Governor Gretchen Whitmer is proposing levying a 32 percent wholesale tax on the sale of adult-use marijuana products to fix Michigan’s roads by adding about $3 billion in additional infrastructure funding each year without commuters paying more.
Whitmer unveiled the plan Feb. 10. It would generate long-term road funding by increasing the corporate income tax, taxing wholesale marijuana sales, cutting unspecified programs and shifting all taxes at the pump to road funding.
The governor’s office declined to share working estimates for the corporate income tax increase or the wholesale marijuana tax percentage, saying those are topics for negotiation with lawmakers. The marijuana tax would be paid by businesses, not customers.
The plan aims to generate $500 million in additional revenue from government cuts, but Whitmer’s office said the governor does not have any specific programs or funding areas in mind for those cuts. That too, her office said, is up for negotiation with the legislature.
In all, the governor’s office estimates the plan would generate $3.77 billion in additional revenue. More than $1 billion of that would be dedicated to new and ongoing investments for communities to fix local roads.
The plan would also dedicate $250 million to investments in local bus services and new transit projects. Roughly $650 million would be used to backfill the School Aid Fund, compensating for dollars redirected away from taxes at the pump.
The plan comes as Whitmer’s $3.5 billion “Rebuilding Michigan” bonding program to finance new road construction projects and speed up other road work is ending.
NORML opposes this proposed tax increase.
Raising taxes on adult-use cannabis products will escalate prices out of reach for some consumers. 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, NORML said in a press release.
This proposed tax increase will also likely hurt state-licensed businesses and their employees because it will increase their costs and reduce their customer base, NORML said.
To implement her road funding plan, Whitmer will need to negotiate with lawmakers. Republicans control the state House, while Democrats control the state Senate.
House Republicans, led by Speaker Matt Hall, R-Richland Township, have introduced a competing long-term road funding plan that they say will raise $3.14 billion in annual revenue for roads without raising taxes.
The plan relies on shifting all taxes at the pump to roads and using funds from the corporate income tax, but without raising the tax itself.
Some top Republicans in the House are already pushing back on Whitmer’s plan. House Appropriations Committee Chair state Rep. Ann Bollin, R-Brighton Township, said the state doesn’t need to increase taxes or create new ones to fix the roads.
Implementing a new marijuana wholesale tax, similar to cigarette taxes, would generate about $470 million. The industry is currently exempt from the tax thanks to a “loophole,” according to the governor’s office.
The governor’s office declined to say what percentage this tax would need to be to generate that amount.
“After voters legalized marijuana, the industry has grown exponentially thanks in part to Michigan’s industry-friendly taxes, the fourth lowest in the nation,” the governor’s office said. “The industry, which recorded billions in sales in 2024, uses Michigan roads to transport marijuana multiple times throughout the process, including to grow operations, testing labs, distribution hubs and finally retail stores.”
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