Tuesday, October 15, 2024
MENOMINEE – A year after Nirvana opened, the Menominee, Mich. marijuana shop is ringing up sales of about $1 million a month, an employee said.
Budtender Justin David Voigt said the store does a good retail business and generates about 25% of its sales from online orders. It’s likely the newly constructed store at 1231 9th Ave., just over the bridge from Marinette, has contributed to an increase in not just excise tax receipts, but also the improved equalized valuation of Menominee County real estate, which translates to higher property tax revenue.
In these ways, the store is helping to generate new revenue for the city, the county and the public schools.
Economics largely drove the Menominee City Council’s decision to pass a marijuana ordinance in the first place in 2020, and again when council members approved a resolution allowing for two more retail licenses to be awarded this month. To avoid more litigation over the way the city scored applications for retail licenses, the city plans to select the new purveyors of marijuana by lottery.
The marijuana shops are controversial, as some residents say they can’t stand the smell, not to mention the way the shops threaten to tarnish the city’s reputation. But the financial high from the new stores is wafting down to individual residential property owners in Menominee County who are benefiting from more local government revenue without having to pay higher property taxes.
Statewide, marijuana sales totaled $9.14 billion a year to date through Aug. 31, according to the State of Michigan’s Cannabis Regulatory Agency. It reported an average per ounce price for marijuana flower of $80.14 in August. Michigan’s 10% marijuana excise tax is divided and sent to local governments and schools, with 15% going to municipalities, 15% to counties, 35% to the school aid fund for K-12 education and 35% to the Michigan transportation fund for roads and bridges.
Besides excise taxes, Michigan counties receive about $59,000 per licensed marijuana shop from the state, the same amount as the local municipality receives. In Menominee County, county revenue from licensed retail shops is expected to grow to $385,000 in fiscal 2025 from $295,431 in fiscal 2024, according to county board documents. Seven licensed shops are expected to be operating in the city of Menominee in fiscal year 2025, up from five in fiscal 2024.
New revenue from higher property valuations boosted by new construction of the stores also explains part of the reason the Menominee County Board was able to approve a 10.5% increase in its fiscal budget to $10.55 million at its Sept. 23 county board meeting, while the increase in individual property taxes per parcel must be held to 5% or the rate of inflation because of Michigan’s constitutional amendments.
Michigan regulations generally aim to hold the line on budget increases from one year to the next, but new marijuana stores are helping to boost public coffers.
“Essentially in Michigan, there are two different constitutional amendments that limit property-tax growth,” said Eric Walcott, government and community vitality specialist at Michigan State University.
Michigan’s Headlee Amendment, passed in 1978, limits the total annual revenue growth for county and municipal budgets to 5%.
“For every taxing unit, in every year, when total values excluding new construction increase by more than the inflation rate, its maximum authorized millage rate must be reduced to limit the allowable property tax increase to the inflation rate,” explained Ron Leix, deputy public information officer at the Michigan Department of Treasury.
If an area has had new construction or substantial real-estate sales, the budget could exceed the 5% limit, Walcott said. Local governments also can ask voters for permission to override the Headlee Amendment through a referendum, he said. Several communities in the northwest lower peninsula had Headlee overrides on the August ballot, he said.
Another Michigan amendment, called Proposal A, which passed in 1994, limits the annual increase on an individual parcel’s taxable value, excluding new construction, to 5% or the inflation rate, whichever is least, until the cap on the property is lifted when the property is sold, Walcott said. The inflation rate for property taxes levied in 2024 was 5.1%, Leix said. The inflation rate for 2025 property taxes will be determined in October, he said.
Because of Proposal A, “The year after property is sold or otherwise transferred, its taxable value resets to 50% of market value – the taxable value is ‘uncapped,’” Leix said.
If a property owner has any question about their tax bills, they should contact their local government or consider filing an appeal with the Board of Review, Walcott said.
