Governor Gretchen Whitmer proposed a 32% wholesale tax on marijuana as part of her MI Road Ahead plan to raise $470 million. Some Michigan growers worry this could shut their doors.
Currently, adult-use marijuana is sold with a 10% excise tax and the standard 6% sales tax, which means that Whitmer’s proposal would add a third tax.
“After voters legalized marijuana, the industry has grown exponentially, thanks in part to Michigan’s industry-friendly taxes, the fourth-lowest in the nation,” a press release from Whitmer’s office read. “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.”
The low tax rate was proposed to drive people into a cheaper legal market instead of the black market, but this black market isn’t just for street sales by strangers. Dustin Walsh, a business reporter with Crain’s Detroit, told Stateside that growers desperate for money could feed into black market sales, too.
“You’re now going to create more desperate operators, more cultivators and processors that are desperate because now they owe more money now in taxes, and now they have to recoup those costs somehow,” Walsh said. “If it drives them into more desperate situations, you’re going to see them potentially loading trucks up with marijuana and shipping it to markets where it’s more expensive or doing other illicit market products.”
An oversupply in the market is currently driving down costs, driving Michigan’s marijuana prices among the lowest in the nation. In the past year, adult-use marijuana costs have dropped nearly 30%, from a little over $90 to just around $65 per ounce of marijuana. Whitmer’s proposed tax hike would pass this added cost to the consumer.
Between 302 local Michigan municipalities, the state distributed nearly $100 million in marijuana tax revenue, from more than $331 million received from the Michigan Marijuana Regulation Fund in the 2024 fiscal year.
Michael Ward, CEO of marijuana grower Harbor Farmz, saidthat if the tax is instituted, he doubts the state will receive the expected tax dollars because the industry will simply see less revenue.
“It will be completely unsustainable and all the taxes that she’s trying to receive from us will go away because of the fact that we won’t be there,” Ward said. “They will not get the money that they’re looking for from the tax revenue from the cannabis industry, which is also already contributing hundreds of millions of dollars to municipalities and the state.”
Instead, there’s a higher likelihood the goods will serve time in the black market, also thanks to recent Michigan legislation and federal policy, according to Chris Jacobson, director of Human Resources for Amazing Budz, a Michigan marijuana business.
Read the rest of this story at Michigan Public Radio