Adrian to receive first tax payment from recreational marijuana sales

Spencer Durham

| The Daily Telegram

ADRIAN — Adrian will see the fruits of opting into the recreational marijuana industry later this spring when it receives its first excise tax payment from the state.

There is a 10% excise tax collected on all adult use, or recreational, cannabis sales. This is in addition to a 6% sales tax. Collected excise taxes are pooled together by the state and then divided between the municipalities and counties that allow for recreational sales.

The state skims money off the top before an allocation to afford the implementation of the Michigan Regulation and Taxation of Marihuana Act (MRTMA), which legalized recreational marijuana.

Another $20 million is provided for clinical trials studying the efficacy of marijuana on medical conditions of veterans and veteran suicide prevention. These studies are approved by the United States Food and Drug Administration and sponsored by a nonprofit or academic institution.

The same amount will be dedicated for studies in 2022.

The remaining funds are split between municipalities with recreational dispensaries, the counties they are located in and the state’s school aid and transportation funds.

The majority of funds go toward the School Aid Fund and transportation fund, 35% each.

Fifteen percent is allocated to municipalities and is proportional to how many retailers are in business.

Each business constitutes one share a city receives in excises taxes. City attorney Tamaris Henagan said shares have been estimated at $28,000.

For Adrian, there were six dispensaries selling recreational marijuana in 2020. Henagan said they expect to receive $168,000 in excise funds.

Addison, Morenci and Lenawee County will also receive excise taxes. Counties receive 15% of excise taxes and is proportional to how many retailers there are in a county.

Henagan said the money will go into the city’s general fund. It’s the first excise tax the city will receive as it missed out on any funds from medicinal marijuana sales.

Municipalities used to receive excise taxes for medicinal sales but this was repealed with the legalization of marijuana.

The timing of when cannabis was legalized prevented Adrian from receiving any medicinal excise tax.

“Had we not opted into adult use as well, we would have lost out on any excise tax,” Henagan said. “This was the initial goal of the commission.”

Another dispensary opened in Adrian this year, bringing the total to seven. Henagan said excises taxes should be a steady source of income for municipalities, but it’s too early to tell if there will be an annual increase in how much cities receive as sales could spread out as more retailers open.

“It will grow as the sale of adult use and recreational marijuana become more accepted in society,” she said.

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