Michigan Governor Signs Bill Establishing a 24% Wholesale Marijuana Tax, Second-Highest Rate in U.S.

Tucked into the $81 billion budget signed by Governor Gretchen Whitmer is a 24% wholesale tax on marijuana, set to take effect January 1, 2026. Combined with the state’s existing 10% excise tax and 6% sales tax, the change could push the effective tax on marijuana purchases to around 34% if businesses pass the cost on to consumers. Only Washington State, with its 37% rate, would tax marijuana higher. The marijuana tax proposal was hotly debated in Lansing, with House Speaker Matt Hall (R) saying the budget deal hinged on including it. The measure narrowly cleared the Senate on a 19-17 vote, with Representative Samantha Steckloff (D) carrying the bill in the House.

Cannabis industry leaders have voiced strong opposition, warning that such a steep tax could send buyers back to the illicit market and slow the state’s growing marijuana sector. Ryan Ratzloff, president of Lion Labs in Lansing, said the plan is likely to cost jobs and reduce, rather than increase, revenue for infrastructure projects.

Despite the pushback, the plan is now law and will substantially reshape Michigan’s marijuana market when it takes effect in 2026.