Image Source: Shutterstock / Creator: Sean Pavone

Written by Azure Kwok. Published on December 17th, 2025.

As the calendar moves toward 2026, Michigan’s cannabis industry finds itself under intense pressure. A controversial 24% wholesale excise tax on cannabis is set to take effect on January 1, 2026 — but not without resistance. The Michigan Cannabis Industry Association (MiCIA), a trade group representing around 400 licensed cannabis businesses, is leading the fight to stop it.

The new tax is embedded within the Comprehensive Road Funding Tax Act, a sweeping infrastructure bill designed to generate over $400 million annually for Michigan’s roads and transportation needs. If enacted, Michigan would shift from having some of the lowest cannabis prices in the country to one of the highest-taxed markets, just behind California.

Last week, the Michigan Court of Claims denied MiCIA’s request for an injunction that would have temporarily blocked the tax before implementation. While the decision allows the tax to move forward — at least for now — the underlying lawsuit remains active, and MiCIA has announced plans to appeal the ruling on the injunction.

“As an industry, we’ve never had it easy in Michigan. We had to fight to get cannabis on the statewide ballot in 2018. We have to fight stereotypes. We have to fight political attacks. And we will fight this unconstitutional 24% wholesale tax with everything we have.”

— Rose Tantraphol, MiCIA spokesperson

Constitutionality at Stake

The lawsuit brought by MiCIA hinges on the Michigan Regulation and Taxation of Marihuana Act (MRTMA), the 2018 voter-approved ballot initiative that legalized adult-use cannabis. MRTMA clearly limits cannabis excise taxes to 10%, a provision designed to prevent consumers from returning to the illicit market.

Under Michigan’s constitution, voter-initiated laws cannot be altered without a three-quarters majority in both legislative chambers. MiCIA argues that the 24% wholesale tax did not meet that thresholds; it also violates Michigan’s Title-Object Clause, which requires bills to clearly and explicitly state the statutes they amend.

While the court denied the request for a preliminary injunction, it also declined the state’s motion to dismiss the lawsuit entirely — a significant signal that MiCIA’s challenge warrants full judicial review.

A Broader Battle

By adding another layer of taxation to wholesale transfers, cannabis prices would likely rise at the retail level, placing undue burden on medical patients, working-class consumers, and those already dealing with economic hardship.

For operators, the stakes are existential. Michigan currently boasts some of the lowest cannabis prices in the country. According to state data, the average retail price for an ounce of adult-use cannabis flower dropped from around $400 in early 2020 to just under $60 as of November 2025. While this price dip has been a win for consumers, it has placed enormous pressure on small businesses, craft growers, and caregivers.

“47,000 jobs are on the line with this decision. Margins for cannabis businesses are already very thin. There’s no room to absorb a 24% wholesale tax on top of our 10% excise tax and 6% sales tax… Layoffs will accompany closures.”

— Rose Tantraphol, MiCIA spokesperson

Across the U.S., legal cannabis markets such as California are struggling with similar challenges: overproduction, market saturation, and state-level taxation that undercuts business viability. States that over-tax cannabis often fail to meet revenue projections while simultaneously harming the very markets they set out to support. Michigan risks falling into the same trap.