Michigan Senate Fiscal Agency estimates marijuana could generate more than $260 M in new tax revenue
If Michigan voters approve the legalization of recreational marijuana for individuals 21 or older by voting in favor of Proposal 1 on November 6, new net annual state tax revenues could grow to $262 million by FY 2023.
That's according to estimates in a recent report by the Michigan Senate Fiscal Agency. The agency estimates that $287.9 million in new revenues will be generated in FY 2023 by sales taxes and excise taxes on marijuana sales and by license application fees. That sum will be offset by a loss of $25.9 million in tax revenues from the elimination of an excise tax on medical marijuana.
The estimated net revenues prior to FY 2023 are lower: $77.1 million in FY 2020, $157.4 million in FY 2021, and $241.4 million in FY 2022.
"The key point is that we're going to be generating much needed revenue for our roads, our schools and our local communities," said Josh Hovey, spokesman for the pro-legalization group, the Coalition to Regulate Marijuana Like Alcohol.
Hovey said Proposal 1 is not only about generating revenues.
"We're saving tax dollars by not arresting people for possession," said Hovey, referring to an American Civil Liberties Union report that indicated Michigan spent roughly $90 million in 2010 on marijuana prohibition efforts including arrests.
But opponents say the estimated new tax revenue would be a tiny drop in the bucket for the state budget.
"More people will be using marijuana if Proposal 1 passes," said Scott Greenlee, president of the anti-legalization group, Healthy and Productive Michigan, "Which means more medical costs whether it's the increased costs of drunk driving resulting in accidents, whether it's treatment for folks who are addicted."
Proposal 1 would establish a 10 percent excise tax on marijuana sales and also apply the state's 6 percent sales tax.
Proposal 1 calls for monies collected to first be spent on implentation, administration and enforcement. For at least the first two years, the next $20 million would go towards research on the efficacy of marijuana in treating veterans and preventing veteran suicide. The unspent balance would be distributed as follows:
- 15% to municipalities where a marijuana retail store is located,
- 15% to counties where a marijuana retail store is located,
- 35% to the School Aid Fund for K-12 education, and
- 35% to the Michigan Transportation Fund for repair and maintenance of roads and bridges.