269 Michigan municipalities to split $87.1M in cannabis tax revenue

This story was reprinted with permission from Crain’s Detroit and written by Dustin Walsh.

Michigan counties and municipalities that allow marijuana businesses in their borders will split $87.1 million in tax revenue collected in 2023. That’s nearly $30 million more than last year.

Under state law, counties split 30% of the tax revenue collected from the 10% excise tax on recreational marijuana sales with cities, townships and villages. The money is distributed based on the number of marijuana businesses in their borders. The amount of product sold from each license holder is not considered when distributing that tax revenue; it’s purely based on the number of license holders in each community.

Marijuana has become a major source of revenue for the state and its municipalities and one of the largest “sin tax” generators in the state.

During the 2023 fiscal year, which ended on Sept. 30, the state of Michigan collected $73.6 million more in recreational marijuana excise taxes than beer, wine and liquor taxes combined, according to a House Fiscal Agency report released in November.

The 198 cities, villages and townships that have opted to allow weed businesses to operate will receive more than $43.5 million, and the 71 counties in which those municipalities exist will divvy up the remaining $43.5 million, according to documents from the Department of Treasury obtained by Crain’s.

That translates to each community receiving $59,086.35 per licensed marijuana business within their borders. That’s up from $51,841.21 per license in 2022.

Cannabis sales in Michigan topped $3.06 billion last year, or about $305 worth of marijuana for every person in the state, according to data from the Michigan Cannabis Regulatory Agency. On a per capita basis, Michigan is the top cannabis market in the nation.

During the 2023 fiscal year, total marijuana taxes collected totaled $290.3 million, according to the Michigan Treasury. Besides the distribution to municipalities, $101.6 million each will go the School Aid Fund and the Michigan Transportation Fund.

That amounts to 0.57% of the $17.8 billion School Aid Fund and 2.75% of the $3.7 billion Transportation Fund.

The city of Detroit will get the largest municipal distribution from tax revenue due to it having the largest amount of marijuana licenses at 33, surpassing Ann Arbor for the first time. The city will receive $1.95 million from the fund. Ann Arbor is set to receive $1.54 million, according to Treasury data.

Wayne and Washtenaw counties will also receive the largest slice of the revenue for counties at $3.5 million and $2.7 million, respectively.

But it’s small communities in the state that have opened up to marijuana that are seeing the greatest impact.

The city of Big Rapids, with fewer than 9,000 residents and 15 marijuana license holders, will receive more than $886,000 in revenue from the tax fund. That’s nearly 13% of the city’s total tax collection. Emmet Township, a municipality with fewer than 12,000 residents and 13 marijuana license holders, will receive more than $768,000, or about 17.5% of its total tax revenue.

Monroe Township, which is a hot locale for dispensaries given its proximity to the Ohio border, will receive more than $945,000 from the marijuana fund, totaling more than 22% of the township’s total revenue.

Only about 15% of the state’s 1,773 municipalities have opted in to allow marijuana sales, meaning more than 1,500 municipalities in the state will receive no tax dollars from the Marihuana Regulation Fund.

Here are the largest distributions for cities, villages, and townships:

Detroit – $1,949,849.55
Ann Arbor – $1,536,245,10
Lansing – $1,418,072.40
Grand Rapids – $1,358,986.05
Kalamazoo – $1,063,554.30
Monroe Township – $945,381.60
Bangor Township; Battle Creek; Big Rapids – $866,295.55
Ypsilanti; Emmet Township – $768,122.55
Traverse City – $709,036.20
Adrian; Coldwater; Muskegon – $649,949.85
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