House Speaker Warns of Shutdown Without 24% Marijuana Tax Deal

Key Points

• Michigan lawmakers are advancing a 24% wholesale cannabis tax beginning in 2026, projected to raise about $420 million annually for roads and bridges.
• The measure passed the House 78 - 21, but fell short of the three-quarters supermajority required to amend the 2018 voter-approved cannabis law.
• Cannabis businesses and workers rallied in Lansing against the plan, warning it could push consumers to the illicit market, raise prices, and threaten 47,000 industry jobs.
• In the Senate, Sen. Jeff Irwin opposes the 24% rate, while Sen. Stephanie Chang floated a 20% alternative tied to tobacco and e-cigarette taxes.
• House Speaker Matt Hall warned of a government shutdown if the Senate does not pass the plan before the October 8 budget deadline.
• The Michigan Cannabis Industry Association is weighing a lawsuit, which could determine whether lawmakers can alter cannabis policy without a supermajority.

Michigan’s Cannabis Market Faces Uncertain Future as Lawmakers Weigh New 24% Wholesale Tax

2 October 2025

Michigan lawmakers are at odds over a proposal to impose a 24 percent wholesale tax on marijuana beginning in January 2026, a measure tied to the state’s roads-and-budget agreement that could raise an estimated $420 million annually for infrastructure. While supporters say the levy would bring Michigan in line with peer states and create a dependable source of revenue, the cannabis industry and several legislators warn it could upend one of the country’s fastest-growing legal cannabis markets.

The Michigan House approved the measure 78–21, tucked into House Bill 4951, but the vote fell short of the three-quarters threshold that is constitutionally required to amend the state’s 2018 voter-initiated cannabis law. That initiative legalized adult-use marijuana and established the current 10 percent excise tax at retail, in addition to the 6 percent sales tax. Crucially, it did not include a wholesale tax - something industry advocates now call a deliberate omission.

The bill next moves to the Senate, where the path forward is uncertain. Democrats hold 19 seats, exactly the number needed to advance the measure, but not all are on board. Senator Jeff Irwin (from Ann Arbor) has signaled opposition, calling the 24 percent rate “terrible” and warning it would drive consumers toward untaxed, illicit channels and weaken Michigan’s appeal as a low-cost market that has attracted buyers from neighboring states.

A Debate with High Stakes

At stake are not just potholes and bridge repairs, but also the 47,000 jobs tied directly and indirectly to cannabis in Michigan and the hundreds of millions in tax revenues that cities say help fund emergency services, schools, and community amenities.

For cannabis businesses, the tax represents a double bind. Retailers and producers already operate with thin margins amid falling wholesale prices. Adding a 24 percent levy on transfers between producers and retailers could raise consumer prices, squeeze payrolls, and nudge more customers to the unregulated market.

Workers and business leaders gathered at the Capitol in Lansing on September 30 to protest the plan, chanting against the “job-killing” tax. The Michigan Cannabis Industry Association may sue if the tax is enacted without a supermajority vote, citing potential constitutional conflicts with the 2018 initiative.

Pressure from the House

Despite industry pushback, House leaders insist the tax is central to Michigan’s road-funding deal. Speaker Matt Hall (R - Marshall) said there will be no more stopgap budgets beyond October 8, raising the stakes for the Senate. “This is the revenue source Senate leadership offered, and now they have to deliver,” Hall said.

Governor Gretchen Whitmer had earlier floated a higher 32 percent wholesale rate, closer to the tax Michigan applies to tobacco. The current 24 percent proposal represents a compromise, though some Senate Democrats are seeking a further reduction. Senator Stephanie Chang (D - Detroit) proposed an amendment lowering the levy to 20 percent while tying it to new tobacco and e-cigarette taxes under Senate Bill 582. Hall, however, said the House would strip out any such changes.

Legal and Economic Crosscurrents

If enacted, the levy would place Michigan among the higher-tax cannabis states, though not the highest. Critics argue that the House Fiscal Agency’s $420 million revenue projection is overly optimistic if legal sales decline as a result of higher prices. Supporters counter that the industry can absorb the change and that reliable road funding is essential for all Michigan residents, not just cannabis consumers.

• For medical cannabis patients, higher wholesale costs could mean higher prices at dispensaries already facing product shortages in certain categories.
• For recreational users, the tax may nudge some toward illicit or cross-border markets.
• For business owners, the wholesale tax could trigger restructuring, staff cuts, or even closures, particularly among smaller operators unable to absorb the costs.

What Comes Next

With just days until the stopgap budget expires, the showdown has become a test of whether Michigan can balance infrastructure needs with preserving a stable legal cannabis market. The Senate must decide whether to:

• approve the House version at 24 percent,
• pursue a lower rate such as 20 percent, or
• risk a standoff that could lead to a government shutdown.

Even if passed, litigation looms. Courts would then decide whether lawmakers can alter the 2018 cannabis framework with a simple majority, or if a supermajority is required. That ruling could reshape not just the fate of this tax, but also the extent to which Michigan’s cannabis market is shielded from legislative overhauls in the future.