Michigan cannabis stores are closing as a direct result of a drastic tax increase imposed on the $3.1 billion market earlier this year that’s also bringing into state coffers a fraction of what was promised.
In response, a Republican state lawmaker on July 29 introduced a bill to repeal the tax, which he called an “unnecessary burden” sold to the public by “deceitful” elected officials, according to Lansing, Michigan-based WLNS-6.
“Government shouldn’t stand in the way of a competitive marketplace with excessive taxation,” state Rep. James DeSana told the outlet.
“Repealing this wholesale tax is a commonsense step that supports Michigan businesses, protects consumers and encourages participation in the legal market.”
What are high taxes doing to the Michigan marijuana market?
Backed by Gov. Gretchen Whitmer, a new 24% wholesale cannabis tax narrowly passed the state legislature in October and went into effect on Jan. 1 despite protests and predictions from cannabis operators that legal sales would plummet. Supporters, led by Whitmer, promised the tax would bring in more than $400 million a year to fund road repairs and other infrastructure improvements.
Cannabis is now taxed at three levels in Michigan:
- The 24% wholesale tax, charged when product reaches the retailer
- A 10% excise tax, charged at the point of sale
- A 6% sales tax, also charged at the point of sale
Several lawsuits have so far failed to defeat the tax. Meanwhile, amid price compression brought on in part by oversupply, the state collected just $34 million in new tax revenue through April 30, far below the projected $105 million.
Cannabis retailers also reported a double-digit drop in sales after the tax was imposed.
Are cannabis stores in Michigan closing in response to higher taxes?
That trend has continued and, in the case of the Higher Love cannabis store chain, led to the closure of five of its nine locations in the Upper Peninsula, company president Joni Moore recently told WLUC.
Statewide, the number of licensed retailers declined from 845 in June 2025 to 836 in June 2026, the most recent data available, according to the state Cannabis Regulatory Agency.
The situation in Michigan is consistent with other mature markets that have raised taxes over the pleas of operators. In California, the country’s largest state market, sales fell to below $4 billion in 2026 after a short-lived hike in that state’s excise tax from 15% to 18%. But despite a return to 15%, sales have yet to fully recover.
DeSana had harsh words for the tax and its supporters.
“I think it was deceitful,” he told WLNS. “I think they knew the tax wasn’t going to come anywhere near the $410 million projected.”
“I just think there’s so many other ways that this marketplace works that trying to put a wholesale tax on just one section of the market was really wrong,” he added.
