Michigan’s marijuana industry is bracing for a potential financial hit after Governor Gretchen Whitmer suggested adding a 32% wholesale tax on adult-use cannabis. The proposal, aimed at generating funds for a $3 billion infrastructure plan, is already facing backlash from industry leaders who say it could cripple legal cannabis businesses.
A Big Tax for a Big Plan
Whitmer, a Democrat, made repairing Michigan’s roads a cornerstone of her campaign, famously vowing to “fix the damn roads.” Now, she’s floating a bold new revenue stream to do just that—targeting the state’s booming cannabis industry.
If approved by lawmakers, the 32% tax would be in addition to the existing 10% excise tax and 6% sales tax on recreational marijuana. This means consumers could see significantly higher prices, while businesses would be forced to absorb added costs at a time when profit margins are already razor-thin.
How Much Would It Cost Consumers?
For cannabis users, the financial impact is clear. According to an analysis by Crain’s Detroit Business, a 32% wholesale tax would raise the average price of an ounce of marijuana from $69.13 to $91.34. That’s an increase of more than $22—enough to push some consumers back into the illicit market, critics warn.
The numbers tell an even bigger story:
| Current Price (Per Ounce) | Price With Proposed Tax | Price Increase |
|---|---|---|
| $69.13 | $91.34 | $22.21 |
With legal cannabis already taxed at higher rates than alcohol, opponents argue this proposal could do more harm than good.
Industry Leaders Sound the Alarm
Many cannabis business owners see this tax hike as a direct threat to Michigan’s legal marijuana market, which generated $3.06 billion in sales last year. Aric Klar, CEO of Quality Roots, didn’t mince words.
“This proposal is a stretch that will have massive pushback from all regulated operators who have invested hundreds of millions of dollars into the state,” Klar told Crain’s.
Similar concerns have played out in states like California, where high cannabis taxes have allowed the illegal market to thrive. Some Michigan business owners worry the same thing could happen if prices climb too high.
Can the Legislature Get Behind It?
Whitmer’s plan is far from a done deal. It needs legislative approval, and given the pushback from cannabis industry leaders, the road to passage won’t be easy.
- Michigan lawmakers would have to weigh the potential $470 million in annual revenue against the risk of driving business underground.
- Municipalities that rely on marijuana tax revenue—$87 million of which was distributed in 2023—may not support a move that could disrupt the industry.
- Republican lawmakers, along with some Democrats, could resist the idea of hiking taxes on an industry already contributing hundreds of millions in revenue.
For now, Whitmer’s proposal is just that—a proposal. But as debate heats up, one thing is certain: Michigan’s cannabis industry won’t accept this without a fight.