each eligible county and township receives approximately $ 28,000 for every licensed business or micro-business resident in the township. And for cities embracing this new age of cannabis, marijuana is revitalizing pandemic-hit economies.
The economic impact of marijuana on Michigan communities
Lansing, Michigan’s ten licensed marijuana facilities, grossed the city a whopping $ 280,000, and Mayor Andy Schor believes he did so without compromising, which makes his city great. The mayor said, “We are not the wild west of marijuana. We have a limited number who do it the right way, who are presentable, and work with our neighborhoods to make sure things are done right. “
According to Mayor Schor, the addition of local marijuana vendors has revived Lansing in more than just $ 280,000 checks.
“Lansing’s licensed cannabis companies reintroduced previously vacant buildings and storefronts to the tax list and are now allocating nearly $ 300,000 to fill the void the pandemic has left in the budget,” the mayor exclaimed.
In addition to filling empty storefronts, the Michigan marijuana market has brought thousands of retail, shipping, and growing jobs to the state. Chris Swope, Lansing Clerk, stated, “These licensees have invested more than $ 85 million in buying and improving properties in Lansing. They have also employed more than 2,400 workers and agreed to pay a living wage of $ 16 or more per hour and a benefit package that includes health care and retirement benefits. “
The success stories continue in many regions of the state, with Washtenaw County raising the largest amount of cash from the 10% excise tax: more than $ 616,000 for its 22 pharmacies. Ann Arbor ranks second with $ 476,000 for its 17 pharmacies, and Bay County rounds out the top three with an equivalent of $ 420,000.
Despite the impressive checks many Michigan counties have earned on their 2020 marijuana sales, this is just the start for the state cannabis market. Currently, only about 100 of Michigan’s 1,764 parishes / counties allow the sale of recreational marijuana. Detroit has only been accepting applications since January 2021. In short, there is plenty of room for growth in the Michigan adult market.
In the 2020-21 budget, the Senate Treasury forecast that recreational marijuana would generate over $ 150 million in excise and sales taxes. Experts estimate that number will reach $ 262 million by 2022/23.
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