Group urges state to explore new marijuana tax, clinical pot research

Beth LeBlanc
The Detroit News

A group commissioned to bring racial equity to Michigan’s marijuana industry has suggested a range of changes to Michigan laws that include the authorization of clinical marijuana trials in the state and a levy of new taxes and other funding mechanisms for licensees disproportionately affected by past state marijuana law. 

The Racial Equity Advisory Work Group released more than a dozen recommendations to improve economic opportunity in Michigan’s marijuana industry after spending six months studying the issue. 

The group concluded in its report that current law governing marijuana sales should "address the specific issue of racial inequities within the commercial industry."

Recommendations related to proposed taxes and clinical trials were listed as some of the lowest priorities of the group, while marijuana education, business partnerships and crowd funding are higher goals.

The tax proposals were "not popular," but were included in the report to reflect all of the ideas vetted by the group, said Anqunette Sarfoh, chairwoman for the work group's Social Justice Committee and a board member on the Michigan Cannabis Industry Association.

"Of those who were licensees, we vehemently opposed any taxes and I vehemently opposed any taxes on patients, in particular," she said. "The reason why our tax structure is so low is because we are competing against a black market that is strong and that’s the way to compete.”

Varieties of medical marijuana in jars at Green Care dispensary in River Rouge on April 20, 2020.

The work group and other similar programs were established within the Marijuana Regulatory Agency to explore ways to help those who had been disproportionately affected by past marijuana arrests and prosecutions prior to the legalization of recreational pot in 2018. 

Medical marijuana was legalized in Michigan in 2008 and the commercial side of the industry set up in 2016. 

U.S. Bureau of Justice statistics indicate nearly 80% of people in federal prison for drug offenses and 60% of those in state prison are black or Latino. 

As of December, 3.8% of licensed recreational marijuana businesses in Michigan had Black ownership and 1.5% Hispanic or Latino ownership, according to the Marijuana Regulatory Agency. African Americans comprise about 13% of Michigan's population. 

Several of the recommendations in the report would require legislative approval, including new taxes on marijuana sales, making marijuana businesses eligible for economic development grants, the enshrining social equity principles in state marijuana laws and the authorization of clinical marijuana research.

Licensing change, education priorities

Among the recommendations in the report are changes that would adjust event permits and expand microbusiness licenses to allow for more flexibility of liability for events and more freedoms for those seeking to run a microbusiness, including an increase on the cap of plants allowed from 150 to 300.

The microbusiness license expansion was one of the most popular proposals as it gives microbusinesses a pathway to survive financially, Sarfoh said. 

"The microbusiness model as written is not profitable. It’s too restrictive," she said. "It’s very difficult to have a viable business if you use the microbusiness model as written.”

The work group also wants a variety of policy changes that would require health professionals to receive continuing education on marijuana, create manuals and training sessions for municipalities, and encourage the continued education of marijuana store employees, growers and processors.

As a medical marijuana patient, Sarfoh said the education is essential to ensure patients have sound advice from doctors and people selling the marijuana. 

"It’s time for our doctors and provisioning center employees to get on board with this," she said. "On top of it, we are still fighting stigma. There is education that they need.”

The report lobbies for a crowdfunding platform, dubbed the Michigan Marijuana Market, to allow local investors to fund marijuana businesses in communities found to be disproportionately affected by past marijuana enforcement.

Another recommendation seeks to open economic development laws and adjust them to make marijuana businesses eligible for grants. A separate recommendation vouches for programs that would allow for joint ventures and ownership program for social equity businesses.

Another recommendation asks the agency to create an exit interview and survey for license applicants for people of color in the medical and recreational pot programs.

The report asks for the Medical Marijuana Facilities Licensing Act to be changed to insert language into the law to establish a “social equity model” for the state.

Also suggested in this week's report is reinstating the Medical Marijuana Excise Tax, a 3% tax on medical marijuana sales that expired in March 2019 under a sunset provision in state law that required its termination if recreational marijuana were ever legalized. 

If the excise tax had been levied in 2020, it would have generated about $9.8 million in tax revenue, according to the report.

Under the recommendation to have the tax reinstated, about 60% of the revenue would go to counties and municipalities hosting marijuana shops and 30% of the revenue would go to the Michigan Social Equity Capitol Investment program. 

A separate recommendation would create a 1.5% tax on transactions between licensees, with about 70% going to host communities and school districts, 20% to the social equity investment fund and 10% to marijuana medical research. 

The recommendations also would ask the Legislature to create a bill that would codify medical marijuana research, including controlled clinical trials to identify medicinal uses for certain marijuana strains. The state Department of Health and Human Services would create a council to guide and implement the research, according to the report.