What W MI communities are doing with $30M in pot funding

GRAND RAPIDS, Mich. (WOOD) — More than $87 million in funding from the cannabis industry is going to cities, townships and counties throughout the state.

Each municipality is getting around $59,000 for each licensed cannabis retail store or microbusiness in its borders, the Michigan Department of Treasury says, as part of the Michigan Regulation and Taxation of Marihuana Act.

In West Michigan, which has around 250 licensed cannabis businesses, close to $30 million is being split among 80 municipalities. Some are getting more than a million dollars in funding, like Grand Rapids, which is getting more than $1.3 million for 23 licensed businesses, or Muskegon County, which is getting $1.5 million for 26.

Kent County is receiving $2.2 million, the most in West Michigan, for 38 businesses, while more than 20 municipalities are getting $59,000 for having one licensed cannabis business.

Marijuana excise tax in West Michigan
Infogram

“The tax funding for municipalities and counties that comes from the marijuana excise tax is a very important benefit of the legal cannabis industry in Michigan,” Cannabis Regulatory Agency Executive Director Brian Hanna said in a release. “The CRA is committed to doing our part in supporting our licensees so that they can continue to grow the local economy throughout the state with good-paying jobs and increased revenues for local government budgets.”

Outside of the $87 million going to state municipalities, $101.6 million in cannabis revenue is going to the School Aid Fund for kindergarten through 12th grade education, while $101.6 million is going to the Michigan Transportation Fund.

‘MAKES OUR BUDGET WHOLE’

The funding going to cities, townships and counties can be used for whatever the municipalities want.

In townships like Emmett Township near Battle Creek in Calhoun County, the funding has helped stabilize the budget. The township is receiving more than $760,000 for 13 businesses, making up a considerable portion of its $10 million budget.

“It is great, it really helps. It makes our budget whole,” Emmett Township Supervisor Debra Belles told News 8.

The Emmet Charter Township offices.
The Emmet Charter Township offices.

High Minded parent company acquires Cloud Cannabis stores

She said the budget had been “shaky” prior to the cannabis funding, which is used for things like road maintenance and covering public safety costs. The funds will also be used for future water and sewer projects, Belles said.

The township, which has several dispensaries along a stretch of Columbia Avenue now dubbed “Marijuana Mile,” at one point had more than 35 licenses. The township later brought the cap on licenses down to 18, which Belles said has helped stabilize the market.

  • Quality Roots in Emmett Township.
    Quality Roots in Emmett Township.
  • Great Lakes Holistics along Columbia Avenue in Emmet Township.
    Great Lakes Holistics along Columbia Avenue in Emmet Township.
  • Superior Bud along Columbia Avenue in Emmet Township.
    Superior Bud along Columbia Avenue in Emmet Township.
  • BE Provisioning near Columbia Avenue in Emmet Township.
    BE Provisioning near Columbia Avenue in Emmet Township.
  • Battle Creek Seeds and Spores along Columbia Avenue in Emmet Township.
    Battle Creek Seeds and Spores along Columbia Avenue in Emmet Township.

“When I first came into office, I thought it was greatly oversaturated,” she said. “It seems to shake itself out. The stronger survive.”

FUNDS FOR THIS IMPACTED BY PROHIBITION

Cities like Muskegon used the part of the funding for programs related to the cannabis industry. Thirty percent of its cannabis funding, which is close to $650,000 this year for 11 licenses, goes to the Muskegon Social Equity Program, Planning Director Mike Franzak said. The program offers grants and loans for people who have been negatively affected by marijuana prohibition. It also offers funding for education, training and business startups.

“We’ve had a couple of businesses able to get started with these grants,” Franzak said. “We have a minority-owned cannabis company that was able to take advantage of this and they were able to start up their retail center. So without that funding it, they could have faced some challenges. …  Luckily they’re able to take advantage of this social equity program, and now they’re open and operating.”

It has also helped fund a series of expungement clinics. The most recent one helped around 50 to 75 people, Franzak said.

Weed war: Michigan dispensaries fight to survive

Other projects the city is using the funding for a hiring an anti-vaping and anti-smoking consultant to work in local schools, and beautification projects in the neighborhoods where most of the stores are located.

“It means a lot to us. Our city commission was very vocal over the past few years about wanting to give back to those that were negatively affected by marijuana prohibition,” Franzak said. “So we were tasked with coming up with a program that would help address some of these issues and shortcomings through some of these businesses that are trying to get up off the ground.”

HOW MARIJUANA BROUGHT A ‘RENAISSANCE’

For Buchanan, located in Berrien County near the Indiana border, where cannabis is not legalized, cannabis meant a revival for a struggling city.

