Pot pays off: Michigan cities like Lansing and Ann Arbor are putting weed taxes to work 

Cities like Lansing and Ann Arbor are bringing in millions of dollars in cannabis tax revenue—and using it to fund everything from firefighters to addiction treatment.

MICHIGAN—A new firefighter in Lansing. An addiction recovery program in Ypsilanti. Unarmed crisis response teams in Ann Arbor. Ambulances. Sidewalks. Parks. Police cruisers.

All of it paid for with weed money. 

And this year, there’s more of it than ever.

In February, the state of Michigan sent out nearly $100 million in marijuana tax revenue to every city, county, and tribal government that has greenlit marijuana sales within their borders—marking a new all-time high as sales continue to shatter records year after year.

Detroit topped the list with about $3.1 million in cannabis tax revenue received this year. Ann Arbor, Grand Rapids, and Lansing were close behind, with about $1.5 million each. Kalamazoo brought in about $1.1 million, and hundreds of other municipalities collected smaller checks, too. 

All told, 302 Michigan municipalities and tribes each got a slice of this year’s pie—at a rate of about $58,000 for every licensed retailer and microbusiness that’s operating in their jurisdiction. 

And after five straight years of marijuana sales directly padding city budgets, some of the state’s more pot-friendly communities are starting to see what all that tax money can actually do.

“This is cash that can go into anything,” Lansing Mayor Andy Schor told The MichiGanja Report. “This year, we hired a new firefighter and a code compliance officer. Last year, we hired two firefighters and an arborist. We’ve bought equipment—ambulances, police cars. All of these things are made possible, in part, because of the money that we get from this tax revenue.”

Where the weed money goes

Michigan’s 10% excise tax on recreational cannabis brought in over $331 million in 2024. 

About 70% of that revenue is split up annually between the state’s School Aid Fund and the Michigan Transportation Fund, which goes out to support millions of students in the state’s public schools, as well as fund road repair and bridge maintenance projects statewide. 

The rest is handed out directly to the cities, counties, and tribes that have opted into legal marijuana sales—all based on how many licensed retailers they have in their jurisdiction.

From sidewalks to city services

For most Michigan cities—including Lansing, Detroit, and Grand Rapids—that tax money goes straight into their respective general funds, where it goes on to help support a wide range of public services from parks and public safety to infrastructure and economic development.

But that also means the cannabis connection isn’t always obvious to local residents. 

“It’s an extra $1.4 million that we can use for anything,” Schor said. “It’s a drop in the bucket for a $300 million city budget, but every drop helps. An extra firefighter or code compliance officer on the street is going to make our city a safer place. All those drops can really add up.”

Schor said the Capital City has dealt with growing pains as some dispensaries have closed in recent years, but noted the industry, on the whole, appears to have “stabilized” locally—which means the city is also starting to bank on the tax revenue as an integral part of the budget.

“Without that tax money, there are less things that we can do to provide services for our citizens,” he said. “So, we can legitimately say thanks to the cannabis industry, people are getting better sidewalks, better roads, better parks, more public safety—all of these things.”

City officials in Detroit told The MichiGanja Report that all of this year’s cannabis tax revenue will go into the general fund, where it will indiscriminately support all city services and programs. 

In Benton Harbor, city officials have also said they plan to put this year’s $233,000 cannabis tax windfall toward public safety and police protection, ultimately supporting “everything from police cars to the gas and payroll,” City Manager Alex Little told Bridge Michigan in February.

And in Monroe Township, where weed taxes account for nearly 20% of its meager $5.8 million annual budget, the taxes from weed sales will inevitably end up funding … a bit of everything.

An intentional approach

Some cities, like Ann Arbor, have taken a more deliberate approach to spending tax revenue.

In 2021, the Ann Arbor City Council passed a resolution directing all cannabis excise tax revenue to be tracked separately from other revenue sources—and reserved for programs focused on mental health, restorative justice, and community safety. The idea was to reinvest cannabis profits into the very communities most harmed by decades of weed criminalization.

Today, that includes funding for deflection and diversion services to keep people out of jail, funding to support a homeless shelter downtown, and a still-developing “unarmed crisis response team” modeled after similar efforts in bigger cities like Atlanta and Denver. 

“If you compare it to other revenue sources, it’s not a lot of money. But it’s enough to get some important work done in the community,” Ann Arbor CFO Marti Praschan told The MichiGanja Report. “It seemed like a natural progression—to help those in need without having to make cuts elsewhere. It’s new revenue that segued into an opportunity to do some good work.”

This year, city officials plan to spend another $84,000 of the city’s cannabis tax revenue on helping to support an addiction treatment facility in Ypsilanti that has reportedly been impacted by sudden federal funding cuts under President Donald Trump’s administration. And another $616,000 in cannabis tax revenue is set to be earmarked later this month, MLive reports.

Money moves

Beyond the nearly $100 million in disbursements to local municipalities and tribes this year, more than $116 million in cannabis tax revenue was also sent to support public schools and fund road repairs. But not everyone thinks Michigan’s cannabis tax system is fully baked.

Gov. Gretchen Whitmer recently proposed a new plan to raise $470 million a year for roads by imposing a new, 32% wholesale tax on marijuana—on top of the existing 10% excise tax and 6% sales tax already paid by consumers. The idea, part of her broader “MI Road Ahead” plan, aims to align cannabis taxes with other tobacco products and help fill more potholes statewide.

The proposal is already making waves in the industry, with some retailers warning that it could drive up prices. But Whitmer has called Michigan’s current taxing structure one of the most “industry-friendly” in the country—suggesting there’s more to be milked from the cash cow.

READ MORE: 6 quick hits of cannabis news from across Michigan

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