Legal marijuana proposal could bring financial benefits to Michigan

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Proposal 1, Michigan’s ballot initiative to legalize the recreational use and possession of marijuana, could have a sizable financial impact on the state.

A study commissioned by the Coalition to Regulate Marijuana Like Alcohol estimates the proposal, if successful, will bring roughly $134 million in tax revenue a year to the state by 2023, which could be used for continually underfunded areas such as roads, schools and local governments.

“We’re under no assumption that legalizing marijuana is going to solve all our school funding issues and road funding issues,” said Josh Hovey, spokesman for the coalition. “Instead, it’s going to generate hundreds of millions of dollars more than what we’re raising now, which is none.”

Eight of the nine states with legal recreational marijuana became that way because of ballot initiatives, starting with Washington state and Colorado in 2012.

States with legal marijuana have reaped financial benefits: In Colorado, the legal marijuana industry has generated more than a billion dollars a year in revenue since 2016, with the state raking in $247 million in taxes and fees in 2017, according to the Denver Post.

“I think voters are generally tired of marijuana prohibition and want to look at alternatives,” said Denver-based attorney Brian Vicente, one of the authors of Colorado’s Amendment 64 and co-director of the successful campaign to pass it.

The proposal calls for a 10 percent excise tax on marijuana sales, becoming a 16 percent effective tax rate when Michigan’s sales tax is added. This 10 percent rate is low compared to past legalized states, such as Washington’s 37 percent sales tax and Colorado’s 15 percent sales tax, which also includes a 15 percent excise tax on growers.

“We think that will encourage people to use the regulated market,” Hovey said.

Michigan is set to be the only state in the Midwest with legal recreational marijuana use, and there’s a good chance that will lead to an uptick in tourism, Vicente said.

Another potential change brought by a successful proposal would be a shift in police resources. Marijuana-related arrests made up 9 percent of all the state’s arrests in 2015. Law enforcement in Michigan can save money and focus on more serious crime by not arresting, prosecuting or jailing offenders for small amounts of marijuana possession or cultivation, Vicente said.

Michigan’s early adoption of medical marijuana in 2008 also gives the state a headstart in regulating the industry.

“I think that Michigan, like Colorado, has benefitted from the fact that it has a fairly robust medical marijuana law,” Vicente said. “I think that’s a good starting point.”

The Coalition to Regulate Marijuana Like Alcohol, the group behind Proposal 1, sought feedback from multiple sources on the proposal’s content. The group took the language to law enforcement, business groups and organizations that would have interest in weighing in to seek improvements, Hovey said. Also considered were Michigan’s medical marijuana laws and the policies of states that legalized previously.

“We took the best practices from all of those and incorporated them into our language,” Hovey said.

Some provisions of the proposal center on assuaging fears of potential opponents. Hovey notes marijuana use will still be banned in public, and municipalities will still have the right regulate the presence of marijuana businesses.

According to a poll published in the Detroit Free Press, 55 percent of respondents supported the proposal as of late September, a large enough proportion for approval if converted to votes. Hovey said he thinks the proposal is in a good position to pass in November, though more work can be done to get the word out to potential voters.

Vicente said marijuana is an issue that can get many who are not normally interested in politics involved in the process. However, even if young voter turnout rises in the November election, it’s not likely a specific proposal will be driving that engagement.

“The early data from others that we’ve looked at, we’re not seeing any impact in terms of turnout or intent to vote based off ballot issues, even if it’s something youth would seem to care about, it doesn’t really impact voter turnout,” said Rey Junco, senior researcher at the Center for Information and Research on Civic Learning and Engagement, or CIRCLE.

Many factors will influence voter turnout in a given year among youth, Junco said, the most important being whether or not voters can perceive they’ll make an impact.

“What it boils down to is that young people need to believe that their votes are important and that they can make a difference,” Junco said.

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