Grand Rapids to receive about $1 million annually from marijuana businesses

GRAND RAPIDS, MI — Grand Rapids marijuana businesses are expected to bring the city about $1 million each year in additional revenues.

Over the past year, marijuana businesses have generated about $330,000 in revenues to the city, but those dollars have all but been absorbed by planning department labor costs.

That will change next year as Grand Rapids starts receiving its share of recreational marijuana tax revenue from the state Treasury and as more businesses renew and apply for local recreational and medical licenses.

In a presentation to city commissioners Tuesday, May 11, Planning Director Kristin Turkelson outlined how the city will bring in an estimated $3.9 million in unused funds by mid-2026 from its allowance of marijuana businesses.

Beyond absorbing the cost of staff time at the Planning Department and Clerk’s Office, the only other proposed use of the marijuana revenue dollars at this time is to invest $50,000 into the creation of a nonprofit cannabis social equity fund.

Turkleson said the fund would aim to “to empower under-resourced communities by implementing equity-driven investment strategies.” The framework around its establishment is still being worked out.

The first medical marijuana provisioning center opened in Grand Rapids in January 2020. Later that year, in October, it also became the city’s first recreational marijuana dispensary.

A total of 10 recreational marijuana dispensaries are now open and operating in the city, with nine more approved but not yet licensed.

In the upcoming fiscal year 2022, which begins July 1 and ends June 30, 2022, the city estimates recreational and medical marijuana businesses, such as retailers, growers, processors and secured transport companies, will generate about $778,000 in revenues to the city.

For fiscal year 2023, revenues are estimated around $1.05 million. In 2024, they’ll be around $1.23, and then $1.02 million in 2025 and $1.03 million in 2026.

The primary revenue drivers are local licensing fees for all recreational and medical businesses in the city as well as the share of state tax dollars the city receives for recreational marijuana dispensaries and microbusinesses.

In March, the state distributed nearly $10 million to municipalities and counties with recreational marijuana stores and microbusinesses. Local governments received about $28,000 for every store they had. Grand Rapids did not receive a cut.

Related: Michigan communities that allowed recreational marijuana shops to split $10 million in tax revenue

The local licensing fee is $5,000 initially for each marijuana business type, and then another $5,000 renewal each year for each business type as well. For example, if a business both sells marijuana and grows it in the city, it will pay $10,000 each year to Grand Rapids to renew the licenses.

New land use application fees accounted for the majority of revenues received by the city this current fiscal year, but that source of funds is expected to taper off as fewer businesses are established.

Read more:

Vaccinating youth will be key in reducing COVID-19 spread, new variants

Michigan colleges can tap into millions in COVID-19 relief funds, see who gets what

Whitmer threatens profit seizure as Enbridge Line 5 closure deadline looms