MI: GOP Lawmakers Contemplate Tying Marijuana Legalization To Income Tax Cut

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Worried about having a proposal on the November ballot that would legalize recreational use of marijuana, Republicans in the state Senate are working on a plan to vote on the citizen petition and tie it to a cut in the state income tax.

The working plan would try to attract wary Republicans to vote on the measure by tying it to a cut in the state’s 4.25% income tax, although a specific cut hasn’t been set yet, according to five people with knowledge of the proposal who couldn’t speak on the record. The revenues lost from the tax cut would be made up with the taxes generated by marijuana legalization, including a 10% excise tax and the state’s 6% sales tax.

The proposal also would allow Republicans to amend the recreational marijuana initiative so it is regulated more like the medical marijuana industry. Right now, the ballot proposal would have licensing handled by the state Department of Licensing and Regulatory Affairs. Republicans want the licensing to be handled by the same board that handles medical marijuana licenses — a board appointed by the governor and the leaders in the state House and Senate.

Keeping the initiative off the November ballot would be a plus for Republicans because the measure is expected to drive up voter turnout, especially among young voters, which could fuel a blue wave that could flip the Republican majority in the House to Democrats and significantly narrow the 27-10 GOP majority in the Senate.

Senate Republicans, however, will have a tall hill to climb to convince their colleagues in the House to jump on board.

Speaker of the House Tom Leonard, R-Dewitt, who also is a candidate for state attorney general this year, has said he’s not in favor of legalizing marijuana and doesn’t see much appetite in the Republican caucus to take it up.

Leonard did push a proposal to cut the state income tax from 4.25% to 3.9% last year, but the bill narrowly failed as 12 Republicans joined most of the Democrats in the House to defeat the measure because it left a $1.1 billion hole in the state budget over three years.

It’s a tax cut that Republicans would love to revisit and by tying marijuana legalization to the income tax cut, the budget hole wouldn’t be as deep. The recreational marijuana market is expected to produce a projected $125 million in tax revenues annually.

“We don’t have the votes for something like that,” said one House Republican lawmaker, who did not want to be named. “That is crazy. I don’t see the marijuana petition going up on the (voting) board.”

While it would be a smart strategic move for Republicans politically, GOP consultant Dennis Darnoi, said it would still be a hard vote for Republicans to justify to their constituents.

“If it’s going to be a Republican-only passed bill, you’re going to need something to sweeten the pot like a tax cut,” he said “But I would still think that certain members in the House would leave it in on the ballot and then make changes in lame duck before it gets enacted.”

Democrats have said they won’t support passing marijuana legalization in the Legislature because they want voters to determine the outcome and they don’t want the proposal amended.

“Either way, we’re not on board,” said Senate Minority Leader Jim Ananich, D-Flint.

The Legislature has until June 5 to act on the ballot proposal and has three options: amend and pass it and it would automatically become law without the need for a signature from the governor; offer a competing proposal, or do nothing and let the voters decide the issue on the statewide ballot on Nov. 6.

By taking the ballot proposal up in the Legislature, lawmakers could amend it with a simple majority. If they waited to amend the issue after it’s passed by voters in November, they would need a three-fourths majority in both the House and Senate.

The Coalition to Regulate Marijuana like Alcohol, which is pushing the cannabis legalization proposal, said it would be happy with either the Legislature or the voters taking up the measure. The group expected it would have to deal with amendments in the Legislature.

“Our focus is getting this passed one way or the other. We just want to see the end of prohibition in Michigan and the benefits of a well-regulated and taxed marijuana industry in Michigan,” said Josh Hovey, spokesman for the coalition. “Whether the Legislature takes it on or the voters, we’re fine with that.”

As for the possibility of an income tax being tied to the legalization vote, Hovey said, “We’re not involved in any discussions with the Legislature and we’re not going to get involved in any horse trading or making deals about what it might take to make this pass.”