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  • Michigan’s cannabis market shrinks as new tax threatens more closures, layoffs – Detroit Metro Times

    Michigan’s cannabis industry is facing a sobering reckoning in 2026 that could have lasting ramifications for legal weed. 

    Since recreational cannabis sales began in December 2019, prices have plummeted, more than 550 dispensaries and cultivators have closed, and thousands of employees have been laid off.  

    And for the first time, the recreational market saw a decline in annual sales, according to new figures released by the Michigan Cannabis Regulatory Agency (CRA). Adult-use dispensaries rang up $3.17 billion in sales in 2025, down from $3.27 billion in 2024, a decline of about $100 million, or 3.1%. 

    Prior to 2025, year-over-year growth helped turn Michigan into one of the nation’s largest legal cannabis markets. But beneath that growth was an industry struggling with declining prices from an oversaturated supply. 

    The dream of a green rush, it turns out, has given way to a cutthroat market where most businesses are fighting to survive. 

    During the six years of recreational sales, the industry has generated a remarkable $13.23 billion in purchases and $2.2 billion in state and excise taxes that go to local governments, schools, and roads. 

    But those figures are expected to continue falling this year.

    Despite the mounting problems facing the industry, Gov. Gretchen Whitmer and state lawmakers approved a measure late last year to impose a 24% wholesale tax on cannabis in 2026. Desperate to deliver on her aging pledge to “fix the damn roads,” Whitmer teamed up with the state House to sneak in the tax proposal before the industry and consumers could respond. 

    Whitmer signed the bill in October, nearly two weeks after the Michigan Department of Treasury estimated the new tax will shrink the wholesale market by 14%, according to records obtained by Metro Times. In other words, the state anticipates that its wholesale tax will chase away customers and cause a significant decline in excise and sales tax revenue. 

    Meanwhile, legislators have not touched the 4% liquor tax since it was set in 1985. That may be because the liquor industry has one of the most powerful lobbies and has donated heavily to Whitmer and other lawmakers.

    “They took advantage of a fledgling industry that isn’t organized, and they did it without any public discussion and punched it through,” Stuart Carter, who owns Detroit dispensary Utopia Gardens and a cultivation facility, tells Metro Times. “Now everyone is scrambling to figure out what to do.”

    Carter and other business owners say the new tax will deepen the downturn, forcing more dispensaries, processors, and cultivators to close and giving an upper hand to the larger corporate retailers and grow operations that provide mediocre product. 

    “The multi-chain operators are in the best position to weather this because they are buying in bulk and they can diffuse losses at some of their stores,” Carter says. “It’s the smaller entrepreneurs who are going to be the most affected.”

    Tom Farrell, owner of the Refinery dispensaries in New Buffalo and Kalamazoo and Growing Pains, a cultivator, says the tax is already taking a toll on the industry. He says sales at his New Buffalo dispensary “have been very, very slow,” in part because many consumers mistakenly believe they are responsible for paying the 24% wholesale tax beginning on Jan. 1. 

    “It’s slower than it has ever been,” Farrell says, adding that the same store saw record sales in December. 

    Dispensaries stocked up on a lot of weed in December to avoid the tax’s impact. While growers and processors are legally responsible for paying the tax, their options for recouping at least a portion of the extra costs are limited to raising prices or negotiating with dispensaries to absorb some of the increase. In an industry already hanging on by razor-thin margins, those costs are likely to raise prices for consumers, many of whom are already squeezed by inflation and other rising prices.  

    “There isn’t that much action in early 2026,” Brian Farah, CEO of Hello Farms in Au Gres Township, says. “Everyone bought up in anticipation of the tax.”

    Farah isn’t optimistic about this year, saying “2026 is set to be even worse than 2025.” 

    “We always look out for the Michigan consumer by offering a quality product, but it’s becoming more and more challenging because sales numbers are starting to decline,” Farah says.  

    Even before the wholesale tax, the industry has been struggling. Prices are a major factor. The average retail price for an ounce of recreational flower fell to $58.20 in December 2025, down from $69.20 a year earlier, and $95.08 in December 2023, according to CRA data. The state has become one of the cheapest legal cannabis markets in the country, which is a win for consumers, but it’s a tough reality for businesses trying to stay afloat.

