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Watch how Muskegon spends nearly $290,000 in marijuana proceeds

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MUSKEGON, Michigan — The marijuana industry brought nearly $290,000 in revenue to the city of Muskegon last year, about $40,000 of which will be spent on social justice programs, including disinfection clinics and grants for those with marijuana convictions.

The vast majority of revenue for the city government — from indirect taxes and license fees — went to the general fund to pay for various city expenses, Muskegon Chief Financial Officer Kenneth Grant told MLive.

The city commission has adopted a policy of spending 35% of selective tax revenue on a three-pronged social justice program, said Muskegon Director of Planning Mike Franzac, who oversees the city’s marijuana business. This program includes grants, loans, eviction clinics, community education, and safety efforts.

“I think the social justice program has been fantastic, especially for those who have been affected by the marijuana ban,” Franzac said. “We saw that for the grant program. That money went fast.”

Last year, the city received $112,000 in selective tax on recreational marijuana sales, of which it spends $39,200 on social justice. It also received $177,000 in licensing fees from medical and recreational marijuana businesses, including operations development, processing business, small business that grows and sells, and retail establishments.

That means roughly $250,000 went to pay for general city expenses, including costs for organizing and inspecting the local marijuana business.

Franzac said he plans to meet with city commissioners soon to discuss transferring additional marijuana tax revenue to social programs.

“We know that some of the offering clinics here have been very well attended,” he said. “There are still a lot of people who need help.”

The city could receive more indirect tax revenue from the state, which distributes money based on the community’s share of recreational marijuana licenses at the state level. In fiscal year 2020, a 10% tax was levied on $341 million in recreational sales, and communities received $28,000 per license.

Muskegon had four licenses at the time the money was distributed. Franzac said she now has about ten.

Nine recreational clinics are currently operating in the city.

“I expect additional funding,” Franczak said.

Franczak said the city has strict requirements for landscaping and street lighting for dispensaries, and sometimes it’s more cost-effective and standard for the city to do some landscaping and decorative streetlights themselves. As a result, some dispensaries gave the city money to do the work, and street coordination revenue totaled $58,255.

Franzac said the city plans to spend some of that money to install 12 street lights on the bike path along Lacton Street where many dispensaries congregate.

Earlier this month, Muskegon city commissioners approved spending $13,700 in Social Equity for educational marijuana offerings on city-owned message boards and 5,000 bags with padlocks to keep cannabis.

Offer letters will touch on topics such as not using marijuana before driving, working, or during pregnancy. Franzac said earlier that the bags will be distributed to dispensaries for distribution to their customers.

The city also has Several loans and grants Within the framework of the social justice program:

  • Education and Training Scholarship. The $5,000 scholarship reimburses costs such as tuition fees or job skills training upon successful completion of the program. Applicants must have been Muskegon residents for at least 12 of the previous 48 months and have a previous “low-level” marijuana conviction.
  • Business start-up grant. The $5,000 grant can be used to cover various costs, including equipment, business plan development, business training courses, and architect fees. It can also be used for rental assistance. Applicants must have a previous low-level marijuana conviction.
  • Business start-up loan. Interest-free “gap” loans of up to $25,000 are available to supplement traditional financing through a third party. The loans must be repaid within 60 months. Applicants must have been Muskegon residents for at least 12 of the previous 48 months and have a previous “low-level” marijuana conviction.
  • Marijuana equipment grant. Up to $10,000 in compensation is available for increased equipment, office needs, and more that is required to operate a marijuana facility in the city. Applicants must have obtained a previous low-level marijuana conviction or have been designated as a social justice applicant by the state of Michigan.
  • Granting a marijuana license. Up to $10,000 is available to help pay for a local or state marijuana license fee. Applicants must have obtained a previous low-level marijuana conviction or have been designated as a social equity applicant by the state of Michigan.

To be a state-appointed Social Justice Applicant, an individual must have resided in a community disproportionately affected by previous marijuana laws, of which Muskegon is one, for at least five of the previous ten years; have a marijuana conviction; Or be a registered medical provider of marijuana.

Franzac said the city set aside $11,760 for the grants and loan program and spent most of the money with two $5,000 grants last year.

Franczak said there are some indications that the city committee will decide to allocate more money to the grants and loans program.

The City of Muskegon has also set aside $13,720 for marijuana-conviction expulsion clinics, which haven’t yet been conducted and can be coordinated with clinics offered by Muskegon County, he said. Clinics assist individuals in preparing court papers needed for deletion.

“We will meet in the next couple of months to discuss how these programs are going and how we expect to spend the money for next year,” Franczak said.

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