More than $2M in marijuana tax money coming to Kalamazoo-area governments

KALAMAZOO, MI — Taxing marijuana sales is a more than $2.1 million-dollar idea in Kalamazoo County.

Local governments that approved the operation of cannabis businesses are now seeing the windfall of their actions for sales made in Fiscal Year 2021, the first full year of sales, and government officials have shared some of the ways the money could be used.

The city of Kalamazoo will receive $564,534.40, Kalamazoo Township will get $225,813.76 and Portage will get $282,267.20 as their share of state revenue collected on cannabis tax sales, the Michigan Department of Treasury said in a news release.

The total for the three governments in Kalamazoo County is $1,072,615.36.

Kalamazoo County will receive that same amount – $1,072,615.36.

That’s $2,145,230.72 total. Officials are considering a variety of spending options for the money.

Kalamazoo County will receive the fourth highest total in the state, tied with the more populated Kent County and Ingham County.

Related: See how much Michigan communities will receive from $172 million in recreational marijuana tax

Here are the top tax amounts by county:

• Washtenaw County $1,806,510
• Bay County $1,354,882
• Calhoun County $1,185,522
• Kalamazoo County $1,072,615 (tie)
• Kent County $1,072,615 (tie)
• Ingham County $1,072,615 (tie)

The tax revenue is determined by the number of retail or microbusiness licenses present in each county or community. The three counties (Kalamazoo, Kent and Ingham) each have 19 active licenses, according to state records.

Kalamazoo County Commissioner Fran Bruder Melgar said she would like to see some of the money used to fund things like problem solving courts, which are designed to help people overcome addiction by working to address the family dynamic around addiction issues. Bruder Melgar, an an internist and a pediatrician, talked with MLive about addiction and the struggles people face to get out of it.

“If we can allocate those resources toward helping people get through that and come out on the other side, ready to take on life and find a job and support their family, that would be my objective,” she said on March 29.

The city of Kalamazoo approved its local rules for marijuana businesses to operate in May 2020.

“I much prefer the structured regulatory model we are taking for adult use marijuana products,” Mayor David Anderson told MLive on March 28. “It is vastly superior on so many levels to our prior blanket criminalization approach.”

Anderson said the city approved a social equity policy that states 25% of the marijuana business fee and tax revenue received by the city would be set aside and used to support programs/initiatives in these areas:

• Training to help educate people of color to prepare for ownership/operations of future marijuana establishments
• Provide community outreach and education on topics such as use of marijuana by pregnant women, the difference between state and federal laws concerning marijuana and adult use of marihuana in general
• Support Shared Prosperity Kalamazoo priorities (Strong youth, strong families, good jobs)
• Blight Elimination

The city’s social equity policy will be dedicated to enhancing programs that have a positive community impact, Deputy City Manager Jeff Chamberlain told MLive.

The city of Kalamazoo was estimating that it would receive around $200,000 in 2021 cannabis revenue from the State of Michigan, he said, and the recent announcement that they would receive more than half a million dollars was welcome news.

City staff are now working on proposals on how to use the amount received from the state, and the 25% dedicated to social equity work, Chamberlain said.

The city of Kalamazoo had 10 active adult use licenses for retail stores or microbusinesses as of Sept. 30, 2021, the state officials said.

Kalamazoo Township approved rules for cannabis businesses in January 2020, and the county’s first recreational dispensary opened in the township later that year.

Kalamazoo Township could use its $225,813 in tax revenue share expected for FY2021 sales in a number of different areas such as community policing and non-motorized travel projects, Manager Dexter Mitchell told MLive. The amount would be a lot to an individual, he said, though it is not as much considering the township of more than 22,000 people.

“It will wiggle the needle” on some projects, Mitchell said.

Increasing community policing would be positive, because it helps people make contacts with officers outside of enforcement or investigations, he said.

“If you get people into the habit of seeing police officers when there’s no problem and you develop that relationship before they occur, you’re more likely to have the trust in the community because of the relationship you have with them. That’s one of the key things that we truly want to get back to,” Mitchell said.

The township has more than 20 cannabis businesses along East Mosel, between North Burdick Street and Harrison Street, which Mitchell and others call “the green mile,” he said. It includes a variety of business types and structures, in addition to retail businesses.

Kalamazoo Township currently has four active adult use licenses for retail stores or microbusinesses, the state of Michigan said.

Portage will get $282,267 from marijuana tax revenue. Marijuana fees/revenue is deposited in the general fund unless otherwise directed by the Portage City Council, Public Information Officer Mary Beth Block said.

Portage’s first budget session is April 19, Mayor Patricia Randall said. This will be the first opportunity for council to discuss any budget items, including additional revenue generated from cannabis sales, she said.

“I support both the additional jobs and revenue supported from the cannabis businesses within Portage,” she said.

The first licensed adult use sales in Michigan occurred in December 2019 at Exclusive Brands in Ann Arbor.

The first adult use shop in Kalamazoo County opened in March 2020.

Adult use taxes are collected from cannabis buyers at licensed shops in municipalities within the county that voted to allow adult use (recreational) businesses.

Of the total collected, 15% goes to municipalities in which a marijuana retail store or a marijuana microbusiness is located, allocated in proportion to the number of marijuana retail stores and marijuana microbusinesses within the municipality.

Another 15% goes to counties in which a marijuana retail store or a marijuana microbusiness is located, based on the number of retailers and microbusinesses.

In addition, 35% goes to the School Aid Fund to be used for K-12 education and 35% goes to the Michigan Transportation Fund to be used for the repair and maintenance of roads and bridges.

The tax statistics are based on the state of Michigan’s 2021 fiscal year that runs from Oct. 1, 2020 to Sept. 30, 2021.

During a partial year of operations over FY2020, Kalamazoo received $168,007, Kalamazoo Township received $112,005, and Portage received $56,002, according to state data from March 2021.

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