Michigan Senate Democrats are reportedly moving toward implementing a major tax hike on marijuana that was previously proposed by Gov. Gretchen Whitmer (D).
While no legislation to effectuate the policy change has been filed yet, the plan is to impose a 32 percent wholesale excise tax on cannabis—which would be in addition to the existing 16 percent in taxes that are placed on marijuana at the retail level.
The governor said in February that the proposal would “close a loophole that exempted the marijuana industry from wholesale tax, which is applied to similar smoking products, like cigarettes, and other tobacco items.” Aligning those tax policies, her office said, could help the state fund plans to “fix the damn roads for generations to come.”
“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 said at the time. “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. This will add an additional $470 million to help fix roads across the state.”
It would also effectively double the total tax rate on cannabis in Michigan, which advocates say would unfairly burden businesses and consumers.
“Michigan’s cannabis consumers already pay more than their fair share of taxes. They should not be singled out to bear the costs of ‘fixing the damn roads,’” Karen O’Keefe, director of state policies for the Marijuana Policy Project (MPP), told Marijuana Moment.
“Michigan’s excise taxes are about 10 times as high on cannabis as they are on alcohol,” she said. “Gov. Whitmer’s proposal would roughly double the tax burden on consumers, many of whom are medical patients who are struggling to make ends meet.”
Despite pushback from advocates and industry stakeholders, however, Michigan Information & Research Service Inc. reported last week that Senate Democrats are getting on board with the governor’s plan.
Senate Appropriations Committee Chair Sarah Anthony (D) said that “whether it’s looking at industries that disproportionately impact the quality of roads, or other creative ways for us to make sure there’s shared sacrifice, I think ultimately, when we get to the point that we’re building a sustainable roads plan, it’s going to take a lot of creativity, both revenue as well as reductions in some of our state services.”
Asked specifically about the proposed marijuana tax increase, Anthony said, “I think you can look at some of the ones that the governor put forward early on, so we have some knowledge there.”
Read more at Marijuana Moment
