Anderson Economic Group Work

Tax Note: Revenues from Legalizing Recreational Marijuana Under Michigan’s Proposal 18-1

On November 6, 2018, a proposed state statute to legalize recreational use of marijuana in Michigan will be put before voters on the statewide ballot as Proposal 18-1. If passed, Proposal 18-1 would:

  • Legalize sales, use, consumption, and cultivation of marijuana products for recreational use;
  • Establish a state- regulated system of licensed marijuana businesses; and
  • Provide for taxation of legal sales of recreational marijuana.

We have prepared this Tax Note in order to:

  • Summarize the current legal status of marijuana in Michigan and provisions under Proposal 18-1; and
  • Provide estimates of legal sales of recreational marijuana in Michigan—as well as the net effect on state sales and excise tax revenues—should Proposal 18-1 pass.

Anderson Economic Group’s Tax Note is the first assessment of Proposal 18-1 that does all of the following:

  • Accounts for cannibalization of medical marijuana sales, alcohol beverages, and other goods due to legalizing recreational marijuana;
  • Accounts for reduction in tax revenues due to repeal of the 3% excise tax on medical marijuana; and
  • Provides a breakdown allocating the net effects on various government entities receiving state sales and excise tax revenues.

The Tax Note utilizes analysis from Anderson Economic Group’s AndCan Index, a proprietary monthly index that tracks consumer demand for U.S. cannabis products. Launched in June 2017, the AndCan Index builds on over three years of comprehensive coverage of the U.S. cannabis industry.

For the full Tax Note, click here.

Since the Tax Note was first published on October 25, 2018, we have made minor edits for formatting and clarity. We published a revised version of the Tax Note on October 29, 2018.

See the interactive visualization below for results from our research and analysis: