Monthly cannabis sales in Michigan fell to their lowest level in more than two years in February as a new 24% wholesale tax continues to punish the struggling industry.
After a slow start to 2026, preliminary data from cannabis analytics firm Headset projects that statewide cannabis revenue sank to $206.18 million in February, a 14.8% drop from February 2025 and the lowest monthly sales total since November 2022, according to MITechNews.com.
The sales drop follows a record year.
Michigan cannabis retailers sold more products in 2025 than in any year since the launch of adult-use sales.
But declining prices meant overall sales revenue in the country’s second-biggest market dropped by about $113 million to $3.17 billion.
Cannabis sales dropped 16% from December to January after the wholesale tax took effect Jan. 1.
And if the current sales trajectory continues, Michigan’s cannabis market could fall below $2.6 billion this year, MITechNews reported.
“The legislature hurt us bad with the tax,” Nick Hannawa, co-owner of retail operator Puff Cannabis, told Crain’s Detroit Business.
“A lot of vendors of ours are feeling the pain, and there’s also a lot of confusion surrounding the tax.”
How an infrastructure tax squeezed Michigan’s $3 billion cannabis industry
Headset data shows the slowdown impacted every major product category in Michigan cannabis:
- Flower sales fell 17.5% year-over-year.
- Concentrates plummeted by 20.5%.
- Vape cartridges declined by 16.2%.
- Edibles were down 14.3%.
Industry executives point directly to the new wholesale tax as the primary reason for declining sales.
Imposed on transactions between processors and retailers, the tax is on top of Michigan’s 10% excise tax and 6% sales tax.
Tax faces scrutiny in court and statehouse
The Michigan Cannabis Industry Association filed a lawsuit arguing that lawmakers exceeded their authority and violated the state’s voter-approved legalization framework by creating the tax.
Bipartisan legislation is moving through the state Legislature to repeal the tax.
But in the meantime, the tax is wreaking havoc.
“This is just the beginning of the mess the governor created with the wholesale tax, and it’s going to get much worse,” Dave Morrow, president and CEO of retailer Lume Cannabis Co., told Crain’s.
