For some communities in Oakland County, the economic windfall promised when recreational marijuana was legalized statewide is coming true. State data shows some are seeing big returns and officials say the investments are paying off.
Take Hazel Park. Ed Klobucher, the city manager, said marijuana payments received from the state for its eight licensed recreational retailers helped bolster the city’s $3.5 million retirement system, which jumped from over $1 million in the last year alone.
The city receives these payments each year from the Michigan Treasury Department as part of state sales taxes. The dollars are paid into the general fund and earmarked for superannuation contributions, which are constitutionally protected payments to city retirees that must be paid monthly. .
“Our city’s retirement system is significantly underfunded, but we’ve never missed a payment,” he said. “We know that the pension system has a deficit every year. We had to find sources of revenue to help the city cope with this cost adjustment. These marijuana revenues help us meet these obligations.
Each month, the city makes $300,000 in pension payments, Klobucher says, from its general fund budget of $17 million to $18 million.
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Over the past two years, more than $50 million has been distributed to more than 50 counties and dozens of municipalities across the state. Payments are based on the number of state-licensed recreational retailers located in its jurisdiction.
Last March, the Michigan Treasury Department announced that over $42.2 million would be distributed among 163 municipalities and counties, including 62 cities, 15 villages and 53 counties. On average, each county and municipality received about $260,000 in marijuana payments.
For fiscal year 2021, that means each eligible municipality and county received more than $56,400 for each licensed cannabis retail store and microbusiness located in its jurisdiction.
According to David Harns, spokesman for the state’s Cannabis Regulatory Agency (CRA), there are no restrictions on how communities can spend these marijuana payments. There is also no obligation for the inhabitants to declare any expenditure to the State.
Statewide, sales tax revenue was collected from 374 cannabis retail license holders in fiscal year 2021. Some of these municipalities are home to more than one retail and micro store. – approved company. During fiscal year 2020revenue was collected from 178 cannabis retailers.
For fiscal year 2021, more than $111 million was collected through the 10% excise tax on adult-use marijuana. A total of $172 million was available for distribution from the fund. For fiscal year 2020, more than $31 million was collected through the 10% excise tax on adult-use marijuana. A total of $45.7 million was available for distribution from the fund.
State law outlines the amount distributed from the Marijuana Regulatory Fund.
In addition to the more than $42.2 million in disbursements to municipalities and counties, $49.3 million was sent to the School Aid Fund for K-12 education and another $49.3 million at the Michigan Transportation Fund.
In total, more than $1.1 billion in adult-use marijuana sales were reported for fiscal year 2021, compared to $341 million for fiscal year 2020.
“It is gratifying to see that the agency’s balanced regulatory approach effectively protects consumers while allowing Michigan businesses to grow and prosper,” said ARC Executive Director Andrew Brisbo. “The funding provided directly to local governments – and the thousands of jobs created across the state – show that Michigan is leading the way in the cannabis industry.
Oakland County received nearly $800,000 in payments for fiscal year 2021, a 300% increase from $200,000 in payments for fiscal year 2020. The number of licensed adult retailers increased from 7 to 14 in this year alone.
Hazel Park, Ferndale, Madison Heights and Walled Lake also received payments totaling $338,721, $169,360, $169,360 and $112,907 respectively.
Walled Lake City Manager Dennis Whitt said the dollars went into the city’s $6 million general fund budget. The city currently has three cannabis retailers, the maximum allowed by city ordinance.
He said the marijuana payments have helped the city make critical investments in the downtown area.
“With this extra money, we are able to repair downtown sidewalks and other improvements,” he said. “We are also able to contribute matching dollars for our grants.”
Ferndale City Manager Joe Gacioch said the marijuana payments are part of the city’s $22.6 million overall budget and have been important in maintaining revenue levels.
The city currently has five adult retailers in operation with another planned for next year. Six is the maximum number allowed by city ordinance.
“We use this revenue to support general operations and core services, but we do not target or carve out explicit uses of this revenue,” he said. “I expect that to happen over time as we come out of the pandemic more stable. At present, these revenues are quite significant.
Gacioch said this year’s marijuana payout, totaling just over $338,000, was significantly higher than expected and helpful in maintaining city revenues that fluctuate from year to year due to the decrease in new developments and activities downtown.
“Not receiving those marijuana payments could be the difference between moving forward with a critical infrastructure project or being able to receive a grant for one of our parks,” he said. “If you look at it that way, it’s significant.”
Whitt said marijuana retailers help the community and the benefits are substantial.
“They take the initiative to try to clean up the community and make it better,” he said. “We are satisfied with what is happening.”
In Hazel Park, Klobucher said marijuana retailers, and the industry as a whole, have been very supportive of the city, including helping build a new park by recruiting volunteers.
“These companies are very community-oriented,” he said. “They have become a big economic engine. They donate to charitable causes and have created many jobs for local residents.
As well as generating revenue, he said the businesses have moved in and renovated abandoned buildings and turned them into “performance venues” helping to improve Hazel Park’s overall aesthetic.
“There’s a misperception in the community that these marijuana businesses are stifling other businesses, but we still have space available for restaurants and things like that,” he said.