WITH VIDEO: Marijuana brings tourists to town, cash to governments
ALPENA — In Northeast Michigan, early indications show the sale of marijuana benefits local governments’ finances and boosts local economies.
It also strains the workforce as more people fear failing drug screenings.
A 10% state excise tax on the sale of the drug — legalized by a public vote in 2018 — allows counties, cities, and townships to utilize their portion from the pool of money on projects and aids their general funds.
Dispensaries that pop up in the area also provide jobs and lure people from other communities who also spend money in other businesses, local officials say.
THE BUD BOOM
Although marijuana was legalized in Michigan four years ago, only recently have local governments become open to allowing marijuana businesses to operate.
Now, the number of dispensaries in the Alpena area is rising rapidly.
Since the first shop began selling recreational marijuana in Presque Isle County’s Rogers Township in early 2020, four more — Consume Cannabis Co. in Harrisville, Neighborhood Provisions and Meds Cafe in Alpena, and Green Pharm in Ossineke — have opened. Another shop in Alpena is expected to open soon, and a dispensary could be built in Alpena Township as soon as next year.
This year, local governments that allow recreational marijuana shops received $56,453 per dispensary. That amount is expected to rise in the future as more shops sell more marijuana and the state therefore collects more tax revenue.
In Northeast Michigan, Presque Isle County this year received $112,906 for the dispensaries in Onaway and Rogers Township. Alcona County and Harrisville received $56,453, as did Rogers Township, which has utilized the state funding for road repairs and to cover the cost of a new police dog for the Presque Isle County Sheriff’s Department.
Rogers Township Supervisor Randy Smolinski said utilizing a portion of tax revenue from marijuana sales statewide to help pay for the dog’s training and care was a good investment of the marijuana money.
Smolinski said the tax revenue from the state also helps supplement the local road millage, allowing the township to complete more street projects.
“It has actually worked quite well, and allowed us to do even more road work than we were able to do with the millage,” Smolinskli said. “There was some apprehension on the township board at first about allowing the dispensary to open, but now there isn’t any.”
Alpena and Alpena County will receive their first checks from the state excise tax in 2023. Thus far, they plan to simply place the revenue in their general funds and decide later what to do with it.
In 2018, when legalization passed in Michigan, the nonpartisan Michigan Senate Fiscal Agency predicted revenues of $262 million from the excise tax, of which municipalities would receive 15% — or an estimated roughly $39 million. The balance goes toward education, roads, administrative fees, and the state’s general fund.
Last year, the state distributed $42.2 million to local municipalities for 374 licensees.
Senate Fiscal Agency Chief Economist David Zin said projections from the state’s Consensus Revenue Estimating Conference meeting in May predict revenues for municipalities could hit $44.8 million next year, $52.6 million in 2024, and $58.2 million in 2025.
“The whole pie is going to get bigger, but we don’t know how big or small the slices of it will be,” Zin said. “Of course, our final estimate will come from the January conference, and it could change some, one way or another.”
Alpena County Administrator Mary Catherine Hannah said county commissioners have discussed how to use the money, but nothing is set in stone, yet. As of now, the money will be placed in the general fund so it can be used as needed. She said a portion of the money could go toward law enforcement in the county.
“That money allowed us to consider some requests from the sheriff’s department, which is mostly for additional officers and (to) fill positions that haven’t been filled in a couple years,” she said.
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BENEFITS OF THE BOOM
Alpena Area Chamber of Commerce Economic Development Director Mike Mahler called it hard to put a number on how many marijuana dispensaries is too many. He said supply and demand, pricing, and the retail market will choose winners and losers.
“I don’t see this as a situation where there will be 20 pot shops in close proximity to each other,” Mahler said. “The market seems to balance things out pretty good on its own, and it will find its equilibrium. I think it is best to not set an arbitrary number of shops and let the market determine it.”
Mahler said marijuana dispensaries offer the local economy traffic from outside the area. He said people from communities without dispensaries travel to Alpena to purchase marijuana. When they do, he said, they probably make stops at other businesses to shop or eat.
“I have to believe there is a trickle-down effect,” he said. “If people drive miles to get here, I think they will make other stops and ultimately spend money.”
Lowell City Manager Mike Burns has seen the impacts marijuana businesses have on government budgets and on the local economy.
He said the first dispensary opened in his city in 2020 and seven now operate. He said 100% of the money from the excise tax goes toward roads, but another key component that has benefited his community is that marijuana shops have improved run-down and vacant buildings, which increased property values.
“They purchased and rehabbed several buildings that were close to being condemned and torn down,” Burns said. “Now, they have businesses in them and look great.”
Like Alpena, Burns said marijuana shops are banned from the downtown, which he said pumps up development in other areas of the city.
Legalization has had unintended impacts, especially to the workforce, local officials said.
Pamela Richardson, president of Alpena job placement firm Star Staffing, said a nationwide hiring crisis has left many businesses short-staffed, and many local businesses have changed their policies to become “THC friendly” by lifting pre-employment testing policies.
THC is the psychoactive ingredient in marijuana.
Businesses now encounter more employees who fail drug-screening tests, and potential workers often don’t pursue jobs because of their inability to pass the test, Alpena Area Chamber of Commerce President Adam Poll said.
Poll, the former Alpena planning and development director who helped draft the city’s current ordinance pertaining to marijuana, said businesses are hungry for bodies to work and are willing to tweak job requirements to accommodate drug users who want to work.
“A lot changed their policies because we have staffing shortages at the moment,” Poll said. “I hear all the time from our members that they need people willing to work and show up on time, so they have changed their way of thinking because it has been decriminalized.”
Poll said some businesses don’t have that luxury, however. He said businesses or organizations that receive federal money or require the use of heavy equipment still need to be vigilant and issue drug tests because marijuana remains illegal in federal law and because of the liability businesses face should an accident involving someone under the influence of marijuana occur.
“The bottom line is marijuana becoming legal has definitely narrowed the labor pool,” Poll said. “There are a lot of job opportunities right now, but the labor market is shrinking.”
As well, Alpena offers a limited inventory of vacant space businesses could occupy. If the surge of marijuana dispensaries continues, it is fair to wonder if other portions of the business sector will struggle to find locations.
Mahler does not expect that to happen.
“I just don’t expect a flood of marijuana businesses,” he said. “Like anything else, the supply and demand will determine what happens. I would like to think any developer who wants to open a business in the area would have a good grasp on the market here, so I don’t fear the market becoming oversaturated.”