A weed tax to pay for roads? Michigan marijuana industry says it's not that simple.
- Oct 1
- 4 min read
September 30 2025
Advocates and stakeholders in Michigan's cannabis industry say a proposed 24% wholesale tax on marijuana to pay for a road funding plan would be a significant blow to operators in the field, where declining flower prices have already placed immense strain on the state's pot shops.
The Michigan House passed bills related to the budget deal Sept. 25, including a road funding measure that would levy a 24% tax on the wholesale price of marijuana in the state. The tax would generate $420 million in annual revenue, according to the House Fiscal Agency, with those dollars going toward a Neighborhood Road Fund and the costs of implementing the plan. It's a key part of a larger plan state leaders announced would provide about $1.5 billion a year to fix local roads.
The wholesale tax will place a burden on the state's marijuana businesses, said Robin Schneider, executive director of the Michigan Cannabis Industry Association, a statewide industry trade group. In a Sept. 26 interview, Schneider said higher cannabis prices will drive consumers back to illicit sources. The higher tax rates in an industry already struggling with market oversaturation and low retail margins will lead to smaller marijuana businesses closing and workers losing jobs, she said.
The retail price of marijuana in Michigan has been on a downward trend. An ounce of marijuana flower cost, on average, $61.79 in August, according to data provided by the state's Cannabis Regulatory Agency. That's a steep decrease from a year earlier, when the average retail cost in Michigan was $80.14 in August 2024.
A 24% wholesale tax on marijuana would be the second-highest figure in the country, behind only Washington state's 37% wholesale tax on marijuana, according to the Tax Foundation.
"This is going to very much harm our young industry," Schneider said. "The first thing that will have to happen is job cuts to make up for that 24% because there are no margins left to absorb this."
The wholesale tax would be levied on marijuana sold or otherwise transferred to retailers. Michigan doesn't currently have a wholesale tax on marijuana sales, although it does have a 10% excise tax, along with the standard 6% sales tax. The excise tax rate was included in the law Michigan voters approved legalizing recreational marijuana sales in 2018.
House Speaker Matt Hall, R-Richland Township, said at a Sept. 25 news conference the 24% wholesale tax was negotiated after Gov. Gretchen Whitmer initially called for a 32% rate in her budget proposal released in February. Hall also said the proposal was negotiated with an understanding of the wholesale price of marijuana being cheaper than the retail price.
Road funding had been a sticking point in negotiations for a state budget — Whitmer has made roads a key issue, and Hall and House Republicans were also keen on producing revenue to pay for construction and repair costs for roads throughout the state. The deal announced Sept. 25 by Whitmer, Hall and Senate Majority Leader Winnie Brinks, D-Grand Rapids, still has to pass the Senate and be signed into law by Whitmer before Oct. 1 to avoid a state government shutdown.
Still, the marijuana industry in Michigan largely panned the wholesale tax proposal. An email sent to MCIA members Sept. 26 indicated the group was planning a protest at the state Capitol to call on senators to reject the road funding plan. In a statement announcing a budget deal, however, Brinks mentioned roads, along with education and health care, as a funding priority. "The framework we have agreed to reflects the priorities of Michiganders from every region, and while no budget will be a perfect product, I am confident that the final result we vote on next week will have features that benefit every resident," Brinks said.
There's also a dispute over the legislative mechanics of a new marijuana tax — Schneider said because Michigan's marijuana laws were established by a ballot proposal, any legislative action would need a supermajority, or three-quarters vote, to alter them. Hall, however, said because the proposal does not alter the existing excise tax, only a simple majority is needed to adopt the wholesale tax.
The state's revenue projections provide a rosier outlook than what the reality would be if a 24% wholesale tax on marijuana were in place, said Chris Silva, a cannabis business consultant in Michigan.
"What's 24% of nothing?" he said to the Free Press. "It's going to put half these people out of business ... soon the value of that tax won't make sense."
Silva said larger, corporate marijuana operations would be better suited to absorb the added costs from a wholesale tax. "We're at the price bottom," he said. "There are people selling weed that aren't making money."
There are other problems in the industry the state would be better off addressing, Silva said, naming issues like the sales of "hot" hemp and THC-8 which aren't subject to the same regulatory scrutiny as legal cannabis sales.
"They know they can still beat up on the weed people," he said.
Contact Arpan Lobo: alobo@freepress.com
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