“We were still reeling from our largest employer, Clerk Equipment, leaving town, with 3,500 jobs that left with them,” Rick Murphy, the city’s community development director and zoning administrator, explained. “We went through a tough time.”

After recreational marijuana was legalized in Michigan in 2018, the city jumped on allowing dispensaries right away. The cannabis companies helped rebuild, with three dispensaries going into buildings that had been shuttered for years. The dispensaries “brought those buildings back to life,” Buchanan Mayor Sean Denison told News 8, adding that even if they now leave, they’ll be leaving behind refurbished spaces for the community.

“After they remodeled those historic buildings, then the foot traffic started coming to town,” he said. “Now we’re seeing an increase in the amount of people we have, we’re seeing really just a renaissance in our downtown. We have a lot of businesses that want to be here now … the amount of money we’re making on building permits alone has increased like crazy since marijuana has come into town, so it’s really been a catalyst for a renaissance in our community.”

Prices down, supply up for MI marijuana industry

They also brought with them young people, Murphy said, as many employees in the cannabis industry are young.

“All of a sudden you have young people like, ‘I’m going to work every day, walking down Main Street, getting coffees, getting (meals at) restaurants, hanging around for the concerts.’ Then there’s three years later, now they’re buying homes, maybe opening other businesses,” he said.

Denison and Murphy say marijuana has done its job of reviving the city. But they said they know the industry is always changing. In the future, Indiana, which the city gets a lot of cannabis tourism from, could legalize cannabis, or it could be legalized at a federal level.

“Our goal moving forward is … to diversify and to make sure that we’re not so reliant on marijuana that we fail again like when Clark Equipment left town,” Denison said. “We’re trying really hard to focus on the future not being about cannabis. We appreciate the funds we get from it. We appreciate what it did to kickstart our economy. But our future, we don’t feel like is reliant on the cannabis industry being here.”

A Pharmhouse Wellness cannabis plant.
A Pharmhouse Wellness cannabis plant.

With that in mind, the city in the past for years has used 50% of the marijuana excise tax for quality of life initiatives, like upgrading parks, and the other 50% goes to business incentives. Leaders will start to determine where exactly this year’s $350,000 in funding — the most Buchanan has ever gotten from the excise tax — in a meeting next week.

How much U.P. cities are getting for having pot shops in 2023—and what some plan to do with it

Denison said while it’s a small portion of the city’s $4 million in funding, it’s still impactful.

“It’s hard to argue with the economic benefits,” Murphy said. “I think the challenges are, how do we use this to as a catalyst to really build a healthy, diversified economy, not reliant just upon the cannabis industry … because there’s a lot of uncertainty in the future.”

Denison said he’s not sure if people in the industry even know where it’s going.

‘THE BEST OF TIMES, THE WORST OF TIMES’

The owner of Pharmhouse Wellness in Grand Rapids, Casey Kornoelje, said the industry currently reminds him of “A Tale of Two Cities.”

“It’s the best of times, and it’s also the worst of times,” he said. “Really what is good for the municipalities and the states (is) not necessarily reflective of good health at the operator level. So it is interesting that we’re seeing record sales within the state, but I think if you look a little closer, and talk to individual operators, you might you might hear a bit of a different story.”

While there’s a big demand for cannabis in the state, he said dispensaries are also seeing “essentially record low prices,” which may be good for the consumer, but isn’t good for operators.

The Pharmhouse Wellness grow room.
The Pharmhouse Wellness grow room.
Pharmhouse Wellness in Grand Rapids.
Pharmhouse Wellness in Grand Rapids.

While municipalities like Grand Rapids, where Kornoelje’s business operates, have caps on the number of licenses, some have no limit. That turns the area into the “survival of the fittest” as businesses face oversaturation.

Inside WOODTV.com: Building West Michigan

Denison observed some cities that are “getting into the game late” are not limiting the number of permits.

“One of the things that I found interesting … as I look through the list of the communities that are getting that money, some communities have 25 and 30 permits. So they’re getting upwards of a ($1 million to $1.5 million). In my mind, there’s a negative that comes along with that,” he said. “It’s going to be really interesting to see how that works for them and their communities.”

As locally-owned Pharmhouse Wellness gets ready to celebrate its fourth anniversary, Kornoelje said the industry helps communities with a lot more than just the excise tax, pointing to things like payroll taxes, property taxes and community work. His business is a social equity operator, and he uses the funds he gets from that to help make Pharmhouse Wellness’ neighborhood more walkable and vibrant.

“We certainly appreciate the support from the community, we feel the love,” he said. “There’s a lot of options when you can go out and procure cannabis or buy cannabis, and (I) just want to remind folks that it’s really important to shop local, just like you shop local for coffee.”

For the latest news, weather, sports, and streaming video, head to WOODTV.com.