$1.75M in marijuana taxes — highest amount ever — flowing into Kalamazoo County budget

KALAMAZOO COUNTY, MI — As Michigan’s cannabis market matures, cash from sales of the plant and its derived products are driving an unprecedented tax windfall in Kalamazoo County.

The 2024 county budget anticipates $1.75 million in cannabis tax revenue over the coming year, according to a draft version presented to the board of commissioners.

If the estimate is accurate, it would represent the highest amount ever received by the county, which began collecting taxes in 2021.

Kalamazoo County cannabis tax proceeds by year:

2021 — $1,072,615
2022 — $1,555,236
2023 budget — $1,031,900
2024 budget — $1,750,000

Fiscal year 2024 runs from Oct. 1, 2023 to Sept. 30, 2024.

Cannabis tax is considered a major revenue source, County Administrator/Controller Kevin Catlin said during budget discussions with the board.

Chair John Taylor said at the Sept. 2 board meeting he believes the $1.75 estimated million figure is “probably right on” for the amount the county should expect to receive. He said the industry is growing by about 6 percent or more yearly.

The cannabis tax revenue comes from the 10% excise tax on sales of the plant and cannabis products.

Michigan law requires the excise tax collected on cannabis sales to be distributed with 30% to be split between local municipalities and the counties in which they reside; 35% going to the School Aid Fund for K-12 education and 35% sent to the Michigan Transportation Fund.

Payments to governments are based in part on the number of marijuana business licenses located there.

Kalamazoo Township approved rules for cannabis businesses in January 2020, and the county’s first recreational dispensary opened in the township later that year.

The amount projected in the 2024 budget is based on historical revenue collection, Public Information Officer Taylor Koopman said. The county will not know what it collected for 2023 until March of 2024, she said.

In Kalamazoo County, the revenue generated from marijuana taxes is not earmarked for a specific department or project. Instead, it is strategically added to the county’s general fund, Koopman said.

“The incorporation of marijuana tax revenue into the general fund pot creates a collective financial resource that is utilized across several fronts,” Koopman said.

Some of the areas it funds are public safety, capital projects, public health, administrative services, and judicial and legal services.

“The overarching idea is that the marijuana tax revenue, while significant, constitutes a part of a larger financial pool in the general fund, thereby contributing to the broad spectrum of services and operations crucial to the effective governance and quality of life in Kalamazoo County,” Koopman said.

“It enables us to maintain a balanced and well-distributed financial approach,” she said, “ensuring that no single department or project is disproportionately favored over another, in alignment with our commitment to serving the diverse needs of our community.”

Kalamazoo County commissioners set Tuesday, Oct. 17, as the date to adopt the budget.

The 2024 proposed budget includes $352 million in total revenues, and the same amount for expenditures. Taxes represent the highest category of revenue, making up about 27%.

Read the 2024 proposed budget here.

It is a decrease compared to the 2023 budget, which called for $393 million in revenues and expenditures.

Expenditures in the county’s primary funds will be $131.4 million, which is a 9.25% increase in appropriations from last year’s $120.3 million. Primary funds are the general fund, law enforcement fund, parks fund, friend of the court fund, health fund, child care fund.

The draft budget includes a line item to use $466,000 to wipe out an estimated $89 million in medical debt held by residents.