New tax on marijuana heads to Whitmer's desk after late-night Senate approval

OG Article By Beth LeBlanc And Craig Mauger

October 03 2025

Michigan Senate Approves 24% Cannabis Wholesale Tax

Overview

• Michigan Senate passed a 24% wholesale cannabis tax on January 1, 2026.

• Vote: 19-17 at 3 a.m. Friday.

• Expected revenue: $420 million annually for road repairs.

Legislative Journey

• House approved bill 78-21 last week.

• Legislation awaits Gov. Gretchen Whitmer’s signature.

• Part of a $1.9 billion road funding plan.

Tax Details

• Applies to first cannabis sale or transfer to retailers.

• Vertically integrated businesses taxed on average wholesale cost, updated quarterly.

• Adds to existing 10% retail excise tax.

Road Funding Plan

• Increases gas tax from 31 to 51 cents per gallon.

• Repeals 6% fuel sales tax, balancing overall tax burden.

• Raises electric vehicle fees by $100, plug-in hybrids by $50.

Supporters’ View

• Backed by Whitmer to fund crumbling roads and bridges.

• Senate Democrats and some Republicans (Kevin Daley, Dan Lauwers, Roger Victory) voted yes.

Opponents’ Concerns

• Sen. Jeff Irwin (D-Ann Arbor): Tax threatens cannabis industry, risking business closures, job losses, and local revenue drops.

• Sen. Jonathan Lindsey (R-Coldwater): Doubts revenue will meet road funding goals.

• Industry advocates warn of market collapse, citing $1.58 billion in sales for 2025, down 0.7% from 2024.

Cannabis Industry Context

• 2024 retail sales: $3.2 billion.

• Employs ~39,000 people.

• Retail flower price fell from $500/oz (Jan 2020) to $62/oz (Jan 2025), per Cannabis Regulatory Agency.

Dissenting Voices

• Sen. Ed McBroom (R-Vulcan): Cannabis industry “out of control” and oversized.

• Opponents include Irwin, Sens. Sue Shink, Sylvia Santana, and most Republicans, led by Senate Minority Leader Aric Nesbitt.

Political Stakes

• House Speaker Matt Hall: Failure to pass risked budget collapse and government shutdown.

• Protests at Capitol highlighted industry struggles.

Market Challenges

• Cannabis Regulatory Agency notes oversupply and falling prices.

• Brian Hanna, CRA Executive Director, reported 87% price drop since 2020.