Published in Finance
Study estimates marijuana as $1.4 billion industry for Michigan COURTESY PHOTO

Study estimates marijuana as $1.4 billion industry for Michigan

BY Friday, October 26, 2018 10:45am

Marijuana for recreational use by adults could become a $1.4 billion industry in Michigan in the years ahead.

That’s one conclusion in an economic analysis conducted by the East Lansing-based Anderson Economic Group LLC that comes as voters in the state prepare to decide Nov. 6 whether to legalize marijuana for recreational use.

The analysis estimates that recreational marijuana use would generate sales of $492 million to $640 million in the first year if Proposal 1 passes. The industry would grow to sales of $767 million to $1.4 billion annually “once the market reaches maturity,” according to the Anderson Economic Group report that estimated low- and high-growth scenarios for the industry.

When revenue from the sale of currently legal medical marijuana is added in, the industry could reach $1.6 billion to $2.2 billion. The estimate includes a decline in medical marijuana sales with the legalization of recreational use, according to the analysis.

The firm also estimates there “would also be a modest amount of cannibalization of alcohol sales and sales of other goods.”

Voter passage of Proposal 1 would generate an estimated $81 million in state revenue by 2023 through sales and excise taxes under a low-growth scenario, and $175 million in a high-growth scenario, according to the Anderson Economic Group.

The analysis joins earlier estimates of the economic impact from legalizing marijuana in Michigan for people over 21 years old.

In a report earlier this month, the state Senate Fiscal Agency estimates that recreational marijuana would generate sales of $1.6 billion by 2023 and $266 million in tax revenues.

An analysis by VS Strategies in Denver, Colo. — where marijuana is already legal — estimates legal recreational sales in Michigan would hit $840.7 million by 2023 and generate $134.5 million in state tax revenues.

The group pushing the ballot proposal, the Coalition to Regulate Marijuana Like Alcohol, estimates a legal and mature marijuana industry in Michigan for both recreational and medical use will hit sales of $1.5 billion by 2023 and generate $520 million in tax revenue in the first five years.

Proponents of Proposal 1 argue the state should regulate and tax marijuana as it does alcohol, that legalization would save money compared to what’s spent to enforce the current law, and that its prohibition has failed to reduce use.

“Proposal 1 is really all about stopping the waste of tax dollars used to enforce a failed law,” said Josh Hovey, spokesman for the Coalition to Regulate Marijuana Like Alcohol. “Marijuana is here in Michigan and this proposal is about recognizing the prohibition has failed and we need to regulate marijuana, rather than criminalize it.”

Tax revenue generated by legalizing marijuana for recreational use would go to municipalities and counties where a related business is located, plus to schools and roads, “all of which have been in dire need for more funding for many years,” Hovey said.

The state’s school aid fund would get $54 million to $101 million by 2023 and the state’s transportation fund would receive $27 million to $47 million, according to the Anderson Economic Group estimates.

Opponents of Proposal 1 see legalizing marijuana as causing a decrease in public safety — for instance, through more people driving while impaired, as well as harming public health, and creating problems for employers enforcing workplace drug policies.

“The ballot proposal, as written, doesn’t really address anything in regard to the societal issues that affect the workplace,” said Joy Gaasch, the president of The Chamber of Commerce of Grand Haven, Spring Lake and Ferrysburg, whose directors recently formally opposed Proposal 1. “(There’s) too many unknowns as it affects the workplace.”

Part of the problem comes from marijuana remaining illegal on the federal level and regulations that require employers to ensure a safe workplace, Gaasch said. Employers in a tight labor market already are having challenges finding enough workers who can pass a drug test, she added.

Directors at the Grand Haven Chamber view the ballot proposal as “one of the biggest issues that has come along in a long time that can cause problems for businesses,” Gaasch said.

Opposition to the ballot proposal also has come from law enforcement and public health advocates, as well as the Grand Rapids Area Chamber of Commerce and Michigan Chamber of Commerce, the latter of which organized a series of press conferences around the state Thursday to urge a “no” vote.

“What’s going to happen to our workplaces and work environments as a result of this?” said Rev. Tom Cross, pastor at Living Word Church in Muskegon, which hosted one of the events.

Hovey counters that the proposal would still allow employers to enforce workplace drug policies.

“From that standpoint, nothing changes with Proposal 1,” he said. “Employers expect their employees to come to work ready to perform, and there’s going to be the same expectations whether the proposal passes or not.”

If passed, Proposal 1 would: 

  • Allow individuals 21 and older to buy, possess and use marijuana and marijuana-infused edibles, and grow up to 12 marijuana plants for personal consumption.  
  • Impose a 10-ounce limit for marijuana kept at residences and require amounts over 2.5 ounces be secured in locked containers.
  • Create a state licensing system for marijuana businesses and allow municipalities to ban or restrict them.
  • Permit retail sales of marijuana and edibles subject to a 10 percent tax dedicated to implementation costs, clinical trials, schools, roads, and municipalities where marijuana businesses are located.
  • Change several current violations from crimes to civil infractions.

Additional Info

  • Image_Position: Full
Read 1847 times Last modified on Friday, 26 October 2018 13:03
SUBSCRIBE TO MIBIZ TODAY FOR WEST MICHIGAN’S FINEST BUSINESS NEWS REPORTING >