Thursday, May 19, 2022

2021 was a great year for marijuana, but what does that mean for East Lansing?

East Lansing to see tax revenue from cannabis sales, new dispensaries

January 18, 2022
<p>Photo of &quot;Legend OG&quot; cannabis strain at Pincanna in East Lansing on Jan. 14, 2022.</p>

Photo of "Legend OG" cannabis strain at Pincanna in East Lansing on Jan. 14, 2022.

Photo by Evan Freeman | The State News

2021 was a record year for marijuana sales in Michigan, generating nearly $1.8 billion in revenue statewide. A share of the billion-dollar industry is owned by East Lansing dispensaries.

And soon, with two new dispensaries coming to East Lansing, the industry is only growing larger.

The new dispensaries include High Society and Ascend, opening on Merritt Road and Michigan Avenue, respectively. Planning and Zoning Administrator Peter Menser said they are both set to open later this summer.

Although the COVID-19 pandemic may have altered normal business activity, Pincanna founding partner Rob Nusbaum confirmed that 2021 was a good year for business.

“The store, since we opened it, has been on a steady rise,” Nusbaum said. “Right now, I’d say the business is very good, and it’s continuing that way.”

Pincanna established their East Lansing outlet last August, having renovated a three-story apartment building into a two-floor retail space. They have another retail outlet in Kalkaska, which opened in May 2020, but Nusbaum said that their reach goes beyond retail.

“We’re a vertical company,” Nusbaum said. “So, we grow, we process and we dispense.”

This has resulted in the production of 12 different brands from their growth and processing facility in Pinconning, Michigan, and Nusbaum said that these brands are in 75-80% of dispensaries in the state.

But there’s more to a good year for marijuana than profits for those that share in the industry.

An increase in marijuana sales equates to more money for the City of East Lansing. A state excise tax on marijuana retailers allows for the creation of the Marihuana Regulation Fund, designated under the Michigan Regulation and Taxation of Marihuana Act. Fifteen percent of this fund is set aside for “municipalities in which a marihuana retail store or a marihuana microbusiness is located,” meaning East Lansing is set to earn $56,000 from the retailers, according to their 2022 fiscal budget.

This $56,000 is to be added to the city’s general fund, which will go toward public safety, public health and other government expenses.

Additionally, under Ordinance 1469, operators of marijuana retail establishments are required to provide an annual donation equivalent to 1% of their net profits or $5,000, whichever is greater, to a local nonprofit organization “operated exclusively for purposes of improving the lives of people with low to moderate income, conserving or improving natural resources, or preventing cruelty to children or animals”.

There exist several other sources of city income related to the dispensaries. One in the form of an annual $5,000 fee and another in the “Percent for Art" rule, which mandates that developers commit one percent of new project costs to public art, through the installation of art on site or a donation to the Public Art Fund, designated under Ordinance 1339.

“Generally, the city has a commitment to the arts that has manifested in this policy,” Menser said. “Any new development, there’s a handful of qualifiers related to that, it could be a new development, an expansion, there are certain criteria when it kicks in.”

While Ascend is exempt from the art requirement due to having a project cost under $500,000, Menser said the High Society is planning to incorporate an on-site installation.

Each dispensary must also have a special use permit, or SUP, for each type of sale they wish to participate in, medical use or recreational. Each of these coming at a fee of $5,000, paid to the city.

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