$122 Million In Taxes: Michigan’s Reward For Legalized Marijuana
WallStreetCheatSheet.com, an Internet business news portal, has published a list of the seven states who stand the most to gain financially from the legalization of marijuana, and Michigan is on the list.
Michigan’s potential revenue from sales and excise taxes: $122 million.
Sales and excise taxes go directly to the government and pay for the roads and schools. The total value of Michigan’s marijuana market was projected to be over $580 million in sales to people over the age of 25. If legalized nationally the market for marijuana has been estimated to be $14 billion or more annually.
The list ranked Michigan as 7th in revenue potential behind Ohio, Illinois, Texas, Florida, New York and California- which topped the projected earnings scale at $519.3 million.
How did the number crunchers arrive at their conclusion? NerdWallet explains the methodology in this way:
We used data from the Substance Abuse and Mental Health Services Administration detailing the percentage of marijuana smokers ages 25 and over in each state and multiplied that percentage by the state’s population older than 25 to get the number of users in each state. We then took the state’s users as a percentage of total users over 25 in the U.S. and multiplied that by the total marijuana market estimate (sized at $14 billion by Harvard University economist Jeffrey Miron) to determine the market size in each state.
A hypothetical 15% excise tax was included, as were state and local tax numbers.
Think these numbers are inflated? Guess again. Colorado put nearly $8 million in their state coffers in the month of August alone from taxes on recreational and medical marijuana sales. That’s not total sales of marijuana for the month, it’s actual money paid to the state by consumers.
6th-ranked Ohio’s potential revenue from sales and excise taxes on marijuana sales was less than $1 million larger than Michigan’s, and Illinois came in 5th with $126 million. Although both Illinois and Ohio are more populous and have higher sales taxes, Michigan has a higher percentage of adults who use marijuana, which increased the earnings estimate.
Based on the methodology used, Michigan is projected to currently have 437,649 marijuana consumers over 25 years of age, despite marijuana’s prohibited status. The state medical marijuana program has more than 120,000 registered patients.
Population ages 25 and older: 6.62 million
Percent of population 25 and older who have used marijuana in the past month: 6.61%
Number of marijuana users: 437,649
State’s portion of the marijuana market: 4.15%
Marijuana market size: $581.27 million
Tax rate state and local sales taxes combined plus excise tax of 15%: 21%
Potential annual revenue from sales and excise taxes: $122.1 million
Illicit drug use percentage among persons ages 12 and older: 8.68% to 9.35%
Current marijuana legislation: medical legal