Michigan Cannabis Industry Comparable In Tax Revenue To Online Gambling

Written By Drew Ellis on January 30, 2024 - Last Updated on January 31, 2024
Image of three green dice on a white background. Two of the dice have a cannabis leaf on the side facing up, the other has an outline of Michigan on the side facing up to show how Michigan's cannabis industry was comparable in tax revenue to online gambling in 2023

The state of Michigan has been looking to new industries to help raise tax revenue over recent years.

Online casinos and online sports betting have been a solid tax revenue driver since 2021.

Now, Michigan’s cannabis industry is bringing in hundreds of millions for the state.

How did the cannabis industry compare to the Michigan online gambling industry in 2023 tax revenue?

Cannabis industry over $450 million in tax revenue for 2023

The Michigan cannabis industry had a banner 2023.

According to the Detroit Metro Times, licensed cannabis dispensaries in Michigan recorded $3.06 billion in sales for 2023. That was a 25% jump from 2022.

Of that total, $2.74 billion were recreational sales.

They report that with a 10% excise tax on recreational cannabis sales, more than $274 million will go to local governments.

An additional 6% sales tax is imposed on all recreational and medical cannabis sales. That totals an additional $183.6 million in tax revenue for the state.

Altogether, that equals $457.6 million in tax revenue through the industry in 2023.

Michigan online gambling hits record tax revenue in 2023

Michigan’s gambling industry has always been a strong tax revenue driver in the state.

For the last three years, the online gambling industry has also come into play.

In 2023, the industry put up the most tax revenue thus far of the three-year window.

Altogether, Michigan online casinos brought in $1.92 billion in revenue for 2023. That was a new record by 21.6% from 2022’s $1.58 billion.

The online casino operators brought in $354 million in state tax revenue, while another $132.6 million went to city taxes and local government.

Michigan’s online sportsbooks recorded a record $4.63 billion in handle in 2023. That led to $420.4 million in revenue. However, online sports betting taxes are far lower than online casinos.

The online sportsbooks brought in just $15.8 million in state tax revenue and $6.4 million in city tax revenue.

Overall, Michigan’s online gambling industry brought in a total of $508.8 million in tax revenue for the state.

bar chart showing a comparison between Michigan tax revenue from the cannabis and online gambling industries in 2023

Where gambling, cannabis compare to other tax drivers

Last May, we took a look at how the gambling industry is amongst one of the strongest tax revenue drivers in the state.

When mixing in online gambling with retail gambling, fantasy contests and the lottery, Michigan’s gambling industry brought in $1.96 billion in tax revenue for the state in Fiscal Year 2021-22.

That made up 5% of the state’s $38.9 billion in state restricted tax revenue.

To give the 2023 tax revenue numbers for online gambling and cannabis some context, here’s some other key industries and what they provided for tax revenue in FY 2021-22:

  • Vehicle Registration: $1.4 billion
  • Gasoline: $1.1 billion
  • Tobacco: $891.8 million
  • Alcohol: $285.8 million

So, online gambling and cannabis certainly rank right up there in tax revenue with other “vices.” Both are rising industries as well that could be far from peaking in overall tax revenue contributions.

In some cases, tribes around Michigan are trying to utilize both growing industries to support their members and bring in added revenue.

Photo by PlayMichigan
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Drew Ellis

Drew Ellis is currently the Lead Writer of PlayILottery.com. He was the former Lead Writer of PlayMichigan, the No. 1 source for online gambling news in Michigan. A lifelong resident of the state, Ellis has been working in various forms of media since 1998, including more than a decade in the sports betting industry prior to transitioning into US casino markets in 2020.

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