    By the end of 2025, Michigan had 2,171 active cannabis licenses, down 85 from the prior year, marking the first year-over-year decline in active licenses since adult-use began. The CRA’s licensing records show 940 licenses are no longer active. 

    Pleasantrees has a cannabis grow operation in Mount Clemens. Credit: Steve Neavling

    Growers are feeling the pressure the most. Michigan currently has 430 active grow operations, but 191 have closed since the industry began. That means about 30.8% of growers have gone out of business over the past six years. 

    In Detroit, at least 14 cannabis businesses have closed since the city began issuing licenses in late 2022.

    Even with the closures, the market is still crowded. New growers and processors continue to enter the industry nearly as fast as those leaving it. Cannabis operators say oversupply is going to continue to eat away at the industry this year. 

    “There is way too much supply. There’s too much product,” Farrell says. 

    As an example of how bad it has gotten, Farrell points to one brand that is making just a 25-cent profit off of a vape cartridge. 

    Whitmer’s office won’t responds to Metro Times’s questions about the cannabis industry or how the wholesale tax is impacting the market. Instead, they referred us to the CRA, which had nothing to do with the tax and isn’t implementing it.

    CRA spokesman David Harns says changes in a new industry are normal and are similar to the challenges facing other cannabis markets.

    “Since legalization, Michigan’s cannabis industry has experienced significant growth, making the state one of the top producers in the country,” Harns says. “As the market continues to mature, fluctuations in supply and demand are expected and consistent with patterns seen in other states that legalized earlier.”

    After voting in favor of the wholesale tax, the state Senate introduced a set of bills on Oct. 2 that would limit competition in hopes of reducing the oversupply. 

    Senate Bill 597, introduced by Sens. Sam Singh, D-East Lansing, and Jeremy Moss, D-Southfield, would limit each municipality to one dispensary for every 10,000 residents. If approved, the legislation would prevent the CRA from approving new dispensary licenses in municipalities that already exceed the limit. Municipalities with fewer than 10,000 residents would be limited to one retail license. 

    While many in the industry support the legislation, it threatens smaller cities like Hazel Park (pop. 19,431), Ferndale (pop. 19,431), and Inkster (pop. 25,108), which have become cannabis hubs and rely on the tax revenue. Hazel Park has nine dispensaries, Ferndale has six, and Inkster has seven, according to CRA records. The new legislation would limit Hazel Park and Ferndale to one dispensary each and Inkster to two. 

    The legislation wouldn’t force existing dispensaries to close, but once one shuts down, it can’t be replaced until the number of retailers fall below the proposed cap.

    For cannabis workers, this is a nerve-racking year. Michigan’s regulated cannabis industry remains a major employer, with 41,248 workers counted in December 2025. Those jobs include dispensary employees, cultivation and processing staff, delivery drivers, compliance specialists, security teams, and others. 

    “People are really scared,” Farrell says. “I have employees asking me if they are going to still have a job.”

    Municipal budgets are also at risk. Michigan shares adult-use cannabis excise tax revenue with communities that allow dispensaries and other cannabis marijuana businesses to operate, and the payments have become an important revenue stream in those cash-strapped cities and townships. In fiscal year 2024, Michigan distributed nearly $100 million to communities, with each eligible municipality, county, and tribe receiving more than $58,200 per licensed retail store and microbusiness within its borders. 

    If more retailers shut down and sales weaken, local distributions will shrink.

    “The state is going to lose excise and sales taxes because of the wholesale tax,” Stewart says. 

    As frustration grows over the legal industry, business owners are worried more consumers will go back to an illicit market that doesn’t face steep tax rates. If that happens, operators say, the legal market will continue to shrink, and the state will have less revenue in the future. 

    For now, dispensaries, growers, processors, and other cannabis businesses will have to find a way to adapt, and it won’t be easy. 

    “We want to have a sustainable Michigan business that gives back to the customers,” Farah says. “But with these changes, it will be difficult to navigate these waters.”


    Steve Neavling

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  • Whitmer’s 24% cannabis tax plan alarms struggling industry – Detroit Metro Times

    Michigan’s cannabis industry is already struggling from plunging prices, layoffs, and shuttered dispensaries and cultivators. 

