The Michigan Legalization of Marijuana and Potential Effects in Prop 1
This year, Michigan has become the 10th state in the nation to legalize recreational marijuana, alongside with North Dakota and Vermont (passing the bill through the legislature rather than a proposition). Michigan legalized medical marijuana in 2008 yet has only able to garner around $10 million dollars in taxes for 2016, a figure that is much lower than the expected tax revenue from the new law passed this year. Michigan’s Proposition 1 passed with 55.9% of the vote, making it the first state in the Midwest to legalize marijuana. Having some of the most lenient laws on the book relating to marijuana, the people of Michigan must now convince local cities and counties not to heavily regulate marijuana as concerns already grow about the drug’s future.
Currently, around 12% of the population in Michigan smokes marijuana. However, this number is expected to increase slightly as it has in other states as legalization gives social approval of the drug. After the legislation, estimates are that the state will be able to generate around $130 million in revenue, most of it earmarked for schools and roads. However, given this increase in revenue to public services, some might argue that this is too small of a gain and is not worth the other risks associated with legalization. With only a marginal increase in tax revenue, some are worried local cities and counties might start regulating or prohibiting marijuana all together, a legal consideration under the law.
Below shows states marijuana status’s on possession and tax rate
Michigan Proposal 1 (2018)
• 2.5 ounces of marijuana
•Grow up to 12 marijuana plants
•10 percent excise sales tax
• 0.5 ounces of marijuana concentrate
Colorado Amendment 64 (2012)
• 1 ounce of marijuana
• Grow up to 6 marijuana plants
•Required the state legislature to enact taxes
•1 ounce of marijuana concentrate
•15 percent excise tax on unprocessed retail marijuana and 15 percent sales tax on retail sales
Washington Initiative 502 (2012)
• 1 ounce of marijuana
• Illegal
•25 percent excise sales tax (legislature increased the tax to 37 percent)
• 0.25 ounce of marijuana concentrate
To prevent marijuana prohibition by cities and counties, taxes might have to increase for people to feel better about allowing marijuana in their communities. Counties such as Ottawa and Menominee are a few that voted strongly against the proposition and would most likely need to see an increase in taxes to see a reasonable return on having marijuana legalized. Currently Michigan has one of the lowest tax rates for marijuana, but that might need in increase, as it would be better to tax marijuana at a higher rate than make it illegal in some areas and not tax it at all. Also, important to note is for every percentage the tax rate rises the rate people will smuggle marijuana across the Michigan border increases, in this case potentially to Canada if it keeps taxation lower. Examples are evident in states like New York and Arizona where cigarette smuggling is extremely high, a cause of high excise taxes and thus a decrease in potential tax revenue.
Michigan’s Proposition 1 will have tremendous effects on the local economies and communities. As legalization continues, people will be able to buy and sell marijuana which will add $130 million dollars of tax revenue to roads and schools. Job opportunities will also be available to Michigan as Colorado alone added 16,000 jobs in 2016 due to legalization. Prisons will also see a dramatic loss in total population as around 9% of Michigan’s prisoners are there due to marijuana related crimes. At 41,000 prisoners in jail for marijuana related crimes and each prisoner costing the state around $47,000, that adds up to $1,927,000,000 the state would save through this law. That figure is a lot more than the initial $130 million the state would gain through direct taxes.
Considering the benefits from proposition 1, Michigan must now regulate the drug enough for people not to turn to the black market but still convince cities and counties to allow it in their communities.
