Michigan Lawmakers Embrace Marijuana Tax Hike Plan Proposed By Governor

Michigan Senate Democrats are reportedly moving toward implementing a major
tax hike on marijuana that was previously proposed by Gov. Gretchen Whitmer
(D).

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.

The governor said in February that the proposal would “close a loophole
that exempted the marijuana industry from wholesale tax, which is applied
to similar smoking products, like cigarettes, and other tobacco items.”
Aligning those tax policies, her office said, could help the state fund
plans to “fix the damn roads for generations to come.”

“After voters legalized marijuana, the industry has grown exponentially
thanks in part to Michigan’s industry-friendly taxes, the fourth lowest in
the nation,” the governor said at the time. “The industry, which recorded
billions in sales in 2024, uses Michigan roads to transport marijuana
multiple times throughout the process, including to grow operations,
testing labs, distribution hubs, and finally retail stores. This will add
an additional $470 million to help fix roads across the state.”

It would also effectively double the total tax rate on cannabis in
Michigan, which advocates say would unfairly burden businesses and
consumers.

“Michigan’s cannabis consumers already pay more than their fair share of
taxes. 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 Marijuana Moment.

“Michigan’s excise taxes are about 10 times as high on cannabis as they are
on alcohol,” she said. “Gov. Whitmer’s proposal would roughly double the
tax burden on consumers, many of whom are medical patients who are
struggling to make ends meet.”

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.

Senate Appropriations Committee Chair Sarah Anthony (D) said that “whether
it’s looking at industries that disproportionately impact the quality of
roads, or other creative ways for us to make sure there’s shared sacrifice,
I think ultimately, when we get to the point that we’re building a
sustainable roads plan, it’s going to take a lot of creativity, both
revenue as well as reductions in some of our state services.”

Asked specifically about the proposed marijuana tax increase, Anthony said,
“I think you can look at some of the ones that the governor put forward
early on, so we have some knowledge there.”

Other states have similarly contemplated tax hikes for marijuana as their
markets have matured. And such plans been met with similar blowback from
the industry.

In California, for example, lawmakers last week sent a bill to the
governor’s desk that would put a pause on a recently enacted tax hike on
marijuana products.

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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Back in Michigan, officials announced in February that they’re disbursing
nearly $100 million in marijuana tax revenue to over 300 cities and tribes
across the state thanks to the state’s adult-use legalization law. That’s
part of the overall $331 million in tax dollars Michigan is distributing
across various 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.

Also, lawmakers recently introduced legislation that would exempt adults
with PTSD from state laws against the possession, cultivation and use of
psilocybin and psilocin, the two primary active components of psychedelic
mushrooms.

The post Michigan Lawmakers Embrace Marijuana Tax Hike Plan Proposed By
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