A bipartisan group of state senators is trying to repeal Michigan’s controversial 24% wholesale marijuana tax, arguing the new levy is already hurting an industry that was once one of the state’s fastest-growing job creators.
State Sen. Jonathan Lindsey, R-Coldwater, introduced Senate Bill 810 to eliminate the wholesale tax approved late last year as part of a road-funding package backed by Gov. Gretchen Whitmer and legislators.
Lindsey said the tax will “damage Michigan businesses and lead to widespread job losses across the state, which are already being reported.”
“This is about reining in the government’s constant attempt to get just a little bit more out of people,” Lindsey said in a statement. “Lansing must realize that growing government by taxing businesses into oblivion has never been, and will never be, a way to encourage a healthy Michigan economy.”
The legislation has bipartisan backing. In addition to Lindsey, the bill is sponsored by Democratic state Sens. Jeff Irwin, Jeremy Moss, and Sylvia Santana and Republicans John Bumstead, Roger Hauck, Joe Bellino, and Jim Runestad.
The wholesale tax took effect Jan. 1 and is imposed when cannabis is first transferred from a licensed grower to a dispensary. While wholesalers are responsible for paying the tax, the cost can be built into prices charged to retailers and ultimately passed on to consumers.
In January, the first full month under the new tax, recreational cannabis sales fell to $226.4 million, an 8.2% decline from a year earlier and the lowest monthly total since February 2023, according to data from the state’s Cannabis Regulatory Agency. It was an early warning sign for an industry that has already seen more than 900 licenses go belly up and thousands of jobs disappear.
Even before the wholesale tax went into effect, the cannabis industry was struggling because of plummeting prices and oversupply.
The Michigan Cannabis Industry Association has sued the state in the Court of Claims, arguing the wholesale tax is unconstitutional because it effectively amends a voter-approved law without the three-fourths supermajority required by the Michigan Constitution.
When voters legalized recreational marijuana in 2018, they set the tax at 10% to keep the legal market competitive with the illicit one.
Whitmer and legislative leaders have defended the tax as a necessary revenue source projected to generate roughly $420 million annually for road repairs and other priorities. But the estimate is based on a stable market, not one that is already shrinking.
“I don’t believe that in the long term this mechanism will generate the expected revenue, especially if sales go down as a result of the increased taxes or if legal challenges against the tax prevail,” Lindsey said.
Senate Bill 810 has been referred to the Senate Committee on Government Operations.