By Elena Durnbaugh
Gongwer News Service
The controversial linchpin of the 2025-26 fiscal year budget was legislation to increase the wholesale tax on marijuana to increase revenue for roads.
As part of the budget and road funding plan passed by the Legislature on Oct. 3, the Legislature passed a 24% wholesale tax on cannabis, which is projected to collect $420 million.
Industry members are suing over the proposal, arguing the Legislature needed to pass the tax with a three-fourths majority in both legislative houses because marijuana was legalized via initiated act (the Michigan Regulation and Taxation of Marihuana Act). Some are also expecting the 24% wholesale tax to be higher in practice.
Part of the surprise of the tax was that many Republicans, especially in the House, were on board with the legislation. HB 4951 passed 78-21, with most of the House Republican caucus supporting the bill.
That’s even with many of them signing a pledge against increasing taxes with the organization Americans for Tax Reform. The organization is not expected to score the marijuana tax policy.
“The wholesale value is much lower than the sales value,” House Speaker Matt Hall, R-Richland, said. “It’s a much smaller percentage of the total price. That’s how they tax a lot of tobacco products… so there will be an increase in the end user price, but it isn’t going to be a 24% increase in the price.”
Hall faulted Democrats for the need for a tax increase.
“The Democrats are the ones that wanted the revenue,” he said. “I didn’t want revenue. I wanted zero revenue. I compromised with that dollar for dollar. I said if you cut $1 of waste, fraud and abuse, I’ll give $1 of revenue.”
Hall went on to say that a tax increase on marijuana was the easiest for Republicans to deliver.
Not all House Republicans were onboard with the tax, though.
Rep. Steve Carra, R-Three Rivers, and Rep. Brad Paquette, R-Niles, voted against HB 4951 .
“I believe we should be going in the other direction and get rid of that 10% excise tax,” Carra said. “I just don’t believe it’s the government’s role, if there’s not a victim and there’s not cruelty, to tell us what is and what is not a good lifestyle.”
The 24% wholesale tax, combined with the 10% excise tax and 6% sales tax on marijuana is more than what many industries pay, Carra said.
He went on to say that he thought the state should have a low-level tax rate across the board.
Many Republicans, including Carra and Paquette, signed the pledge not to increase taxes, but Carra said his understanding was this policy wasn’t going to be scored by the organization.
“I would have voted no on that bill had they said they were going to score it the right way or not,” he said. “I don’t think we should be putting that heavy of a burden on one specific industry.”
Paquette said although he wasn’t particularly supportive of marijuana, he made a commitment to the businesses in his community that he would not support any legislation that harmed the industry. Berrien County, most of which Paquette represents, has become one of the biggest retail centers for marijuana in the United States.
He went on to say that any tax issued on the wholesale tax is likely to get passed along to consumers.
“It’s going to raise prices,” he said. “I went back to district, and people are very concerned at what it will do… I hope it’s not as bad as some of our forecasting.”
Both the House and Senate are looking at changing the way marijuana in Michigan is regulated by cracking down on black market activity, which could serve as a bone for the industry after the tax increase.
“I wanted to do it anyway,” said Rep. Joe Aragona, R-Clinton Township, who chairs the House Regulatory Reform Committee .
Aragona’s committee is set to consider legislation on Thursday that would increase fines for people growing and selling marijuana illegally.
“We’re going to start graduating this penalty to say, all right, we’re going to start with fines. Misdemeanors. And if you’re growing 10,000 plants, that’s going to be felonious, and we’re going to slap you with millions of dollars in fines,” Aragona said.
The licensed industry needs teeth, Aragona said.
“Good actors and the regulators are both saying this is something we need to start looking at,” he said.
The average price per ounce of a flower in Michigan is far below the price in surrounding states, Aragona said.
“We can have a conversation about what the industry looks like in Michigan and the different economic factors and forces, but I think the one thing everybody’s agreeing on is we’ve got to cut down on black market stuff,” he said.
Aragona said that although the House and the Senate weren’t specifically working in concert on providing the industry with better regulatory laws, everyone was working to get ideas on the table.
“Sam Singh…he’s doing a lot of good work. He and I are working together,” he said. “I know the Senate had a hearing, and they’re just trying to really flush out a lot of ideas, and in committee they were getting everything out there, and all that helps.”
