Archive · 2025-10-21

Attention Michiganders -  your local Michigan marijuana brand may be in danger! Signed Oct. 7 by Gov. Gretchen Whitmer and filed with the Secretary of State the next day, the Mitten State enacted the new Michigan weed tax of 24% on wholesale cannabis transactions, which has an anticipated revenue of $420 million for the state’s roadways. The 24% Michigan marijuana tax rate on wholesale transactions is added to the current Michigan marijuana tax rate of 10% cannabis excise tax. And consumers will continue to pay the established marijuana tax in Michigan of 6% sales tax when they purchase from regulated dispensaries. “It’s like a gut punch to the industry,” said Al Williams, president of the Detroit Cannabis Industry Association. “We’re already overtaxed from the federal government, we were already taxed heavily from the state government, and now to have a 24% increase, a lot of people are going to figure out whether this industry is worthwhile.” The measure passed the Senate by a narrow 19-17 vote as part of the larger budget framework. “We’re already getting beat over the heads by the cannabis regulatory authority with basic fees,” Williams added. “It costs me ten to twenty thousand dollars if I have a misprint on one of my tags.”

Is the New Michigan Weed Tax Hurting Small Growers?

Those in the industry spoke out immediately when the bill was initially introduced. “Our industry is not their piggy bank. Our wallets are not their budget overruns,” said Mike DiLaura, chief of corporate operations and general counsel for Michigan licensed cannabis operator House of Dank. Additionally, Republican State Rep. Timmy Beson issued a statement about the legislation, saying that “this specific tax increase to help fund roads is detrimental to many small businesses in the district I represent and across the state. We should be seeking to grow independent businesses in Michigan, not destroy them. Farmers are price takers, not price setters. Forcing them to absorb this tax will destroy small growers. If there is going to be a tax at all, we should apply it at the retail level where prices are set and apply any tax equally to all marijuana retail licenses, instead of creating carveouts that will provide unfair advantages for companies that control every step of their supply chain.”

How the Michigan Marijuana Tax Compares to Other States

In response, Gov. Whitmer said that while she’s sympathetic to the load the tax is putting on cannabis businesses, the tax is akin to other state rates where marijuana is legalized. “The 24% actually makes us commensurate with other states in our region,” Whitmer said. ”It is not out of line, and it’s not even close to the tobacco tax on tobacco products or taxes on alcohol.” For reference, here are some other state cannabis tax rates as of April 2025:
  • Colorado: 15% tax on wholesale and 15% tax on retail
  • Illinois: 7% tax on wholesale and taxes ranging from 10-25% on retail
  • Nevada: 15% tax on wholesale and 10% tax on retail
  • New York: 9% tax on wholesale and 13% tax on retail
And some of the distilled spirit tax rates in 2025 are:
  • Illinois: 11.7%
  • 37.3% in Indiana
  • 8.1% in Ohio
  • 30.8% in Wisconsin
It is essential to note that if this legislation had failed, the overall bill would have fallen apart, sending the state into a full government shutdown. House leadership committed to not entertaining another continuation budget after the previously passed budget expired after Oct. 8. Although many members of the cannabis industry rallied at the Capitol and lobbied lawmakers against passing the legislation, the implications of the entire deal failing weighed greatly on the members of the state legislature voting for the Michigan marijuana tax.

New Marijuana Tax in Michigan Faces Legal Challenge

This new marijuana tax in Michigan is not being accepted blindly. In fact, the Michigan Cannabis Industry Association (MiCIA) is suing the state over it. In the formal 22-page lawsuit, MiCIA argues the tax violates the voter-approved adult cannabis use legalization law, and the 2018 law - which only imposed a 10% excise tax on retail sales - can only be modified by voters or a supermajority vote by lawmakers. The group further declares the tax violates the Michigan Constitution’s contracts clause. In the complaint, the trade association contends that lawmakers “jammed” the proposal through both chambers “without a single committee hearing to discuss the substance of the bill”. MiCIA has requested a declaratory judgment deeming the new Michigan weed tax law “null and void” as well as unenforceable.

Stay Informed on Cannabis Taxes with CannaCon

Has the updated Michigan marijuana tax affected your business? Or are you preparing for tax increases or other restrictions in your state? Follow CannaCon, the nation’s leading business-to-business cannabis conference, and get involved! We’re contributing to the growth of the cannabis industry by educating cannabis business owners on all things related to cannabis, hemp, CBD and more. CannaCon cannabis trade shows feature a large exhibition hall with exhibitors from around the world, as well as educational seminars delivered by cannabis industry experts. Join us on LinkedIn or Instagram, and register to attend a CannaCon tradeshow in a market that excites you, and let’s grow the industry together!