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Neighbor states reap tax money as Indiana resists legalizing marijuana

Poll found 85% of Hoosiers support legalization
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Posted at 11:55 AM, Sep 01, 2023
and last updated 2023-09-04 18:27:40-04

INDIANAPOLIS — Marijuana is booming just across the Indiana border.

Neighboring states Illinois and Michigan harvested hundreds of millions in tax revenue from recreational pot sales last year. Both will reap hundreds of millions more in 2023.

Opponents of legalization say marijuana is dangerous, addictive and causes a range of cognitive and health problems. But supporters say our neighbor states are using marijuana tax money to fund schools, transportation and government operations along with other public investments.

As a panel of Indiana lawmakers prepares to study the economic, workforce and other impact the state could expect to see if it were to legalize marijuana, folks in our neighboring states already have the answer.

"You know, Indiana is a huge driver. I mean, I thank Indiana and Ohio every day for what they've done for the Michigan cannabis business," said Andrew McFarlane, founder and CEO of the Michigan Cannabis Trail.

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Andrew McFarlane, CEO of the Michigan Cannabis Trail.

Numbers are telling.

Michigan raked in $325 million in tax revenue from nearly $1.9 billion in marijuana sales in 2022, according to the state's Cannabis Regulatory Agency.

Michigan doesn’t track out-of-state purchases, but one dispensary owner tells WRTV that out-of-state visitors make up about half of her shop’s sales.

“We get a lot of people from everywhere in our store,” said Katie Lynch Lindgren, co-owner and brand director for Green Stem in Niles, Mich.

Marijuana dispensary Green Stem is located five miles north of the Indiana border in Niles, Mich.

Green Stem sits five miles north of the Indiana border and just 10 miles north of Notre Dame University in South Bend.

Lindgren says her shop sees a lot of tourists.

"Every summer due to tourism, we hit every single state in the United States, as well as many provinces from Canada, and then internationally as well," Lindgren said.

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Marijuana dispensary Green Stem is located five miles north of the Indiana border in Niles, Mich.

Illinois, our neighbor to the west, took in $445 million in tax revenue from $1.5 billion in marijuana sales last year. About 30% of the recreational marijuana sold in Illinois went to out-of-state buyers, the state reported.

"If I were an Indiana resident, I would tell Indiana politicians: 'Hey, you guys are leaving a huge amount of money on the table,'" McFarlane said.

Critics say the money isn't worth the social ills. Legalizing marijuana, they say, doesn't make the drug any less dangerous.

Polls show support

An overwhelming 85% of Hoosiers support legalizing medical or recreational marijuana, according to a 2022 survey by Indiana Public Broadcasting/Ball State University.

That's in-line with a Pew Research Center poll that found 88% of Americans support legalizing pot.

“We have an overwhelming support for some form of legalization of cannabis in the state,” said Shadi Khoury, an Indianapolis businessman who owns eight Indy E Cigs shops in the state and a hemp growing and processing facility in Indianapolis. “It seems to me that the legislative body is really the only thing holding us back at this point.”

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Shadi Khoury owns seven Indy E Cigs locations in Indiana and a hemp growing and processing facility in Indianapolis.

Besides the tax revenue, Khoury said Indiana is missing out on an entire locally grown industry ready to brings jobs, investment and development opportunities to the state.

Khoury employs about 40 people and said he's ready to expand if Indiana ever legalizes marijuana.

Legal hemp products including vaporizers and edibles are sold at Indy E Cigs on the north side of Indianapolis.

“All the business owners like myself that would be investing in the cannabis space,” Khoury said. “The jobs that would create, the amount of money that would go back into enforcement, law enforcement, mental health treatment.”

The federal laws make marijuana a controlled substance, so weed can’t be shipped across state lines. All marijuana sold in a state has to be grown in that state.

By holding back as states around Indiana legalize, Khoury said, our state is missing out on high-paying cannabis industry jobs in chemistry and agricultural fields. If the federal government makes it legal, he said states like Illinois and Michigan would ship pot to Indiana, cutting out the Hoosier growers and local jobs.

