Early returns on Michigan’s new 24% wholesale cannabis tax are almost entirely negative, from both inside and out the industry.
So far in 2026, the levy has crashed legal sales, drawn multiple lawsuits and, most recently, became a flashpoint in statewide politics.
Marijuana operators in the state on Friday filed a new lawsuit claiming the levy is unconstitutional.
Meanwhile, a county sheriff mounting a longshot campaign for governor has pledged to eliminate the tax if elected, according to the Michigan Advance.
Michigan sheriff, running for governor, pledges to fight cannabis tax
On Friday, Genesee County Sheriff Chris Swanson, a candidate in the Democratic gubernatorial primary, called the new tax “not fair and equitable” and promised to work to repeal it, according to The Advance.
“We cannot balance state budgets on the backs of one industry,” Swanson said in a press release, according to The Advance.
“Excessive taxation drives consumers back to the illicit market and shrinks the legal one.”
Recent polling shows Swanson is currently running a distant third behind frontrunner Jocelyn Benson, the secretary of state, ahead of the August primary.
Championed by Gov. Gretchen Whitmer, the tax narrowly passed the state legislature in October and went into effect on Jan. 1 despite legal challenges and critiques from cannabis operators that legal sales would plummet.
Cannabis sales in Michigan, still the nation’s second-largest state market, have fallen by double digits through the first two months of 2026, according to data.
Michigan cannabis operators file second lawsuit against new tax
Meanwhile, cannabis operators filed another lawsuit against the tax on Friday, alleging the tax is unconstitutional, as The Detroit News reported.
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
The end result is “a tax levied on a tax, which results in an unconstitutional over-taxation of Michiganders,” according to Michigan Cannabis Industry Association spokesperson Rose Tantraphol
“This type of tax pyramiding imposes an unlawful burden on consumers, and this lawsuit seeks to end that practice,” Tantraphol said in a statement.
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What Michigan cannabis operators need to know about the new tax
By law, the cannabis tax is meant to fund roads and bridges.
State officials earlier this month released new information for cannabis businesses, including how vertically integrated operators should calculate the wholesale tax when transferring product from cultivation or manufacturing to retail.
Those businesses should calculate what they owe based on an “average wholesale” price list that’s updated every quarter, according to the state Department of Treasury.
Officials also offered some leniency.
Cannabis businesses need only make “good faith” payments for the first three quarters of 2026, the Treasury said.
That’s defined as “at least 75 percent of what it ultimately owes,” but full payments will be required starting next year.
The first quarterly payment is due April 20, according to a recent Treasury press release.
