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Published in Economic Development
3Fifteen Cannabis on Plainfield Avenue NE in Grand Rapids. 3Fifteen Cannabis on Plainfield Avenue NE in Grand Rapids. COURTESY PHOTO

State distributes first $10 million from recreational marijuana taxes to municipalities

BY Thursday, March 04, 2021 11:25am

State officials are releasing nearly $10 million for more than 100 municipalities across the state that have allowed recreational marijuana dispensaries and microbusinesses.

It’s the first tax revenue being distributed to local governments that allow recreational cannabis businesses under the Michigan Regulation and Taxation of Marijuana Act, which was approved by voters in 2018.

Thirty-eight cities, seven villages, 21 townships and 38 counties started receiving payments this week from a state fund that — for fiscal year 2020 — includes roughly $28,000 for each retail store and microbusiness allowed to operate as of Sept. 30, 2020. The state had issued licenses to 178 retailers and microbusinesses in that time.

The state reported more than $341 million in recreational cannabis sales in fiscal year 2020.

Michigan Marijuana Regulatory Agency Executive Director Andrew Brisbo said in a statement that the $28,000 directed to local governments for each retailer and microbusiness is “very impactful and shows how strong and successful the industry is becoming.”

Roughly half of the $9.97 million distributed by the state went to counties. Kalamazoo and Calhoun counties — which had 12 and 13 licensed recreational cannabis businesses as of Sept. 30, 2020, respectively — were among state leaders with each receiving more than $335,000.

Kent County had just one licensed dispensary — in Lowell — as of Sept. 30, 2020, although the city of Grand Rapids now has five dispensaries as of late January, as MiBiz previously reported.

Beyond the tax revenue to local governments, Michigan’s recreational cannabis law generated about $11.6 million for the School Aid Fund and another $11.6 million for the Michigan Transportation Fund.

Under state law that imposed a 10 percent excise tax on marijuana sales, the Marihuana Regulation Fund distributes 15 percent of revenues to municipalities, 15 percent to counties, 35 percent to the School Aid Fund and 35 percent to the Michigan Transportation Fund. Microbusinesses are defined as a person who’s licensed to grow up to 150 plants and who can process and sell it to individuals or to a safety compliance facility.

State Treasurer Rachel Eubanks said the payments are especially critical as local governments have taken tax revenue hits during the COVID-19 pandemic.

“The revenue generated from marijuana taxes and fees is important to our local governments,” Eubanks said in a statement. “In this extraordinary time, our staff is working to get those payments to impacted municipalities and counties. Every dollar helps right now.”

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