Without a Headlee override, local municipalities must use a referendum to garner voters’ approval for a higher increase. Without this approval, counties are constricted in the amount of property tax revenue they can count on. “The challenge is if the growth rate is greater than 5%, then the millage rate is reduced” to keep the revenue growth to 5%, Walcott said. “That reduction is permanent. In a lot of communities, this restricts their revenue.”
Since the 1980s, the Headlee rollback has resulted in a net decrease in revenue to Menominee County of just over $580,000, Menominee County
Administrator Jason Carviou said. This year, the city of Menominee’s new marijuana shops contributed to new revenue growth for the county without raising property taxes for individual homeowners.
About $6.99 million of Menominee County’s $10.5 million fiscal 2025 budget will come from property tax revenue, Carviou said in a presentation before the County Board of Commissioners Sept. 10. This overall number represents an 8% increase from fiscal 2024, he said, but most property owners won’t see their property tax bills increase 8% because of Proposition A, unless they recently purchased the property and the property cap was removed. Balancing the proposed fiscal 2025 budget, required a transfer from the county’s fund balance of about $69,000, Carviou said.
No one from the public commented at a public hearing at the start of last week’s County Board meeting, which was moved to Monday, Sept. 23, from the usual Tuesday. A scheduled presentation also was canceled due to a no-show as the presenter apparently had the wrong date.
In short order, the county commissioners voted unanimously to approve the budget, which Carviou had presented in detail at the Sept. 10 meeting.
Not everyone is thrilled about the marijuana shops, however.
Research indicates early exposure to drugs and alcohol can lead to higher use rates in youth and teens, said Karianne Lesperance, executive director for Menominee County’s Intermediate School District, who also works at Communities that Cares of Marinette and Menominee Counties. The agency aims to prevent and reduce youth substance abuse of initiation drugs and alcohol.
“We are the only people to provide education on what oversaturation of marijuana can do to a community,” she said, noting many marijuana proponents have some financial ties allowing them to benefit from legalized marijuana sales.
Sixth-grade students who self-report drinking alcohol say they first began drinking at age 10.8 on average, while 10th graders who drink say they started at age 12.9 on average, according Communities that Care research. “This increase in the age when they begin to use is important. The later a person engages in use of substances, the lesser the incidence of psychosocial concerns with relationships, work, mental health disorders, etc.,” the research said.
The group’s data also indicates most youth in Menominee and Marinette don’t use alcohol or drugs. Menominee County Prosecutor Jeffrey Rogg said the county has periodic Operating Under the Influence of Drugs cases attributable to marijuana, but not many offenses. “I can’t remember the last time we had a marijuana case, at least for possession or delivery,” he said. That’s not to say he doesn’t prosecute drug crimes, but nine out of 10 involve methamphetamine, he said.
When comparing root causes of alcohol and drug use identified in a 2023 Youth Pride PLUS Survey with 2021 survey responses, parental attitudes toward drug use became a larger risk factor in 2023, while availability declined in importance, Lesperance said.
Despite parents seemingly becoming more accepting of substance use, survey data indicates most responding youths don’t drink alcohol until after high school. About nine out of 10 6th graders say they “do not use” alcohol, compared with 70% of 10th graders and 53% of 12th graders, according to a survey published in a 2023 Communities that Care newsletter.
The marijuana shops in Menominee are required to have a secure check-in area, where patrons must present a driver’s license showing they are 18 or older. E-commerce sites selling marijuana require an over-18 birthdate to shop online.
Voigt, the budtender at Nirvana, which is owned by NU Group, said the store offers discounts and special offers in the store from 9 a.m.-9 p.m. every day. “Our deals change all the time,” he said.
Many customers are from out of state, Voigt said, and not just from over the bridge in Marinette. While marijuana also is legal in Illinois, some Illinois customers shop at Nirvana because the prices are better, he said.
Some items, such as flower, pre-roll, and vaporizers, go so quickly they sell out, making the website out of date, he said. Some disappointed customers become annoyed when the product they want isn’t available. “We have to calm them down. They could get a little upset if it is sold-out,” he said.
