Michigan’s cannabis industry could soon face a significant tax hike, as Governor Gretchen Whitmer has floated the idea of adding a 32% excise tax on adult-use marijuana. The proposal has sparked concern among dispensary owners, industry advocates, and consumers, who fear it could drive business back to the illicit market.
The Push for Higher Cannabis Taxes
The proposed tax increase aims to boost state revenue and fund various government programs, including infrastructure, public safety, and education. Supporters argue that cannabis remains a booming industry, generating over $3 billion in sales annually in Michigan. They believe a tax hike could provide much-needed resources without impacting the market too severely.
However, industry leaders warn that increasing taxes could have unintended consequences. Michigan already imposes a 10% excise tax on adult-use cannabis, plus the 6% state sales tax—bringing total taxes on recreational marijuana to 16%. Raising the tax burden by an additional 32% could make legal cannabis far less competitive with black-market products, which remain untaxed and often cheaper.
Concerns from the Industry and Consumers
Dispensary owners argue that high taxes stifle business growth and reduce their ability to compete. Many have already dealt with falling wholesale cannabis prices, oversupply issues, and increased regulatory costs. Adding another tax could make it harder for small businesses to survive, potentially leading to market consolidation favoring large, multi-state operators.
Consumers may also feel the pinch, as prices would likely rise significantly if the proposal becomes law. With illicit sellers offering tax-free products, some fear that buyers will turn away from state-licensed dispensaries in favor of cheaper, unregulated sources.
What’s Next?
The tax increase is still in its early discussion phase, but it has already ignited debate among lawmakers, business owners, and cannabis consumers. If it moves forward, expect strong opposition from the industry, which has fought hard to establish a thriving legal market.
For now, Michigan’s cannabis businesses and consumers will be watching closely—because a 32% tax hike could change the game entirely.