Gongwer News Service
The controversial linchpin of the 2025-26 fiscal year budget was legislation to increase the wholesale tax on marijuana to increase revenue for roads.
As part of the budget and road funding plan passed by the Legislature on Oct. 3, the Legislature passed a 24% wholesale tax on cannabis, which is projected to collect $420 million.
Industry members are suing over the proposal, arguing the Legislature needed to pass the tax with a three-fourths majority in both legislative houses because marijuana was legalized via initiated act (the Michigan Regulation and Taxation of Marihuana Act). Some are also expecting the 24% wholesale tax to be higher in practice.
Part of the surprise of the tax was that many Republicans, especially in the House, were on board with the legislation. HB 4951 passed 78-21, with most of the House Republican caucus supporting the bill.
That’s even with many of them signing a pledge against increasing taxes with the organization Americans for Tax Reform. The organization is not expected to score the marijuana tax policy.
“The wholesale value is much lower than the sales value,” House Speaker Matt Hall, R-Richland, said. “It’s a much smaller percentage of the total price. That’s how they tax a lot of tobacco products… so there will be an increase in the end user price, but it isn’t going to be a 24% increase in the price.”
Hall faulted Democrats for the need for a tax increase.
“The Democrats are the ones that wanted the revenue,” he said. “I didn’t want revenue. I wanted zero revenue. I compromised with that dollar for dollar. I said if you cut $1 of waste, fraud and abuse, I’ll give $1 of revenue.”
Hall went on to say that a tax increase on marijuana was the easiest for Republicans to deliver.
Not all House Republicans were onboard with the tax, though.
Rep. Steve Carra, R-Three Rivers, and Rep. Brad Paquette, R-Niles, voted against HB 4951 .
“I believe we should be going in the other direction and get rid of that 10% excise tax,” Carra said. “I just don’t believe it’s the government’s role, if there’s not a victim and there’s not cruelty, to tell us what is and what is not a good lifestyle.”
The 24% wholesale tax, combined with the 10% excise tax and 6% sales tax on marijuana is more than what many industries pay, Carra said.
He went on to say that he thought the state should have a low-level tax rate across the board.
Many Republicans, including Carra and Paquette, signed the pledge not to increase taxes, but Carra said his understanding was this policy wasn’t going to be scored by the organization.
“I would have voted no on that bill had they said they were going to score it the right way or not,” he said. “I don’t think we should be putting that heavy of a burden on one specific industry.”
Paquette said although he wasn’t particularly supportive of marijuana, he made a commitment to the businesses in his community that he would not support any legislation that harmed the industry. Berrien County, most of which Paquette represents, has become one of the biggest retail centers for marijuana in the United States.
He went on to say that any tax issued on the wholesale tax is likely to get passed along to consumers.
“It’s going to raise prices,” he said. “I went back to district, and people are very concerned at what it will do… I hope it’s not as bad as some of our forecasting.”
Both the House and Senate are looking at changing the way marijuana in Michigan is regulated by cracking down on black market activity, which could serve as a bone for the industry after the tax increase.
“I wanted to do it anyway,” said Rep. Joe Aragona, R-Clinton Township, who chairs the House Regulatory Reform Committee .
Aragona’s committee is set to consider legislation on Thursday that would increase fines for people growing and selling marijuana illegally.
“We’re going to start graduating this penalty to say, all right, we’re going to start with fines. Misdemeanors. And if you’re growing 10,000 plants, that’s going to be felonious, and we’re going to slap you with millions of dollars in fines,” Aragona said.
The licensed industry needs teeth, Aragona said.
“Good actors and the regulators are both saying this is something we need to start looking at,” he said.
The average price per ounce of a flower in Michigan is far below the price in surrounding states, Aragona said.
“We can have a conversation about what the industry looks like in Michigan and the different economic factors and forces, but I think the one thing everybody’s agreeing on is we’ve got to cut down on black market stuff,” he said.
Aragona said that although the House and the Senate weren’t specifically working in concert on providing the industry with better regulatory laws, everyone was working to get ideas on the table.
“Sam Singh…he’s doing a lot of good work. He and I are working together,” he said. “I know the Senate had a hearing, and they’re just trying to really flush out a lot of ideas, and in committee they were getting everything out there, and all that helps.”
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