    Now Gov. Gretchen Whitmer is pushing a whopping 24% wholesale tax on marijuana products that business owners warn will accelerate closures and drive customers to the illicit market. 

    With little to no warning to the cannabis industry or its consumers, the state House on Thursday voted 78-21 to approve the tax, which is projected to raise $420 million a year. But industry leaders say that estimate ignores the inevitable loss in revenue from losing customers, dispensaries, and cultivators. 

    The tax hike was a bipartisan effort, with 10 Republicans and 11 Democrats voting against it. 

    As early as Tuesday, the state Senate will take up the bill, and some cannabis business leaders are in Lansing on Monday to urge senators to vote against the tax. They are also planning to protest outside the state Capitol on Tuesday.

    “This is going to be a nail in the coffin, especially for mom and pops,” says Tom Farrell, owner of the Refinery dispensaries in New Buffalo and Kalamazoo and Growing Pains, a cultivator. “The industry is in turmoil right now.”

    At his Refinery location in Kalamazoo, sales are down 70% over the past 18 months, he says.  

    “It has been horrendous,” Farrell tells Metro Times. “We had to lay off employees.” 

    Michigan’s recreational market is already taxed more than any industry in the state. Cannabis consumers pay a 10% excise tax and a 6% sales tax.  

    If approved, the tax increase will drive people to the illicit market, further harming the legal market and exposing consumers to untested, unregulated marijuana, cannabis businesses say.

    “It’s going to make the illicit market more affordable by a wide margin, and the tax revenue will escape the state completely,” Jesse Rose, founder of Exotic Matter, a flower and rosin cultivator, tells Metro Times. “It’s going to create a bigger black market. It’s funny that some politicians would be in support of that.”

    In the same week the Michigan House approved the wholesale tax, California Gov. Gavin Newsom signed a bill to roll back a 25% tax increase on recreational cannabis. He approved the measure because the state’s high tax rates have forced thousands of legal businesses to shut down and drove residents to the unregulated market.

    A 2024 report by California’s Department of Cannabis Control estimated that licensed growers supplied only about 38% of the cannabis consumed in the state, meaning roughly 62% came from the illicit market. 

    For whatever reason, state lawmakers aren’t learning from California’s troubles. 

    “We’ve already seen this story play out. California taxed the crap out of operators,” says Seth Miller, co-owner of Growing Pains. “Wise people are able to learn from others’ mistakes, not their own.”  

    Miller says the tax increase lacks “foresight” because it will ultimately erode state revenue by leading to a loss in payroll taxes and other sources of revenue. 

    “It’s going to stifle business, job growth, and income taxes,” Miller says. “I think it’s shortsighted.”

    Bill “Chocolate” Anderson, owner of the Refinery dispensary in Detroit and the cultivator Hytek agrees, pointing out that consumers are already under water with inflation and the economy. 

    “If the 24% tax is approved, it will crater the market,” Anderson says. “We’ll have one of the highest tax rates in the nation. It will slow everything down. Less weed will sell. The market is so fickle. A few dollars to the customer is a big deal.”

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    While Whitmer and state lawmakers target the cannabis industry, legislators have not touched the 4% liquor tax since it was set in 1985. That may be because the liquor industry has one of the most powerful lobbies and has donated heavily to Whitmer and other lawmakers. 

    “It seems like they are picking on us because we don’t have the lobbyists that other industries do,” Anderson says. “They aren’t going after alcohol and tobacco.”

    The state’s Cannabis Regulatory Agency charges up to $24,000 a year just for a license. The fines for cannabis business violations are also far more punitive than those imposed on the liquor industry. On average, fines against cannabis businesses have exceeded $150,000 a month. By contrast, liquor fines generally don’t surpass $300 because lawmakers capped the penalties in 1998.   

    The tax hike defies the intent of voters who legalized recreational cannabis in 2018 as part of a ballot measure. The initiative required a 10% excise tax and 6% sales tax on cannabis sales. Cannabis advocates wanted to keep the rate relatively low to undercut the black market and ensure the legal market is thriving. 

