Cannabis industry warns of fallout from new 24% Michigan marijuana tax

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October 06 2025

The Tax

Michigan’s Senate passed a 24% wholesale cannabis tax, effective January 2026, by a 19-17 vote. Part of the state budget, it aims to raise $420 million yearly for road repairs.

Industry Reaction

The tax threatens Michigan’s cannabis industry. Al Williams, president of the Detroit Cannabis Industry Association, calls it a “gut punch.” Dispensaries face rising costs, pushing consumers to the black market.

Price Impact

Consumers will see higher prices. Williams, who runs DACUT dispensary in Detroit, predicts a $3–$4 per gram increase. Gummies, processed products, and flower will cost more.

Business Strain

Small cannabis operations face extinction. Compliance costs are already high—$10,000–$20,000 for a tag misprint, Williams says. Michigan’s oversaturated market worsens the outlook. Smaller growers in cities like Detroit and Flint may not survive.

Industry Fears

The tax could drive job losses. Williams warns of businesses closing, especially smaller urban operations. He points to California, where a 25% tax hike was recently reversed.

Official Response

Governor Gretchen Whitmer acknowledges the burden but defends the tax. “The 24% aligns with other states,” she told Local 4. It’s lower than tobacco or alcohol taxes, she adds.