If you start to notice you’re paying more in taxes on your cannabis product, it’s actually a good thing.
Think of it as a new marijuana tax to boost diversity. It’s part of a more comprehensive plan to help people and communities that have been disproportionately affected by marijuana prohibition and enforcement.
And if implemented, it will raise millions of dollars to assist disadvantaged groups succeed in the cannabis industry.
Blazing Trails in Michigan
When voters approved the Michigan Regulation and Taxation of Marijuana Act back in 2018, the Michigan Marijuana Regulatory Agency (MMRA) created the Racial Equity Advisory Workgroup.
The work group has met monthly since last July. It’s composed of state lawmakers, representatives of minority-focused industry and broader business groups, representatives of municipalities with high minority populations, lawyers with experience in equity and racial disparity issues, and those with experience in finance, real estate, and banking. The new plan is their brainchild.
“This is a really, really progressive initiative,” said attorney Barton Morris of the Cannabis Legal Group in Royal Oak. He also chairs one of the work group’s five subcommittees. “It’s going to make Michigan a leader in our industry, throughout the entire country.”
And it’s high time (no pun intended) that diversity become a primary focus. Data collected in December by the Michigan Marijuana Regulatory shows that only 3.8% of those with an ownership interest in licensed recreational marijuana businesses in Michigan are Black. Only 1.5% are Hispanic or Latino.
So the work group is getting down to brass tacks with this new initiative to be a leader on diversity, equity, and inclusion in the country.
New Marijuana Tax to Boost Diversity
The agency’s work group has recommended reinstating a 3% excise tax on medical marijuana sales that was repealed in 2016. 30% of the proceeds would go to a social equity capital investment program.
Money could be used to provide loans or grants to social equity license applicants to aid with startup costs, training, and technical assistance.
On the recreational marijuana end, they suggest creating a new 1.5% tax on transactions between license holders, such as sales between producers and retailers. 20% of those proceeds would go to a social equity investment fund, while 30% would go to the licensee’s host city, 20% to their county, 20% to their school district, and 10% to medical marijuana research.
That’s Just the Beginning Though
Among the work group’s other suggestions are:
- An agency-hosted crowdfunding platform to connect investors and marijuana businesses located in economically disadvantaged communities
- Requiring larger marijuana companies to purchase a certain percentage of supplies and services from disadvantaged companies
- Reallocation of some current funding to increase the presence of Black and brown-owned businesses in the cannabis space
- Training sessions with bilingual content to help social equity license applicants comprehend the licensing process and the challenges of growing a marijuana business
- A new microbusiness license permitting 300 plants obtained from licensed growers, as well as use of licensed processors.
Of course, implementing some of these recommendations will require action and approval by the Legislature. But it’s a major move in a positive direction.
Plus, the executive director of the Michigan Marijuana Regulatory Agency is in the process of developing a permanent equity and diversity working group to turn these recommendations into reality.
Embrace Social Justice
As cannabis marketing experts, we’re strongly in favor of a new marijuana tax to boost diversity. We want to see everyone succeed in this industry.
So if you find yourself shelling out a little more for your marijuana, just know that you’re serving as an agent of change… for the better.
And if you currently have a cannabis business and haven’t reviewed your marketing strategy in a while, it could be time. Contact us for a free consultation to see how we can help.