    The proposed tax increase “is a slap in the face to the cannabis industry and voters,” says Nick Hannawa, partner and chief legal counsel of Puff Cannabis, which has 11 dispensaries and a 30,000-plant outdoor grow. 

    “It’s very sad. They are out of touch,” Hannawa says of lawmakers, noting they “snuck in” the tax increase in the House. “It’s totally unfair to a struggling industry. We are already taxed more harshly than any other industry in the country.”

    If the bill is ultimately approved, cannabis business owners plan to file a lawsuit against the state, arguing that lawmakers are barred from imposing a tax increase. Because recreational cannabis was approved as part of a ballot measure, any changes by the Legislature must pass with a three-fourths supermajority in both the House and Senate. 

    Whitmer is trying to get around that requirement by imposing a tax on wholesalers, instead of cannabis sales. But cannabis business leaders don’t accept that. 

    “We are not going to roll over and die,” Miller says. “I think this is unconstitutional. I can see this going to the state Supreme Court.”

    Cannabis industry experts estimate that a third of the sales in Michigan — or about $1 billion a year — come from border states like Indiana, Illinois, Ohio, and Wisconsin in pursuit of lower prices. But the new 24% tax wouldn’t make the trip worthwhile, cannabis business owners say. 

    “A lot of Michigan’s revenue comes from these bordering states because we have lower taxes,” Steve Mayo, owner of Mitten Canna Co., a cultivator, says. “This tax increase would give them no incentive to come to Michigan.”

    The state’s cannabis excise tax raised about $331 million in revenue last year from $3.3 billion in sales. If the industry loses a third of its customers, that’s $110 million. And that’s not to mention state residents who flock to the illicit market for cheaper prices.

    Rose says the tax increase is a betrayal to cannabis businesses owners, many of whom dumped their life savings into the industry based on false promises. 

    “You put your life savings in an industry, and you build your business around what citizens voted for,” Rose says. “Now they want to add a big tax increase in one day. Find me another industry that has had that kind of tax increase overnight. No one would have done business in Michigan if they thought this was going to happen.” 

    Miller says he hopes the state Senate understands what’s at stake. 

    “Hopefully they can use reason and logic and the information we are providing to them,” Miller says. 

    The state’s cannabis market is struggling because the state doesn’t cap the number of businesses allowed in the market, like it does with liquor. As a result, the market is saturated with cannabis products, causing prices to plummet.

    In August, the average price of recreational flower hit a record low of $61.79 per ounce. The average price of an ounce was $82.50 last year, $128 in 2022, and $512 in January 2020, when legal sales began.

    The tax hike “is going to cripple the industry,” Mayo says. “It’s going to force a lot of businesses to close.”

    Rose says ignoring voters’ intent will only deepen the public’s distrust of elected officials. 

    “You destroy people’s faith in the government, which is too bad,” Rose says. “People are entrepreneurs, and they took a chance and built a new industry from scratch, and now this is how the state is going to react — to pull the rug out from beneath us?”


    Steve Neavling

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  • Michigan regulators fine 29 cannabis businesses for numerous violations in July

    Shutterstock

    Michigan regulators cited 29 cannabis businesses for violations in July.

    State regulators fined 29 cannabis businesses in July for violations ranging from selling excessive amounts of weed to failing to tag products with compliance stickers.

    Eleven of those businesses operate in metro Detroit and were smacked with $169,100 in fines.

    The Cannabis Regulatory Agency took action against these local businesses:

    In each of these cases, the businesses admitted fault and pledged to make corrections.

    Other cannabis businesses that were fined outside of the area are Amber Waves Cannabis Co. in Morenci, Berry Green Management in Lapeer, Blue Fox Brands in Lansing, Holy Smokes Farms in Lansing, Exclusive in Coldwater, Birch Solventless in Rogers City, Cherry Brands in Jackson, Flos in Kalkaska, Infinity Artisan Cannabis in Kalkaska, Levels in Grand Rapids, Gramz Cannabis in Mt. Morris, Uniq Pressure in Monroe, Backpack Boyz in Monroe, Native Leaf in Reading, Nirvana Center in Menominee, One Love Labs in Chesaning, and Wanda Products in Luzerne.

    Steve Neavling

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