With revenue from Michigan’s 24% wholesale cannabis tax falling short of state projections, lawmakers have introduced legislation to pause it for one year.
The proposal, introduced Oct. 28 by Rep. Jay DeBoyer, would halt the tax while lawmakers review its effect on Michigan’s regulated cannabis market, which generated $3.2 billion in sales in 2025.
How far behind projections is the tax?
The tax, designed to help fund road repairs across the state, generated $73.4 million in collections through June, according to a Michigan State Budget Office report.
That figure represents roughly 35% of the $210 million that would have been collected over six months at the state’s initially projected pace of $105 million per quarter. The comparison assumes revenue would be collected evenly throughout the year.
The state’s May 2026 forecast subsequently projected $315 million in wholesale tax revenue for the fiscal year ending Sept. 30.
The tax, which applies to certain sales or transfers of adult-use cannabis to retailers, is layered on top of Michigan’s 10% adult-use excise tax and 6% sales tax.
Wholesalers generally are responsible for remitting the tax, although the added expense can be passed along to retailers. Licensees made their first wholesale tax payments on April 20.
Michigan operators have faced years of price compression, and the wholesale tax has added another financial burden for businesses already operating on thin margins.
Industry groups have warned the added expense could push smaller cultivators and retailers out of the market.
The tax is placing additional financial pressure on licensed cannabis businesses, DeBoyer said. He argued that a one-year suspension would give lawmakers time to reassess its effectiveness.
However, Michigan Treasury guidance indicates quarterly returns for the first three quarters of 2026 will not be available for filing until November, complicating assessments of the tax’s performance based solely on collections.
How is the tax affecting Michigan cannabis businesses?
Henry Meyer, owner of Fortuo Premium Cannabis in Lansing, said Michigan’s 24% wholesale cannabis tax is straining his business operations, according to WILX News 10.
More than a decade ago, Meyer served more than two years in federal prison for a marijuana conviction. He now operates a licensed dispensary but said the tax leaves him feeling as though he’s still being punished.
“We’ve had to let people go. We’ve had to lower everybody’s hours,” Meyer told WILX.
The financial strain has also forced Meyer and his business partner to take on additional responsibilities, limiting their ability to focus on expansion and community outreach.
Meanwhile, transportation industry representatives have warned that suspending the tax could jeopardize funding for road repairs.
Lance Binoniemi of the Michigan Infrastructure & Transportation Association told WILX that reducing dedicated transportation revenue could delay road improvements and affect construction jobs.
What comes next?
The bill has been referred to the House Appropriations Committee. It must pass both legislative chambers and be signed into law before taking effect.
If approved, the pause would last one year, beginning on the legislation’s effective date. The 24% tax would then resume unless lawmakers take further action.
