Pubdate: Tue, 01 Mar 2016
Source: Detroit News (MI)
Copyright: 2016 The Detroit News
Contact:  http://www.detroitnews.com/
Details: http://www.mapinc.org/media/126
Author: Jonathan Oosting

ANALYSIS: $63M IN TAXES FROM MEDICAL MARIJUANA

Lansing - Regulating and taxing the medical marijuana industry could 
generate up to $63 million a year for the state and local 
governments, according to a new economic analysis.

It's a conservative estimate, said Gary Wolfram, director of 
economics at Hillsdale College and a former deputy state treasurer 
for taxation and economic policy. He released the calculations Monday 
on a legislative package approved last year by the state House but 
not yet taken up by the Senate.

"This is going to generate revenue - probably a lot of revenue," 
Wolfram said Monday on a conference call organized by the Michigan 
Cannabis Development Association, which commissioned the report.

The House bills Wolfram analyzed would require the state to license 
medical marijuana storefront dispensaries, growers, processors, 
distributors and safety testers. Registered patients who purchase the 
drug at a dispensary would pay the state's 6 percent sales tax and 
retailers would pay a 3 percent tax on gross profits.

Wolfram estimated that the proposed taxes would generate $44.3 
million in annual revenue for the state and local governments if 
roughly two-thirds of existing medical marijuana patients bought 
their product at a licensed dispensary, rather than from a caregiver.

If 80 percent of registered patients became regular dispensary 
customers, the taxes would generate $52.9 million. And if the 
regulated system encouraged a 20 percent increase in registered 
patients, the taxes could generate $63.5 million, according to the analysis.

Wolfram said his study was informed by data from states such as 
Colorado, which had a regulated medical marijuana system long before 
voters approved recreational sales in 2012. But he did not analyze 
what effect the proposed tax rates would have on patient numbers and 
customer behavior.

"There could be some drop-off, but given what we know about ... how 
responsive demand is to price changes in the marijuana industry and 
other industries like it, it's fairly inelastic," Wolfram said.

He estimated a licensed and regulated medical marijuana industry 
could sustain an estimated 10,000 jobs, including people who might 
already work at existing dispensaries not currently licensed by the state.

Michigan's 2008 medical marijuana law created a system of patients 
and caregivers who are allowed to grow a limited number of plants. 
But the law did not address retail dispensaries, which have continued 
to operate in some parts of the state despite a 2012 state Supreme 
Court ruling that empowered county prosecutors to shut them down.

The Michigan Cannabis Development Association is among a handful of 
business-minded groups urging the state Senate to take up the 
House-approved medical marijuana licensing bills.

"People just want guidance and regulation," said association vice 
president Willie Rochon. "They want their legislators to act now 
without more delay."

Patient advocates have long called for legalized dispensaries, but 
one of the state's top associations dropped support for the House 
bills late last year when the Senate modified them to create a tiered 
licensing system, which they fear would drive up prices.

The legislation is stuck in the Senate Judiciary Committee, where 
Chairman Rick Jones says he does not have the votes to move them but 
is asking leadership to discharge them to the floor.

"I think it's critical that we act because we now have cities that 
are out of control with dispensaries popping up everywhere like 
dandelions, and I'm fearful that some people may be selling product 
that's not safe," said Jones, R-Grand Ledge.
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MAP posted-by: Jay Bergstrom