The Michigan Senate Fiscal Agency says that the state could have a medical marijuana market worth $711 million if it were to establish a fully developed legal market.
Michigan’s medical marijuana market has the potential of racking up $711 million in sales annually if the program’s prices and customers’ buying habits were similar to Colorado’s market, according to the Senate Fiscal Agency. The agency, a nonpartisan group responsible for providing the state senate and Michigan residents with legislative and fiscal analyses, says that a fully established market would yield significantly greater revenue for the state.
The state’s medical marijuana program has struggled as of late. Marijuana Business Daily reports that expected dispensary sales for this year range from $140 million to $180 million, down from last year’s estimated sales of $180 million to $220 million. The reason for the decline has been partly attributed to the decrease in the number of dispensaries, as authorities have shut several down for not complying with zone ordinances. Regulations currently vary by municipality, with only some localities permitting dispensaries.
The recent passing of a collection of bills is expected to be a step forward in establishing a fully developed medical marijuana market and significantly help in the growth of sales. Governor Rick Snyder signed five bills, with most taking effect this coming December, that will establish a statewide regulatory and licensing system, create a seed-to-sale marijuana tracking system, and impose a 6 percent sales tax and a 3 percent excise tax on dispensaries’ gross sales receipts. The new law also legalizes cannabis edibles and extracts.
The Senate Fiscal Agency estimates that the additional tax to be collected under the new regulations, in addition to revenue from state and local licensing fees, could mean $42.7 million in earnings for the state in 2016. A Hillsdale College economist has projected the state’s annual revenue to be higher, up to $63.5 million.
In a report published earlier this year, cannabis market research firms New Frontier and ArcView Market Research projected that Michigan will rank behind only California and Colorado in largest state medical marijuana markets by 2020. The report projected that Michigan will hit $556 million in medical marijuana sales that year.
There is some concern that the new regulations implemented later this year will cause the prices of medical marijuana products to rise and potentially become unaffordable. Tax rates being too high could discourage patients from treating conditions with medicinal cannabis or encourage them to get cannabis through the black market.
“The notion is, what we do not want to do is attach so many fees associated with the legal market that the market can no longer compete with the illegal market,” said Paul Armentano, deputy director of the National Organization for the Reform of Marijuana Laws (NORML), “and therefore we continue to allow that illegal underground market to flourish.”
Michigan first legalized medical marijuana in 2008. The state has approved medicinal cannabis for Alzheimer’s disease, amyotrophic lateral sclerosis (ALS), cachexia or wasting syndrome, cancer, chronic pain, Crohn’s disease, glaucoma, HIV or AIDS, hepatitis C, nail-patella syndrome, nausea, post-traumatic stress disorder (PTSD), seizures, and severe and persistent muscle spasms. Registered patients are legally allowed to purchase and possess up to 2.5 ounces of ‘useable marijuana’, or cultivate up to 12 marijuana plants.