If Michigan voters elect to legalize marijuana in November, the state can expect to collect hundreds of millions of dollars in tax revenue over the next five years, according to a new report from the non-partisan Michigan Senate Fiscal Agency.
In fact, the new estimates are even higher than those projected by the group sponsoring the legalization ballot measure.
While that group, Regulate Marijuana Like Alcohol In Michigan (RMLAM), predicted that the state would collect about $520 million in cannabis sales and excise tax revenue in the five years after implementation, the government estimate is closer to $730 million over the same time span.
The agency’s report is “more bullish than ours,” Josh Hovey, spokesperson for RMLAM told Marijuana Moment.
“We knew from the get-go that ours was a very conservative estimate and we wanted to make sure we had something that wasn’t going to oversell the public on legalization. Because, in retrospect, whether it’s $130 million a year or more than $200 million a year, that is just secondary to ending unnecessary arrests and freeing up the court system.”
The initiative, Proposition 1, would impose a 10 percent excise tax on non-medical cannabis sales in addition to the state’s six percent sales tax. It would also eliminate a three percent tax on medical cannabis “provisioning centers,” which was accounted for in the fiscal report.
Where would all that money go?
The 10 percent excise tax revenue would be distributed for transportation infrastructure (35 percent), schools (35 percent) and local jurisdictions that permit adult-use marijuana businesses to operate in their municipalities and counties (15 percent each).
Based on the government report, that means that by the 2022-23 fiscal year, out of of $252 million in total marijuana tax revenue, about $126 million will go toward road construction and K-12 education funds on an annual basis from the excise tax alone. On top of that, schools would receive an additional $77 million a year due to marijuana commerce, allocated from the state’s six percent sales tax.
Then, of course, there’s the cost savings of simply ending marijuana arrests and related prosecutions and incarcerations, as the Michigan Senate Fiscal Agency noted. The proposition “could have a positive fiscal impact on State and local government,” according to the report.
“Fewer felony arrests and convictions could decrease resource demands on court systems, community supervision, jails, and correctional facilities. In 2016, 199 people were sentenced to prison for a marijuana-related felony conviction, and 3,620 were sentenced to jail, probation, or a combination of both.”
The chances that Michigan ends up legalizing marijuana for adult-use seem fairly strong. A September 2018 poll from The Detroit News and WDIV-TV found that 56 percent of likely Michigan voters favor fully legalizing cannabis, compared to just 38 percent who said the opposed ending prohibition.