Senate members on Friday morning narrowly approved a House-backed budget plan imposing a 24 percent wholesale tax on marijuana products sold in the state. The Senate vote came hours after the Republican House Speaker threatened a state government shutdown if Senators failed to back the tax hike.
Today’s vote came despite significant pushback from marijuana reform advocates and cannabis industry players, who argued that the tax increase will weaken the state-regulated adult use cannabis market.
Last week, members of Michigan NORML, MPP, and other advocacy organizations met with state lawmakers to voice their opposition to the tax increase. Earlier this week, hundreds of activists rallied at the state capitol in protest of the proposal.
The newly approved budget plan imposes a 24 percent tax on the wholesale price of marijuana sold or transferred to a retail shop. (Initial plans proposed a 32 percent tax hike.) That’s on top of the existing 10 percent excise tax on retail marijuana sales, in addition to the state’s six percent sales tax. The new tax takes effect on January 1, 2026. One of the state’s largest cannabis trade organizations in considering suing the state over the proposal, arguing that it improperly amends the state’s voter-initiated law.
“Raising taxes on adult-use cannabis products will escalate prices out of reach for many consumers,” stated NORML in an action alert that was shared with state lawmakers over 3,000 times. “This will drive a growing percentage of consumers to the unregulated market, thereby undermining the primary goal of legalization, which is to provide adults with safe, affordable, above-ground access to lab-tested products of known purity, potency, and quality. This proposed tax increase will also hurt state-licensed businesses and their employees because it will increase their costs and reduce their customer base.”
An estimated 40,000 Michiganders work in the state’s cannabis industry. In 2024, excise taxes imposed upon the industry raised over $330 million in new tax revenue.
Earlier this month, a legislative effort led by California NORML successfully rolled back marijuana-related taxes in that state. By contrast, lawmakers in Maryland and Minnesota both enacted cannabis-related tax hikes this year.