An unprecedented cannabis tax hike that took effect in Michigan on Jan. 1 significantly depressed legal sales, recent state data shows.
Michigan marijuana retailers reported about $227 million in sales in January, according to state Cannabis Regulatory Agency data. That’s a nearly 16% decrease from the $270 million in sales recorded in December, according the CRA.
And it’s also below the $246 million in sales reported in January 2025.
At least some of that December haul was price-conscious cannabis consumers stocking up before the tax hike, Fox 17 reported.
Michigan cannabis tax hike follows price compression
Michigan cannabis retailers enjoyed a record year in 2025, with more products than ever sold. However, price compression amid what operators say is an oversupply of product – plus retailers competing on price – meant overall sales revenue declined by $113 million to $3.17 billion on the year.
The average price of an ounce of flower has dropped by nearly 50% since 2023.
But that was before a controversial tax hike, approved by state lawmakers and Gov. Gretchen Whitmer in the fall, took effect.
Supporters, including Whitmer, say the new wholesale tax will raise as much as $420 million annually to fund roads and other infrastructure improvements in the state. The new tax is on top of a 10% excise tax and 6% sales tax.
Michigan cannabis product sales fell from 681,819 pounds in December to 518,000 pounds in January, according to the CRA.
Can states raise cannabis taxes without wrecking the industry?
Several states raised cannabis taxes last year amid a slowing economy and federal budget cuts.
The decline is consistent with depressed sales in other mature markets that have raised taxes.
In the third quarter of 2025, when a since-canceled excise tax hike was briefly in effect, California cannabis sales fell to a five-year low.
The 19% excise tax reverted back to 15% as of Oct. 1 after Gov. Gavin Newsom signed a bill into law that will keep the excise tax at that level until at least 2028.
California and Michigan remain the country’s two biggest individual state marijuana markets, respectively.
