How Michigan’s Pot Legalization Compares to Other States

Californian Marijuana Industry

Back in 2008, voters in Michigan approved a bill that legalized using marijuana medically, called Proposal 1. Now, a decade later, voters will once again decide if they want to legalize it recreationally too. Approval appears imminent, so just how does Michigan’s proposal to legalize weed compare to other states that have already chosen this route?

Michigan Marijuana Legalization Initiative

Voters will decide on the November 6 ballot whether to approve MMLI, or the Michigan Marijuana Legalization Initiative. The measure would legalize cannabis for anyone 21-years or older, allowing them to use and possess weed, provided they are not doing so in public or driver under its influence. Should voters approve MMLI, then legal adults will have other laws to follow too.

They will be able to carry up to 2.5 ounces of weed on their person at any given time and have up to 10 ounces in their homes. Additionally, they will have the right to grow as many as 12 cannabis plants in their residences. However, municipalities will decide whether to completely ban or restrict the number of marijuana businesses operating within their jurisdictions.

Taxes

MMLI would impose an excise sales tax of 10 percent on all pot sales, paid by retailers, as well as the state’s standard six percent sales tax, which the consumer will pay. The 10 percent excise tax would make Michigan’s overall tax rate on recreational weed the lowest in the country. Colorado has a 15 percent excise tax, plus a 16 percent sales tax on all recreational sales.

Oregon imposes a 17 percent sales tax, plus an additional three percent in local taxes. Washington has the heftiest tax rates of all, with a sales tax of a whopping 37 percent. Maine, Massachusetts, Alaska, Nevada, and California all impose higher taxes overall on recreational pot than Michigan would if MMLI gets voter approval.

Those against the initiative are actually using the proposed low tax to further their cause. “Michigan would become the marijuana capital of America if this passes,” claimed Scott Greenlee, president of Healthy and Productive Michigan, a group opposed to legalization. “The 10 percent tax rate is the lowest of any state that has recreational marijuana, and yet people would be able to have more of it on them and in their homes than anywhere in America.”

Allocation of Revenue

The purported goal of keeping excise tax low is to encourage consumers to buy from the legal market instead of the illegal one, while still generating the hundreds of millions of dollars needed to fund the following programs with any significance:

  • The administrative costs for Michigan’s Department of Licensing and Regulatory Affairs.
  • At least $20 million for at least the next two years, or until 2022, to research the benefits of cannabis in treating military veterans and preventing their high suicide rates.

The state plans to divide all remaining revenues as such:

  • Fifteen percent will go to cities in proportion to how many weed stores or micro-businesses they each have.
  • Fifteen percent will go to counties in proportion to how many retail outlets and micro-businesses they contain.
  • Thirty-five percent will go to a school fund to aid in K-12 education.
  • Thirty-five percent will go to the Michigan transportation fund to fix and maintain roads and bridges.

However, even some proponents of the measure confess that a 10 percent excise tax will not prove sustainable in the long-term, especially when supply catches up to demand and forces prices to drop. Matthew Abel is the executive director of the Michigan branch of NORML, or the National Organization for the Reform of Marijuana Laws, and senior partner at Cannabis Counsel, a Detroit-based pot law firm.

Abel explained that, if the state wants to sustain revenues from recreational weed, then legislature will need to take action in the future. In Colorado, taxing recreational pot highly enabled the first $40 million to fund education and infrastructure programs in the state. Local governments with licensed stores also get a share of the monies, as Michigan proposes, while the rest goes into a Marijuana Tax Cash Fund.

Legalization Will Be Slow

If voters approve Michigan’s recreational pot initiative on the November 6 ballot, the state’s Department of Licensing and Regulatory Affairs will only start accepting business applications in December 2019. For at least two years after that, it will only accept applicants from residents in Michigan who already have licenses to operate medical cannabis facilities.

This frustratingly slow timeframe mimics the rollout of Colorado’s recreational weed laws. Voters approved adult-use pot in 2012, but the first businesses only opened their doors in January 2014. Resembling Colorado further, Michigan’s proposal does not prevent employers from screening their employees for weed and making disciplinary decisions based on the test results.

A poll conducted recently indicates that Michigan’s vote on this measure will likely be very close. However, the broad trend nationally reached a tipping point some time back. Weed is legal in some form or other in thirty states already. You can get recreational pot anywhere on the entire West Coast, and several Democratic senators intend proposing legislation to legalize at the federal level.

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