Lucrative business
State will pay millions to county, communities from taxes collected on cannabis product sales
Oakland County and a handful of communities with licensed recreational marijuana retailers will share $4.38 million in 2023 taxes and fees collected by the state on sales of cannabis products.
That’s according to data released recently by the Michigan Department of Treasury, which is distributing more than $87 million to 269 municipalities and counties from the marijuana regulation fund.
Oakland’s total is $4.38 million, half to be shared by 13 communities and the other half paid to the county.
“The dollars received from (recreational) marijuana taxes and fees are distributed to our participating communities,” said State Treasurer Rachael Eubanks. “These dollars may be spent how our local units deem fit to their needs.”
The payments, disbursed annually in late February and early March, are based upon the number of licensed recreational cannabis shops or related microbusinesses in each community. The more licenses issued by each, the larger the payments communities receive.
The math is simple: Multiply the state’s $59,086 payment for one license in 2023 by the number of licenses in each community to determine the amount it will receive. In Oakland County, communities with cannabis retailers had 37 licenses in 2023 which adds up to a $2.19 million share of the regulation fund.
For example, Hazel Park had 10 licenses last year, the most in Oakland County, so it will receive $590,863.
Others to receive money:
Ferndale, with six licenses, will receive $354,518;
Oxford has four licenses and will receive $236,345;
Two communities — Walled Lake and Waterford Township — each have three licenses and each will receive $177,259;
Three communities — Berkley, Madison Heights and Southfield — each have two licenses and each will receive $118,172;
Five communities — Holly, Lake Orion, Orion Township, Pleasant Ridge and Royal Oak — each have one license and each will receive the minimum payment of $59,086.
In total, the state collected $290.3 million in excise taxes for the regulation fund in 2023. From that, the state will pay $43.5 million (15%) to 198 local governments, $43.5 million (15%) to 71 county governments, $101.6 million (35%) to the school aid fund for K-12 education, and $101.6 million (35%) to the transportation fund to repair or maintain roads and bridges.
“The tax funding for municipalities and counties that comes from the marijuana excise tax is a very important benefit of the legal cannabis industry in Michigan,” said Cannabis Regulatory Agency (CRA) Executive Director Brian Hanna.
Spending the money
In Hazel Park, city retirees can thank sales of recreational cannabis products for keeping pensions fully funded.
City Manager Ed Klobucher said the money it receives from the state will go directly into the city’s pension fund, after the state’s retirement system recalculated its actuarial table.
“Our pension was increasing by about $1 million a year,” he said. “One reason we moved to marijuana in such a big way was so we didn’t have to negatively impact all our city services. Pensions are a constitutionally protected obligation.”
If Hazel Park couldn’t meet the new payments, he said, there would have been lawsuits that ultimately would have added pension payments to residents’ tax bills.
Hazel Park’s share of the cannabis fund grew by $176,134 when licenses increased
from eight in 2022 to 10 in 2023, and payments jumped from $414,729 to $590,863.
Klobucher said the overall experience with the 10 licensees has been positive because each business has either renovated an existing vacant building or constructed a new one.
“It’s not like they’re choking out other businesses,” he said. “We have our share of pizza places and party stores. We sell our share of Doritos. There’s not really any downside.”
Klobucher said one early fear that recreational cannabis sales would increase crime has not materialized. Each licensee is required to have security on site and to submit a security plan to the city. He said there are occasional police incidents at the shops but no more than at bars or restaurants.
“There are no negatives,” he said.
And, he said, the companies are paying taxes as well as making donations to support community organizations.
Hazel Park has no plans to add more licenses, Klobucher said. Other communities should make their own decisions about whether to pursue marijuana businesses, he said, calling the experience “unique to each city.”
Hazel Park has room for other types of businesses, he said. Anyone who wants to open a restaurant, bar or “cool new business” is welcome. “We’d love to talk to them,” he said.
Oakland County’s payment will be $2.19 million for the 37 licenses within its borders. In 2022, the county received $1.14 million for 22 licenses.
“Oakland County has used adult-use marijuana payments to support public health and other initiatives that help make the county a healthy, safe, and thriving place to live and work,” said Bill Mullan, county spokesman.
Lake Orion, which has one licensee, received $51,841.21 from the 2022 disbursement and will get $59,086 for 2023. Village Manager Darwin McClary said the money goes into the general fund to offset the cost of administration and enforcement of recreational marijuana applications and of facilities. That includes zoning compliance work and inspections, he said.
Pleasant Ridge will use its $59,086 to fund public art, said City Manager James Breuckman.
“We have created an Arts Council to oversee that process. We are currently creating an arts plan and will use the marijuana excise tax money to implement the plan when it is complete. We expect that to occur over the next six to 12 months,” he said.
Breuckman said the city has had no issues with its licensee.
“We’ve found that the licensee has operated just like any other retail store,” he said.