"Cannabusiness" brings big bucks to Michigan

Michigan braces for possible $500 million in sales tax revenue from cannabis sales next year

(CBS DETROIT) - The business of cannabis is booming. 

As marijuana users celebrated Thursday as the unofficial holiday for the flower, state leaders say the community as a whole has a lot to be happy about.

With Michigan bracing for a possible $500 million in sales tax revenue next year, we spoke to the executive director of the state's Cannabis Regulating Agency to understand what determines how much revenue we see locally from the sales, keeping in mind that both medical and recreational use are taxed 6%, plus an additional 10% cost for recreation.

Brian Hanna, Executive Director of the Michigan Cannabis Regulating Agency, broke it all down for us. 

"Cannabusiness" brings big bucks to Michigan

"The tax amounts are actually written in the statutes. And so what we do is we implement the statutes and promulgate rules in accordance with the statutes. And so every three or four months, we are breaking sales records, when it comes to cannabis in the state of Michigan, predominantly, the sales records adult use of driving that growth, but the demand is there. And with that demand comes in increase in amount of taxes and tax revenue that come back to local organizations, local state agencies and go back to schools, roads, and back to municipalities and counties for the last year, last fiscal year, there's $198 million available in a loan and just from the 10% excise tax of the adult use marijuana. And so how that's distributed. And again, it's in accordance to the statutes in the adult use act. First, funds are distributed for implementation administration, enforcement of the act, like us and others. And then the remainders are distributed as follows. So 15% go to municipalities and retail stores 15%, go to counties with retail stores, 35%, go to the school aid fund, and then 35% goes back to the Michigan Transportation fund. And with the previous doling out of taxes that just came back from fiscal year 22. That's approximately $51,800 to every municipality or county, for every retailer, don't use retailer they have so there's a municipality that has, let's say, five of these, that's five times $51,800 for each of those and that that is the amount of money that comes back and again, it's the end labor and hard work of elbows working in the industry, those that work to regulate it, partner with us to help regulate it and those customers that prefer safe access to cannabis."

Michigan could be seeing billions in sales tax revenue as soon as next year, because of cannabis sales. The state's regulating body over the industry is reporting that since adult recreational use became legal, sales continue to increase, which could be very helpful to local communities.

The future of cannabis in Michigan

"Well, there are many different opinions and thoughts about cannabis. And I know for a fact and just by looking at the numbers themselves, we have 163,600 registered patients in the state of Michigan that need access to this medicine and 16,659 caregivers. There are people that need access to this and then there are people that would like to have access to this as an adult. By law, access to cannabis for recreational purposes and the sales are evident. You know that there are people that believe that this is something that they believe in and prefer to use. The employment industry is going up again, the marijuana industry in Michigan employs almost 30,000 people. Before we had this industry, and before we had these acts, you know, it was difficult to ascertain those values, but that's what we have now and it continues to grow so way that it's progressing right now. It would not be a difficult prediction to make that we could, you know, first see potential half a billion dollars in taxes next year."

Thursday marked the unofficial holiday for marijuana users, but nobody is celebrating as much as the Michigan Cannabis Regulatory Agency. Sales are up 30% and show no signs of slowing down. 

The agency runs the state's patient caregiver program under the Michigan Medical Marijuana Act. It also licenses medical and adult use facilities and regulates the industrial hemp products.

"We're hoping to have a state run reference laboratory, we think that would be great for the industry. Right now, there is no third party independent lab arena that helps regulate the licensed laboratories in the cannabis environment. And we'd like to have that and have our own separate division and actually build it right on the other side of my office and space that currently we can definitely fill lab in and our goals of doing that is we want to enhance our investigative capability, you know, our ability to independently test cannabis will help us through an investigations for let's say, illicit product investigations. We think it could turn our timeline down by more than 50%. We think we can increase confidence in the testing industry. We want to perform audits, we want to do two blind audits of the labs as well, and proficiency testing. And we think that the desired end state with this laboratory, it could assist in industry standardization by developing and optimizing testing methods. We think that can inform not only the Michigan industry, but also United States, other cannabis regulator agencies, and perhaps maybe the federal government in the future. So that is a project that we're hoping to be approved for and we're very positive about and we look forward to implementing should we get the approval we're doing right now is trying to set Michigan up as one of the national leaders in cannabis regulation in the cannabis market so that we can say hey, here are our standards and here's what we recommend should federal legalization have happened and you know, the more practical we can do that as an industry and as a regulatory body then we can be on a quicker page and same page working with the federal government should that happen."

Like it or love it, the marijuana business is here to stay. 

Michigan's Cannabis Regulatory Agency says sales tax on the flower has brought in hundreds of millions of dollars … and is showing no signs of slowing.

"With the previous doling out of taxes that just came back from fiscal year 22, that's approximately $51,800 to every municipality or county, for every retailer, adult use retailer that they have. So if there's a municipality that has, let's say, five of these, that's five times $51,800 for each of those, and that is the amount of money that comes back. And for how that's distributed, and again it's in accordance to the statutes in the adult use act. First, funds are distributed for an implementation administration, enforcement of the act, like us and others. And then the remainders are distributed as follows. So 15% Go to municipalities and retail stores 15% Go to counties with retail stores, 35%, go to the school aid fund, and then 35% goes back to the Michigan Transportation fund. And from what we had last year, you know, where their approximate total $325 million in total from both of those taxes that's about a 30% increase over the previous year's taxes and the way that it's progressing right now, it would not be a difficult prediction to make that we could, you know, first see potential half a billion dollars in taxes next year."

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