Agency: Pot tax could generate up to $64M a year

Michael Gerstein
The Detroit News

Lansing — A proposed new medical marijuana tax could generate as much as $64 million a year more for the state government, according to a Senate agency analysis released Friday.

The Senate Fiscal Agency estimated a new tax on medical marijuana provisioning centers could pad state coffers by more than $21.3 million a year.

Since medical marijuana could be subject to the 6 percent sales tax, according to the analysis, the state could reap another $42.7 million annually if Gov. Rick Snyder signs the legislation the House sent him this week. But analysts said the sales tax revenue isn’t guaranteed.

“In total, the medical marihuana provisioning centers could generate $64.0 million in revenue on an annual basis, assuming Michigan experiences similar market conditions as Colorado did as its retail medical marihuana program came into being,” according to the analysis.

Under the legislation, about $6 million raised from the tax would finance a fund for firefighters’ cancer costs, while another $6 million would help counties with medical marijuana dispensaries and $5 million would aid municipalities with the pot shops.

The Legislature created a fund in 2015 for medical costs related to cancer that firefighters contract on the job but did not put any money into it. The Senate unanimously approved in March a one-time $1 million appropriation to the fund.

Prescription medicine is not subject to sales tax. But the Senate Fiscal Agency analysis said that a tip from “a physician” helped analysts realize that medical marijuana would not necessarily be interpreted as “dispensed by prescription” and therefore might be taxable.

The analysis notes the sales tax money is not guaranteed. It didn’t stop analysts from breaking down how the projected revenue might be spent.

If Michigan applied the sales tax to pot sales, about $31.3 million more would go to fund K-12 education.

The rest of the money raised through sales taxes would go into the state’s general fund. It means lawmakers would choose where to pour more money — from roads to prisons to environmental protection.

The memo noted, however, that short-term revenue “will be significantly less” as the state creates new regulations outlined in the legislation and new “participants enter the market.”

The analysis was based in part on financial information from years of sales in Colorado, which legalized medical marijuana dispensaries in 2010 and recreational use of the drug in 2013.

The bills would let local governments control where provisioning centers open, impose a new tax on the centers, track the sale and distribution of medical marijuana in a new database, allow patients to use “edibles” and other non-smokable marijuana derivatives, and create other changes.

Lawmakers in the House and Senate finalized the bill package this week, following nearly eight years of uncertainty from patients, lawyers and marijuana dispensaries about what the state’s ambiguous 2008 voter-approved medical marijuana law actually allows.

Senate Majority Leader Arlan Meekhof, R-West Olive, didn’t have a comment since he was at a memorial service Friday for state Rep. Peter Pettalia, the Presque Island Republican who died Monday evening in a motorcycle crash on a rural highway, said spokeswoman Amber McCann.

House Minority Leader Tim Greimel, D-Auburn Hills, has said he opposed the legislation in part because of the tax it would apply to medical marijuana patients.

Twitter: @MikeGerstein