New laws provide more tax dollars for road improvements in Menominee

MENOMINEE, MICH. – Menominee County Road Commission is gearing up for a big year in road improvement to take place next year in 2027, following several changes taking place this year.

“2027 is going to be a pretty big road year for us,” said Darrell Cass, the engineer/manager at the Menominee County Road Commission. “We’ll have additional money by that time,” he said.

Cass expects to see a 30% to 35% increase in road funds in 2027, he said, noting a change in the gas tax that took effect January 1 will result in more money for roads in Michigan.

Michigan has switched from a 6% tax at the pump to a $0.21 flat motor-fuel tax per gallon that’s expected to be revenue-neutral for consumers but a big win for the roads, as the new statute no longer allocates funds to public schools but supports road improvements, Cass said. About $0.52 per gallon in taxes now goes to the roads, he said.

The State of Michigan said 98% of the funds collected will go to the Michigan Transportation Fund, with 34% allocated to state highways, 34% to county roads, 19% to cities and villages and about 10% to a comprehensive transportation fund for public transit. About 2% will fund the Recreation Improvement Account for local recreation projects, the state said.

Also new this year is a 24% wholesale marijuana tax in Michigan that’s expected to provide new funds for the roads, including at the local level, Cass said.

As a result, finding the funds to improve local roads in Menominee County is expected to get easier — if the new marijuana tax holds up.

Cass said the Comprehensive Road Funding Tax Act is being challenged in the courtroom as opponents say it violates the Michigan Constitution.

According to the new statute, the wholesale tax would be separate from the existing 10% cannabis excise tax imposed at retail and the 6% sales tax, but it applies only to wholesale cannabis.

It is expected to generate about $421 million in annual revenue in a neighborhood road fund. About $320 million would be passed down to county road commissions, cities and villages, while $100 million would be spent on bridge improvements, according to information from the State of Michigan.

“If it does go through, the $420 million expected to be raised is the same formula, with funds distributed in the counties and 500-plus municipalities,” Cass said. “There’s some litigation going on. Marijuana is fighting back on the legality of the state being able to apply the wholesale tax,” he added.

At Elevated Exotics — a Menominee marijuana shop — co-owner Nilsson Davis said he doesn’t expect to have to raise prices more than 5%, as other tax changes will lower some other costs. “It is stressful,” he said, but he isn’t overly worried.

“It’s a tax on the grower. It only affects wholesalers, people trying to sell weed and grow weed. You can still deduct your costs. There are ways for vertically integrated companies to get taxed at a lower rate,” Davis said.

Elevated Exotics buys cannabis products from about 100 companies, he said. “There have been companies that have said their prices aren’t changing at all.”

Davis said the change making marijuana a Schedule III drug, instead of a Schedule I controlled substance, is a bigger change as it will reduce the criminality of cannabis in states where it isn’t legal.

A White House executive order directed the Attorney General to expedite the change, to reschedule marijuana to a Schedule III drug from a Schedule I drug.

“The FDA reviewed the landscape of medical use of marijuana and found credible scientific support for its use in treating various ailments, including pain management and anorexia,” the White House released.

Davis’ father was prescribed marijuana when he had cancer, and this prompted Davis and his mother to start Elevated Exotics, he said.

In other tax changes for businesses, a corporate income tax also is expected to provide some funds for the roads, Cass said.

Besides the new tax revenue, the Menominee County Road Commission expects to receive $3.5 million in funds in 2027 from a U.S. Department of Transportation grant it received notice of last year.

The grant will allow the road commission to improve County Road 388 from Hermansville to Faithorn township, Cass said.

Story highlights

• A 30% to 35% funding increase is expected for Menominee County roads by 2027.
• Fuel tax restructuring shifted to a $0.21 flat rate per gallon to prioritize road improvements.
• Marijuana rescheduling to Schedule III acknowledges the drug’s medical utility and reduces criminality.
• A new 24% wholesale marijuana tax is projected to generate $421 million annually for local roads and bridges. Ongoing litigation challenges the constitutionality of the new marijuana tax.