The --env flag refers to your environment...which in your .env is set to local.
So you should try php artisan migrate --env=local, but I am not sure if you even need to pass the --env flag at all. If you are migrating on a local server (vm or AMPPS, MAMP, WAMP etc), php artisan migrate will use the credentials in your .env file. If you are running it on a remote (most likely your production) server, then php artisan migrate will again use the credentials in the .env file on your remote.