A group of Republican lawmakers in Michigan introduced legislation today that would repeal the state’s 10% excise tax on recreational marijuana beginning January 1, 2026.
Filed today by State Representatives Steve Carra (R), Jaime Greene (R), James DeSana (R) and Matthew Maddock (R), House Bill 5085 was referred to the Committee on Finance. The measure would amend the Michigan Regulation and Taxation of Marihuana Act by removing the statewide excise tax imposed on adult-use sales, while leaving intact the 6% state sales tax that already applies to marijuana purchases.
If approved, the legislation would mark a significant policy shift for Michigan’s marijuana industry. Since retail sales began in December 2019, the 10% excise tax has been a key source of revenue for the state, generating $330 million in 2024 alone, with funds distributed to municipalities that allow marijuana businesses, county governments, the School Aid Fund, and the Michigan Transportation Fund.
Proponents of eliminating the levy argue that consumers would benefit directly through lower prices, while licensed marijuana businesses could gain an edge over the illicit market. Critics, however, are likely to raise concerns about the loss of state and local funding, which has become an important revenue stream for infrastructure and education.
HB 5085 also includes provisions addressing tribal cannabis operations, clarifying definitions and revenue-sharing rules. Those changes would sunset once the excise tax ends in 2026.
The bill’s introduction comes as Michigan continues to report strong marijuana sales, with more than $3 billion in combined recreational and medical transactions in 2024. Whether lawmakers will move forward with a plan that could reshape the state’s marijuana tax structure now rests with the Committee on Finance.
