March 4 2016 10:39 AM

Regulation of medical marijuana could generate millions for state

LANSING — Medical marijuana could generate up to $63.5 million in revenue for Michigan, according to a recent study.


Hillsdale College economist Gary Wolfram’s analysis shows how a proposed regulatory framework for medical marijuana could boost the economy by getting more patients registered for medical marijuana and allowing more forms of use.


“In 2008 medical marijuana became legal in Michigan,” said Wolfram. “This analysis is a matter of what would happen if it was regulated and taxed.”


The analysis estimates that 10,000 new jobs could be created in the industry.


“These jobs will include everything from growing the plant to jobs behind the counter,” Wolfram said.


The study was commissioned by the Michigan Cannabis Association to help support a three-bill package in the state legislature that creates a more regulated, accountable and transparent medical marijuana system. The bills are designed to provide clear and consistent protections for patients and guidelines for businesses and law enforcement, Wolfram said.


“For seven years, Michigan’s medical marijuana law has been extremely vague,” said Willie Rochon, vice president of the Michigan Cannabis Development Association.

“That’s negatively affected patients, local communities and businesses like the members of MCDA who support strong regulations because we believe all businesses should play by the rules on a level playing field,” said Rochon. “These proposals will end the uncertainty that is causing confusion for patients and businesses, and help eliminate the black market that puts patients at risk.”


Rep. Lisa Lyons, R-Alto, is the primary sponsor of a bill to allow patients to use non-smokeable forms of marijuana, such as tinctures and other liquid forms. Among the conditions for which they can be used are epilepsy, cancer and chronic pain.


“This issue is not about whether you support medicinal marijuana or not,” Lyons said. “Michigan voters decided that on the 2008 ballot proposal.”


After medical marijuana was legalized in 2008, numerous court cases created inconsistent definitions of useable marijuana, said Lyons. This bill helps define those uses.


“This is about ensuring safe access to medicinal marijuana and allowing patients to use alternative forms to smoking that are more healthy and effective for them, especially children and the elderly,” Lyons said.

Another bill establishes licensing and regulations for medical marijuana growers, processors, secure transporters, provisioning centers and safety compliance facilities. It includes guidelines to dispense marijuana in a clean, regulated environment. The sponsors include Rep. Andy Schor, D-Lansing, Rep. Winnie Brinks, D-Grand Rapids, Rep. Phil Potvin, R-Cadillac and Rep Sam Singh, D-East Lansing.


Wolfram’s analysis explains a formula in the bills to disburse tax funds from marijuana sales. It indicates that municipalities would receive $4.4 million to $6.3 million; counties would get $5.9 million to $8.5 million; county sheriff departments would receive $800,000 to $1.1 million and the state general fund would get $3.7 million to $5.3 million. The revenue distribution is based on a 3 percent tax on all medical marijuana retailers proposed in the legislation.


“Michigan residents could receive benefits from this revenue in the form of critical services,” Wolfram said. “The services could be anything the legislature wants, improving infrastructures or roads.”


A third bill would require a “seed-to-sale” system to track marijuana grown, processed, transferred, stored or disposed of under the Medical Marijuana Facilities Licensing Act. The primary sponsor of the bill is Rep. Klint Kesto, R-Commerce Township. All three bills were passed by the House and now move to the Senate for further consideration.


“These bills passed the House 95-11. There was not a lot of controversy with these bills,” Wolfram said.


But some concerns remain.


“Concerns were raised from law enforcements on how they would handle and recognize medical infused products that, for instance, would be transported between caregivers and patients,” said Rob Macomber, legislative director for Lyons. “All interests are working to find further solutions as the bills move through the Senate.”


“Discussions about medical marijuana can’t be driven by money,” said Terry Jungel, executive director for the Michigan Sheriffs Association. “Decisions must be made on if it enhances or jeopardizes public safety.”


“If we call it a pharmaceutical, it must be treated as a pharmaceutical and not as a casual agricultural product. That’s why we’re opposed to the use of edibles. Medical marijuana is still a threshold drug, it is dangerous, and its use has implications. However we do support the concept of better controls and tracking,” Jungel said.


Wolfram’s analysis also shows:

•The industry would generate more than $44.3 million a year based on the current patient population of 182,091, assuming that two-thirds of them would buy from a licensed provisioning center.

•If the number patients buying from licensed provisioning centers increases to 80 percent, the revenue exceeds $52 million.

•The more regulated and transparent the medical marijuana system is, the more patients will register and buy from provisioning centers. Should the number of registered medical marijuana patients increase by 20 percent (to around 219,000 patients), the revenue would be $63.5 million a year.


The analysis used data from Colorado and Nevada. Colorado is a leading state in marijuana sales. It generated $700 million in sales of recreational and medical marijuana last year and nearly $76 million in tax revenue, including $13 million in licenses and fees, according to the Colorado Department of Revenue.


Wolfram says that this analysis allows the state to better regulate sales and eliminate the black market.


JASMINE WATTS

Subscribe to Our Newsletter