Michigan Governor Gretchen Whitmer is proposed to more than triple the state’s excise tax on recreational marijuana sales.
In order to fund $3 billion in needed road repairs, the governor is proposing a series of tax increases. One of those increases would impact recreational marijuana sales, with the governor wanting to increase the excise tax on such sales from the current rate of 10%, to 32%. This would give marijuana products the same tax rate as tobacco products.
If implemented, Michigan would have the second highest marijuana tax rate in the nation, with only Washington’s 37% being higher.
In 2024, licensed marijuana stores in Michigan sold $3 billion worth of product, resulting in around $300 million in taxes, according to the state’s Cannabis Regulatory Agency. Under Whitmer’s proposed tax rate of 32%, these same sales would have resulted in nearly $1 billion in taxes, assuming that these sales don’t decrease due to consumers switching to the black market rather than paying the increased tax.
Michigan voters approved marijuana legalization in 2018, with the first licensed retail outlets opening the following year. Adults aged 21 and older may legally possess up to 2.5 ounces of marijuana and 15 grams of marijuana concentrate. Recreational marijuana is subject to a 10% excise tax, in addition to the state’s 6% sales tax.
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