Michigan Senate Democrats, according to media reports are moving forward with a tax hike that Gov. Snyder had proposed. Gretchen Whitmer.
While no legislation to effectuate the policy change has been filed yet, the plan is to impose a 32 percent wholesale excise tax on cannabis—which would be in addition to the existing 16 percent in taxes that are placed on marijuana at the retail level.
According to the Governor, in February, this plan would “close the loophole” that excluded the marijuana industry’s wholesale tax from being applied, as it is for similar tobacco products like cigarettes and other tobacco goods. According to her office, aligning tax policies would help fund state plans “to fix the damn roads” for future generations.
The governor stated that the marijuana industry grew exponentially after voters approved its legalization. This was in part due to Michigan’s tax-friendly environment, which is the lowest in the country. The marijuana industry will use Michigan roads for multiple transports throughout its process. It includes transportation to the grow operation, to testing laboratories, to distribution hubs, to retail shops, etc. The additional $470 millions will be used to fix the roads in Michigan.
The tax on marijuana in Michigan would be effectively doubled, according to advocates. This would burden consumers and businesses unfairly.
Michigan cannabis consumers pay far more in taxes than is fair. They should not be singled out to bear the costs of ‘fixing the damn roads,'” Karen O’Keefe, director of state policies for the Marijuana Policy Project (MPP), told MEDCAN24.
“The Michigan excise taxes on marijuana are 10 times more than the alcohol tax,” she stated. “Gov. Whitmer’s proposal will roughly double the burden of tax on consumers. Many are medical patients struggling to survive.
Despite pushback from advocates and industry stakeholders, however, Michigan Information & Research Service Inc. reported last week that Senate Democrats are getting on board with the governor’s plan.
Sarah Anthony, Chair of the Senate Appropriations Committee (D), said, “Whether it is looking at industries which have a disproportionate impact on the quality of the roads or finding other creative ways to ensure there are shared sacrifices, I believe that ultimately, once we reach the point where we’re creating a sustainable road plan, it will take a great deal of creativity. Both revenue and reductions of some of our State services.”
Anthony responded, when asked specifically about the proposal to increase the tax on marijuana, that “you can look back at some of those early proposals from the governor, we know what they are.”
As their marijuana markets mature, other states are also considering tax increases on marijuana. These plans are also being met with similar opposition from the cannabis industry.
California legislators, for example sent to the Governor’s Desk a last-week bill which would put on hold a tax hike recently implemented on marijuana.
In Maine, Maryland and Ohio, bipartisan governors have also floated tax hikes within their state cannabis programs this year—a trend that raises questions about balancing revenue goals with the need to bring consumers into the legal marketplace.
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Michigan officials, who announced the distribution of nearly $100 million dollars in marijuana taxes to 300 towns and tribes in Michigan in February thanks to Michigan’s legalization for adult use law. This is part of $331 million that Michigan distributes across different initiatives.
The tax revenue supporting these disbursements is the result of a record year for marijuana sales in Michigan, with over $10 billion in adult-use cannabis products sold in 2024.
State officials said in late 2023 that tax revenue from legal marijuana grew by 49 percent compared to 2022, surpassing the amount of revenue made from alcohol sales. Marijuana sales incur a 10 percent excise tax—among the lowest rates in the nation—as well as a 6 percent state sales tax.
Recently, legislators introduced legislation which would allow adults with PTSD to be exempted from laws prohibiting the cultivation, use and possession of psilocybin, psilocin and other psychedelic substances.
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