Four governors from the United States are considering significant increases in taxes on marijuana.
In Maine, Maryland, Michigan and Ohio, bipartisan governors are floating tax hikes within their state cannabis programs—a trend that raises questions about balancing revenue goals with the need to bring consumers into the legal marketplace.
There are also no small tax proposals. Below is a list of plans the governors hope the legislature will implement during the 2025 legislative session.
Maine
Maine Gov. Janet Mills, a Democrat from Maine, submitted a budget proposal late last month which would raise the marijuana sales tax by 40%. It will go up to 14% on January 1, 2026.
According to the governor’s office, the change in tax rates would result in an additional $4.2 million revenue for the fiscal year 2026 and another $11.5 million the following fiscal year.
Maryland
According to Gov. Wes Moore’s (D) budget plan, the tax rate on marijuana would increase from 9 percent to 15 percent—a 67 percent hike—starting in July 2026.
A $5 million strategic investment is also included in the budget to transform a Catonsville armory that has been vacant “into incubator space for marijuana businesses.”
Last week, Moore, in his State of the State Address, praised legislation which would allow people to expunge their marijuana-related criminal records.
Michigan
Michigan Gov. Gretchen Whitmer’s (D) goal is to implement a new wholesale cannabis tax, which would be paid not by consumers but rather licensed cannabis operators.
Her office stated that her intention is to fix a “loophole,” which exempted this industry from a similar tax. However, while the policy change is projected to bring in $470 million in new revenue—which would go toward road repairs—the governor didn’t specify what she thinks the exact tax rate should be, saying that would be up for negotiation with the legislature.
Whitmer’s office released a statement saying that the legalization of marijuana has led to a rapid growth in the cannabis industry, thanks in large part to Michigan’s low taxes for the industry, fourth in the United States. The industry that recorded billions of dollars in sales by 2024 uses Michigan roads multiple times to transport marijuana throughout the entire process. This includes to grow operations and testing laboratories, distribution hubs, retail stores, etc.
Ohio
In Ohio, Gov. Mike DeWine’s (R) proposal to double Ohio’s 10 percent cannabis tax to 20 per cent is a response to the voter-approved legalization laws.
This hike is even more drastic than the bill passed by the State Senate late in 2023. This legislation was tentatively supported by the Governor and called for an additional 15 percent cannabis tax.
Last month, Ohio Republican lawmakers separately revived an effort to significantly alter the state’s voter-approved marijuana legalization law—in part by raising the tax on cannabis products to 15 percent, halving the number of plants adults could grow and eliminating certain social equity provisions.
Notably, DeWine—who opposes legalization but pledged to implement the will of voters that approved the reform—is proposing a tax rate on cannabis that matches what pro-legalization Pennsylvania Gov. Josh Shapiro, a Democrat, called for this in his most recent budget request. The plan was deemed unworkable by lawmakers.
California’s cannabis market is also anxious about a tax hike expected to go into effect in the summer of this year, which will increase the marijuana tax by 25%.
Marijuana’s tax policy was also of interest to the marijuana industry on the federal level. This is especially true in the context of the ongoing marijuana redistribution process.
The Biden Administration has proposed that cannabis be moved to Schedule III under the Controlled Substances Act. This would enable state-licensed pot businesses to claim federal tax deductions, which they were previously barred under IRS code 280E.
Last week, however, two GOP Senators presented a bill which would prevent marijuana companies from being able to take these deductions even if cannabis was re-scheduled.
Trump Administration Releases American Medical Marijuana patient who was serving 14-year sentence in Russia