“I think that the pros of... cannabis legalization in Indiana outweigh the cons that could ever come from it,” Khoury said.

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Indy E Cigs, 901 Broad Ripple Ave., Indianapolis.

Powerful opponents

Legalization bills have had bi-partisan support, which is important in an Indiana Statehouse dominated by a GOP super-majority.

But the key Republicans, led by Gov. Eric Holcomb, have resisted efforts at marijuana reform.

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Gov. Eric Holcomb.

Holcomb, who has admitted using marijuana while in college, addressed the marijuana issue several years ago.

"If the (federal) law changed, we would look at it — all the positive or adverse impacts it might have on our population," Holcomb said in 2019. “But I'm not convinced other states have made a wise decision, both short-term and long-term."

Heavy marijuana use can hamper cognitive functions including memory, attention and ability to plan, according to the University of Michigan's C.S. Mott Children's Hospital. Frequent marijuana use can cause permanent damage in still developing teen brains, according to the hospital.

The Centers for Disease Control says marijuana use has been linked to social anxiety, depression, suicide and schizophrenia.

The drug has been shown to impact the health care system. A study published in 2019 found that cannabis-related emergency room visits more than tripled in Colorado after the state legalized recreational marijuana in 2014.

Opponents, including the Indiana Chamber of Commerce, the Indiana Prosecuting Attorneys Counsel and the Indiana State Police, say legalization will increase addiction, attract crime and lead users to harder substances.

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Brock Patterson, director of government affairs for the Indiana Prosecuting Attorneys Council.

“Our group has always been opposed to it and we're going to stand that line because we see it at the forefront,” said Brock Patterson, director of government affairs for the Indiana Prosecuting Attorneys Council. “We know that this is one of our most common crimes. We know what the negative side effects are.”

"Not bad to be last"

Indiana is in a shrinking minority of states where pot is illegal.

Recreational marijuana is legal for adults in 23 states and Washington, D.C.; 15 more states allow medical marijuana, according to the National Conference of State Legislatures.

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Indiana Sen. Rodney Pol

"It's backwards for us," said Indiana Sen. Rodney Pol, a Democrat from Chesterton in northern Indiana. "It's not as if we're a guinea pig. We can see what the impact was on workforce development. We can see what the impact was on potentially teen use. And there's so much that we can learn."

Pol, a staunch supporter of legalization, is one of the lawmakers who requested that a committee be appointed to study marijuana issues before the Legislature returns to the Statehouse next year. The hearing dates have not yet been scheduled.

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Recreational marijuana sales brings in hundreds of millions of dollars in tax revenue in Michigan and Illinois, those states say.

Pol noted that recreational use is legal in Illinois and Michigan, while medical marijuana is legal in Indiana's other neighboring states, Kentucky and Ohio.

"Right now, we're on an island where all the other states around us have taken some stance on it," Pol said. "You know, a lot of them are raking in a huge amount of tax revenue."

But Patterson and other opponents say the tax money isn't worth the crime and other problems that come with legalizing pot.

Legal hemp products like this vaporizer starter kit are sold at Indy E Cigs on the north side of Indianapolis.

"No one has regulated it properly. Why should we jump the ball and put our citizens at risk, put our state in a fiscal risk for something that no other state has figured out?" Patterson said.

"Sometimes there is this connotation that Indiana is the last to do everything, but in this circumstance, it's not bad to be last."

MORE | New survey shows majority of Hoosiers favor Marijuana legalization | Indiana lawmakers hear testimony on marijuana decriminalization bill | Marijuana bills filed for Indiana 2023 legislative session | What happened to Indiana's 13 marijuana bills? They all went up in smoke.

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Recreational marijuana sales brings in hundreds of millions of dollars in tax revenue in Michigan and Illinois, those states say.

Contact WRTV reporter Vic Ryckaert at or on Twitter: @vicryc.