Michigan Cannabis Market Nets $60M Windfall for Local Governments

Tens of millions of dollars have been doled out to local governments across Michigan as a result of the state’s cannabis industry. 

FOX 2 Detroit reports that the state sent out nearly $60 million to counties and local governments.

“Local governments that have approved the recreational sale of weed in their county, city, village, or township will see approximately $51,800 for every retail store and micro-business that it’s handed out licenses to,” the station says.

According to FOX 2 Detroit, “Only 30% of total adult-use sales go to local governments, with the other 70% going to schools and roads. When contributions from last year are paired next to figures from 2021 and 2020, they show an industry that shows no signs of slowing down.”

Voters in the state legalized adult-use cannabis in 2018, when they approved Proposal 1. 

That initiative made it legal for adults 21 and older to toke up, and cleared the way for a regulated cannabis market that launched in 2019. 

But despite strong sales numbers, Michigan, like other regulated cannabis markets, has become oversupplied with pot.

Politico reported last year that the “number of cannabis grow operations serving the state’s recreational market has almost doubled in the past year,” and that the “number of active marijuana plants now exceeds 1.2 million, roughly six times the volume seen in 2020.”

“Michigan has way too much weed,” Politico said then.

“By one estimate, Michigan has enough cultivation capacity to supply three times as much weed as the state’s consumers are buying — and that doesn’t include the huge illegal market that by all accounts commands a large share of sales.”

That, according to Politico, makes Michigan “emblematic of what’s been happening across the country all year — and why the industry’s been in a funk even as legalization spreads: Ill-fated hopes that a Democratic-controlled Washington might loosen decades-old restrictions on the drug have given way to a market glut and plummeting prices that have put scores of businesses at risk of collapse.”

But that is not to say that Michigan’s recreational cannabis industry hasn’t experienced growth.

As FOX 2 Detroit noted, “224 municipalities had registered 1,148 business licenses” last year. That’s up from 163 municipalities and 748 licenses in 2021, and 104 municipalities and 356 licenses in 2020. 

The station has more details on the state’s latest cannabis sales figures:

“The latest figures come from the Michigan Department of Treasury which reported $198.4 million in revenue from recreational pot last year. Another $69.4 million will go to School Aid Fund, while $69.4 million will go to the transportation fund. In total, $1.8 billion in sales from weed came last year. To put that in context, there were $341 million in total sales in 2020. In 2021, the state reported $1.1 billion in sales.”

Michigan Gov. Gretchen Whitmer, a Democrat, supported Proposal 1.

Late last year, Whitmer vetoed several Republican-sponsored bills that, among other things, aimed to ease access to the state’s medical cannabis program, which began in 2008, for both patients and prospective operators.

In her veto message, Whitmer said that the proposals were passed hastily by lawmakers and required closer examination.

“I look forward to working with the new Legislature in January on priorities that will continue our economic momentum, help lower costs, and expand education supports for Michigan students. It is time to be serious about solving problems and getting things done that will make working families’ lives better right now,” Whitmer said at the time.