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October 02, 2018, Michigan
Voters in Michigan will decide the fate of adult-use legalization of cannabis in November’s public ballot. A cannabis advocate group The Coalition to Regulate Marijuana Like Alcohol, which spearheaded the campaign to get the question of recreational legalization in November’s election, has estimated that the state’s cannabis industry will become a multimillion venture from the beginning. The group is now carrying out canvassing campaign to ensure that a maximum number of citizens will turn up to vote in the favor of Proposal 1.
Proposal 1 entails that the possession and use of recreational cannabis will be legal for all citizens 21 and above. The proposal also gives an outline to tax legal cannabis businesses, which proposes 10 percent excise tax on adult-use retail sales and six percent sales tax.
Michigan awaits a billion-dollar market
The group has commissioned an analytical firm VS Strategies to devise sales and tax collection projections for the state’s upcoming all-legal scenario in the light of Proposal 1’s provisions. According to one survey, roughly one million Michigan residents consume marijuana monthly and likely to do this on regular terms. The firm mainly draws its projections from this piece of data.
Andrew Livingston works as a policy analyst and economist with VS Strategies. He has projected that the state’s legal cannabis market will be fully matured in the next five years. This fully developed adult-use and medical cannabis market will generate sale revenue of nearly $1.5 billion every year. Livingston also predicts a contraction in the following years because market saturation and competition will gradually bring down the prices of legal products.
State and local government revenues
The firm has also forecasted how legal cannabis market will turn out for the state and local administrations in terms of tax revenue. Livingston says that in the five year period between 2020 and 2024, the state and local administrations will be able to collect roughly $520 million in taxes.
Proposal 1 also proposes a comprehensive cannabis tax distribution
According to Proposal 1, the collected excise tax will be distributed in four parts and used for particular developments.
- 35 percent of this tax collection will be spent on the state’ road infrastructure
- 35 percent of the collected excise tax will be credited to the state’s school development fund
- 15 percent of excise tax collection will be given to each respective municipalities and counties
The collected sales tax will primarily go to the state’s School Aid Fund. The spokesperson of the Coalition to Regulate Marijuana Like Alcohol has said in a press release that legal cannabis market will pay for the restoration of the state’s ignored infrastructure. He further adds that the state will also save millions of dollars used up in a futile exercise of prohibition.
On the other hand, prohibitionist quarters have rejected the assertions that cannabis legalization will bring economic prosperity. They are of the belief that the state’s operating budget of more than $50 billion dollars won’t’ get any assistance from the state’s legal cannabis market.