by Rick Thompson for The Compassion Chronicles
12/19/2012
On November 6, 2012, citizens in two states legalized the use of marijuana
for all adults 21 and over. Washington State’s fiscal report
<http://www.ofm.wa.gov/
benefits of this new legalization legislation yields a startling projection
of $1.9 billion generated or saved during the program’s first 5 years.
Michigan’s larger population indicates the Great Lakes State could reap a
$2.8 billion payoff for initiating similar legislation.
Washington’s estimate of financial yield came in the OFM Fiscal Impact
Statement (I-502), compiled by the state Office of Financial Management.
The estimates were created assuming a start date for the licensing and
taxation portion of Prop. 502 of December 1, 2013. Per the
Report<http://www.ofm.wa.gov/
“Assuming a fully functioning marijuana market…estimated total revenue
generated to the state could be as high as $1,943,936,000 over five fiscal
years.” Michigan is the 8th largest state by population, with 9,883,640
residents per the 2010 US Census.
<http://en.wikipedia.org/wiki/
is 13th, with 6,724,540 citizens, making them 68% of Michigan’s size.
Projecting these numbers reveals the potential for Michigan to capture
$2.857 billion in revenue over five years.
[image: Assorted products infused with cannabis are on sale in Michigan
already]<http://www.
products infused with cannabis are on sale in Michigan already
The study cited consumption numbers generated by the US Department of
Health and Human Service’s National Survey on Drug Use and Health,
2008-2009. The OFM recalculated the numbers to reflect 2013 population
estimates. Their conclusion was an estimate of 363,000 marijuana users in
Washington State consuming 85.1 million grams of cannabis annually. The
pattern of consumption used was taken from the United Nations Office on
Drug and Crime’s 2006 bulletin on use, with numbers ranging from 3% of
those users consuming daily, up to 18% expected to be once-a-year consumers.
The official report also assumes that all the cannabis these consumers use
will be purchased through a Washington State licensed distributor, will all
be smoked and that all will be sold to in-state consumers. Washington’s
medical marijuana patients are not included in this estimate, apparently
assuming they will find their current method of acquisition preferable to
this new, as-yet uncreated market. The projected financial benefits to
local and state agencies should represent a very attractive revenue stream
to many Michigan cities struggling with budgetary crises. “Michigan’s
Provisioning Centers, grow supply stores, retailers and related businesses
and organizations have occupied and improved vacant spaces, created jobs
and contributed to the local economy- all through medical marijuana. When
we legalize marijuana for personal use, the economic advantage will be
staggering,” according to Jamie Lowell of Ypsilanti’s 3rd Coast Compassion
Center.
TAXES AND REVENUE
The I-502 program requires a $250 application fee and a $1000 issuance or
renewal fee for every business participating in the program. Their estimate
is 100 marijuana producers and 55 marijuana processors will register.
Distribution is projected to mirror that of liquor sales, indicating 328
outlets making marijuana sales. The initiative created a 25% marijuana
excise tax on each wholesale and retail sale from a licensed producer,
processor or retailer. Other revenues include the statewide average local
sales tax rate of 2.412%, a 0.471% state business and occupation tax for
retailers, a 0.484% tax for processors and wholesalers, and the inevitable
city business taxes (estimated to be up to 8.9% of all business and
occupation taxes).
Over five years, Washington’s local communities are expected to see income
from taxes at up to $120 million- the Michigan equivalent would be $176
million. An estimated $348 million could be gained through state taxes for
Washington- or $511 million to Michigan. “The prospect of billions in
revenue from state sponsored recreational marijuana sales is promising to
our anemic state budget, and savings come with significant and often
ignored reductions in the misdemeanor criminal justice system that no
longer deals with marijuana as contraband,” said attorney John Targowski of
Kalamazoo.
Half of all marijuana entering this state-sanctioned program is projected
to be grown and processed by the same person/company, with only half of the
raw stock grown being handled by a professional processing company. They
estimate a $3 per gram price to produce, a $6 per gram price after
processing, and a $12 average retail price per gram, based on the state’s
review of current medical marijuana dispensary prices.
The benefits- and costs- of marijuana legalization are broad-reaching. In
Washington, the report took into consideration the effect on the Department
of Licensing (equivalent to Michigan’s Secretary of State), background
check requirements, development of rules and licensure, testing lab
accreditation standards and even the loss of a $368,000 Federal marijuana
eradication grant. Fees incurred by the state Attorney General and
Department of Health, as well as many other agencies, were also factored in.
ESTIMATE IS TOO LOW?
Using the numbers estimated in the Washington fiscal analysis, Michigan is
already farther advanced than our west coast cousin. Michigan has approx.
130,000 registered patients and 25,000 caregivers using the Medical
Marihuana Program (MMP) and the number of unregistered users is many times
that number.
The market for cannabis goes far beyond the smoked form. The Washington
study acknowledges the new law allows for the possession of
marijuana-infused products, too- up to 16 ounces of solid (think brownies)
and 72 ounces of liquid (like raw cannabis juice). None of the revenue
figures above reflect any sales of these two lucrative product lines. “The
medical marihuana industry has been a boon to the entire state of Michigan.
The potential economic growth opportunities of adding the industrial hemp
industry and allowing for non-medical use for adults would be very
significant,” said Lowell.
The survey simply accounts for income and expenditures to the state of
Washington but ignores real estate transactions, employee payrolls and
utility expenditures, all of which are taxed. The benefit to local
economies is an unknown, but positive, factor in the overall picture of
economic opportunity Washington’s voters have created for themselves. The
state-generated portion of these funds could go towards a revitalization of
Michigan’s Film Industry
credits<http://www.
which are expected to be a meager $50 million in 2013 and $25 million in
2014, or it could offset the Snyder administration’s 2011 cuts
<http://www.huffingtonpost.
Michigan schools.
Despite these attractive economic numbers, the Snyder administration is
still pressing charges against cannabis businesses. The Attorney General’s
office is in court in Port
Huron<http://www.
pursuing charges against a medical marijuana distribution facility that
operated in compliance with, and under the approval of, local and county
law enforcement agencies. The AG’s office has encouraged local prosecutors
to file suit
<http://www.mlive.com/news/
the city of Grand Rapids to halt implementation of a marijuana
decriminalization ordinance passed by the people on that November 6th
election night.