Michigan Update: Nearly $60M In Weed Tax To Cities, Industry Avoids Stoppage Over Unpaid METRC Fees

The Michigan Department of Treasury announced Tuesday that more than $59.5 million is being distributed among 224 municipalities and counties as a part of the Michigan Regulation and Taxation of Marijuana Act.

 According to the department’s press release, over the next few days, 81 cities, 26 villages, 53 townships and 64 counties will receive capital from the Marijuana Regulation Fund. That is, each eligible municipality will get more than $51,800 for every licensed cannabis shop and micro business in its jurisdiction.

"Municipalities and counties will begin seeing these payments appear in their banking accounts," said state treasurer Rachael Eubanks. "Through a partnership, the dollars received from the adult-use marijuana taxes and fees are distributed to our participating communities."

Furthermore, $69.4 million was used to support the School Aid Fund for K-12 education, and another $69.4 million was granted to the Michigan Transportation Fund.

 In fiscal 2022, the state has seen $1.8 billion in recreational marijuana sales.

“The team at the CRA does an amazing job and our effective regulatory approach allows our licensees to provide Michigan’s cannabis consumers the safest possible product,” stated CRA executive director Brian Hanna. "The funding that makes its way to local governments through the excise tax collected by licensed retailers is an important benefit of the regulated cannabis industry and the CRA is committed to doing our part in supporting our law-abiding licensees."

85% Of Businesses Almost Shut Down Over Unpaid Tracking System Service Provider Fees

Meanwhile, the cannabis industry narrowly avoided a sales stoppage of 85% of its licensed operators due to a miscommunication with its private tracking system service provider – Florida-based METRC, reported Crain’s Detroit.

What Happened

METRC (Marijuana Enforcement, Reporting, Tracking, and Compliance), which provides cannabis regulatory technology systems and has a contract with Michigan, recently established a new monthly service fee of $40 per month. Many Michigan cannabis operators say they never received an invoice.

Having failed to pay for the service, more than 85% of the 800 cannabis-licensed businesses were about to lose access to METRC. However, the Michigan Cannabis Regulatory Agency quickly notified them. 

"The Cannabis Regulatory Agency (CRA) has been notified that your business is at risk of having its statewide monitoring system (METRC) account suspended due to past due monthly reporting fees," the bulletin read. "We recommend that you contact METRC as soon as possible to resolve the issue and avoid any interruption in your access to the system.

"We have heard reports of significant gaps in communications from METRC on this matter, including not invoicing companies. Consequently, it is highly likely that many companies are not even aware that their account is seriously in arrears. All licensees should contact METRC customer support immediately to ensure that they are current on all subscription fees (or other fees) owed to METRC and to ensure that their METRC accounts are in good standing,” the agency also wrote in the bulletin. 

CRA spokesperson David Harns told Crain's Detroit that the agency managed to negotiate with METRC for a 30-day pause on account suspensions. 

Photo: Courtesy of CRYSTALWEED cannabis on Unsplash