Marijuana Tax Revenue Won't Be A Panacea For Schools

Oct 30, 2018

Michigan voters head to the polls next Tuesday for what many believe could become one of the most consequential midterm elections in decades.  One issue voters will be asked to decide is recreational marijuana.  If the measure passes, a portion of the collected tax revenue will go towards public education.


Michigan legalized medical marijuana in 2008.  But the effort to make it a recreational drug goes back much farther. 

Ann Arbor was the first city to decriminalize cannabis back in 1972.  Starting in 2012, a wave of cities from Detroit to Lansing to Grand Rapids allowed people over 21 to possess up to an ounce of marijuana. 

Now, with statewide legalization on the ballot, supporters are counting on Michigan voters to turn over a new leaf.

“This is an issue that really appeals to all sides of the electorate,” says Josh Hovey, a spokesperson for the Coalition to Legalize Marijuana Like Alcohol. 

Hovey says one of its selling points is its revenue potential.  Hevey points to a report from the Michigan Senate Fiscal Agency that estimates marijuana tax revenue could generate as much as $287 million by 2023. 

A portion of that total would fund Michigan schools.

“You know, this campaign isn’t going to claim that that’s going to fix all our school funding problems, but $287 million is a whole lot more than the zero we’re collecting today off of marijuana,” says Hovey.

Hovey concedes that’s a bullish figure.  East Lansing-based Anderson Economic Group predicts legalized pot will produce up to $175 million in tax dollars by 2023.  The coalition’s own hired research firm, VS Strategies, puts that number at around $130 million.

Keep in mind that schools will get nowhere near that amount.  The School Aid Fund will receive 35 percent of what’s left over after sales and excise taxes.  The rest will be divvied up between road and bridge repair and municipal and county government.

Thirty-five percent may sound like a lot.  However, it’s unlikely to become the huge public education cash reservoir some Michigan voters might be imagining. 

Other states have already found that out for themselves.

“The marijuana revenue is still very minimal for education,” says Colorado Department of Education spokesman Jeremy Meyer.  “It’s about around one percent of the state’s total education budget.” 

Colorado was one of the first states to legalize recreational marijuana in 2012.  Meyer says education’s cut from cannabis tax revenue goes towards various programs, especially school construction. 

Colorado opted not to enshrine the funding in statute to avoid conflicting with federal law.  Marijuana is, after all, a federally illegal substance.  Instead, the money is doled out in grants.

Meyer says that’s given educators a bit of an image problem.

"When districts have gone to voters for additional money for bond elections or mill levy increases, I think voters are under the impression that, ‘well, you’ve got all this marijuana money; why do I need to approve your latest bond election?,’” he notes.  “So, I think there’s a misperception out there that marijuana tax money is really the savior of education, and we have not seen that.”  

The circumstances may be similar in Michigan if voters say yes.  It’s unlikely any additional tax revenue would immediately boost teacher salaries or per pupil spending. 

State representative Tim Kelly (R-Saginaw Township) chairs the Michigan House K-12 appropriations subcommittee.

“If the thing passes, I suspect there’ll be more talk  in next year’s budget – or perhaps maybe  even lame duck, I don’t know – around maybe there are specific earmarks,” says Kelly.  “But to this point, there hasn’t been any discussion on what we would do with any excess revenue.” 

So far, Proposal 1 is polling favorably in Michigan.  Supporters feel good about its chances next Tuesday.  They believe since Michigan has banned straight ticket voting, citizens will be forced to turn over their ballots and give each proposal a good look. 

There could be a lot of people doing just that.  Pollsters predict Michigan could see one of its largest midterm election turnout rates in history.