Three-hundred-thirty-eight-thousand dollars: That’s how much money has come to Leelanau County in adult-use marijuana tax revenue since the county’s lone dispensary, Olean’s Northport, opened its doors in August 2021. That number grew this month, as the state announced a record $100 million in marijuana tax revenue distributions to more than 300 municipalities across Michigan. But according to Olean’s owner Daniel Caudill, a proposal from the governor’s office could determine if Leelanau continues to get its piece of that growing pie.

Under the Michigan Regulation and Taxation of Marijuaha Act, which voters approved in 2018 to legalize adult-use cannabis, Michigan imposes a 10 percent excise tax on all recreational marijuana sales, on top of a 6 percent sales tax. Tax revenue is then split between schools, roads, and local governments, including shares for both the county and the village, city, or township where each dispensary is located.

Beginning with Fiscal Year 2022 and continuing in 2023 and 2024, Leelanau County and the Village of Northport have each received more than $50,000 per year in marijuana tax distributions, thanks solely to Olean’s. It’s a statistic Caudill is incredibly proud of.

“Olean’s isn’t my main business, and I don’t even take any income from it,” Caudill tells the Leelanau Ticker. “Olean’s, to me, was just an opportunity to do something for the community. We give a lot of donations, because we believe in the community, and then there’s these tax revenues, which go into a general fund that is used for capital improvements. I was on the Northport planning commission for a while, so I know there are always a lot of things on the docket for capital improvements. If Olean’s can help with that, then I’m very happy and proud to be able to contribute.”

The state’s Marijuana Regulation Fund tallied a record $331 million in tax revenues last year. $116 million of that money will go to the School Aid Fund, which pays for K-12 public education, while another $116 million will go to the Michigan Transportation Fund to cover road and infrastructure projects. The remaining $99.45 million is split between 302 local municipalities, including counties, cities, villages, townships, and – new this year – Native American tribes. Divided equally among the state’s 854 active licensed adult-use shops, each county and each city/village/township will receive $58,228.66 for every dispensary operating within their borders.

Seven years on from marijuana legalization, Leelanau County still has just one dispensary, compared to more active jurisdictions like the neighboring Grand Traverse County. With 16 active licenses, Grand Traverse County will pocket $931,658.56 from this year’s marijuana tax revenues, while the City of Traverse City will get $756,972.58 for its 13 licensees.

Cumulatively, though, across the three fiscal years in which Olean’s has operated, the dispensary has brought in more than $338,000 in tax revenue, including $169,115 apiece for both the Village of Northport and Leelanau County. Under Michigan law, units of government are allowed to use these funds in any way they see fit. Some, like Grand Traverse County, have sought to use at least some of the money for community projects or healthcare programs. Others, like Northport, simply use the money to supplement their general funds.

Per Interim County Administrator Richard Lewis, Leelanau County falls into the latter category: “[The money] goes into the general fund, and there has not been a discussion regarding a specific use or category [for those dollars],” he tells The Ticker.

While the Village of Northport and Leelanau County have so far been able to expect approximately $50,000 annually from marijuana revenues, Caudill warns that a proposed change to state law could put his business – and by extension, those tax revenues – in jeopardy.

Earlier this month, Governor Whitmer announced a plan to generate an additional $3 billion per year in road and infrastructure funding. One of her proposed funding sources? A new 32 percent wholesale tax on marijuana, which would be levied in addition to existing excise and sales taxes.

It’s not an idea without precedent: Cigarettes and other tobacco products are already subject to a 32 percent wholesale tax. Precedent or not, though, Caudill says the tax would likely be the death knell for small, independent dispensaries.

“We’re a one-off store, not a big company,” Caudill says, contrasting Olean’s with Traverse City dispensaries like House of Dank and Lume, both part of large statewide operations. “Unlike those places, we don't have multiple locations or grows. It's a small, single-person-owned business. And if this tax goes into effect, we would probably have to close. We wouldn't be able to support it.”

Unlike excise and sales taxes, which are paid at the point of sale by the end consumer, Caudill explains that a wholesale tax would make it significantly more expensive for Olean’s to stock its shelves with product. While passing the expense on to the customer is an option, he’s skeptical consumers would pay the extra cost.

“I think what would end up happening is a percentage of our customers would start going to Traverse City and shopping with those larger companies that have multiple locations, that have their own grow operations, and that can absorb some of those costs better than we could,” Caudill says. “So, if [this tax] did happen, we’d obviously adjust and would try our hardest to make it work. But my gut instinct is that it would price us out.”