Michigan lawmakers impose massive tax increase on cannabis

On November 6, 2018, 55.9% of Michigan voters approved Prop 1, making Michigan the first state in the Midwest to legalize cannabis for adults 21 and older. Michigan now leads the country in cannabis sales, in large part due to its reasonable prices. However, as part of a budget deal in fall of 2025, the Michigan Legislature approved a massive new 24% wholesale tax on cannabis, which is in addition to the existing 16% at retail. This is expected to result in the shuttering of many cannabis businesses — especially ones with less capital, such as family run and social equity businesses — and laid off workers.

After the House passed the tax hike — HB 4951 — with virtually no notice, hundreds of cannabis workers showed up at the capitol to demand the Michigan Senate “Save Our Jobs.” While the cannabis community’s mobilization initially peeled off enough Senate votes to delay passage, ultimately enough senators caved after Speaker Matt Hall (R) threatened a shutdown if the cannabis tax didn’t pass. Gov. Gretchen Whitmer (D) had initially proposed a staggering 32% tax and pressured lawmakers to vote in favor of the increase. In the early hours of October 3, 2025, the Senate voted 19-17 to approve the tax.

HB 4951 takes effect on January 1, 2026. Michigan has separate licensing for medical and adult-use cannabis businesses, though some are dual-licensed. Excise taxes do not apply to medical cannabis sales. Registering as a patient requires a doctor’s certification and a $40 registry fee. The number of registered patients has dropped 75% since legalization, and there are currently only 13% as many medical provisioning center licenses as adult-use retail licenses.

Michigan’s Cannabis Legalization Landscape

Michigan’s legalization law, the Michigan Regulation and Taxation of Marihuana Act (MRTA), legalized adults’ possession of up to 2.5 ounces of cannabis and their home cultivation of up to 12 plants. Adults can also possess up to 10 ounces of cannabis at their residence, and any cannabis they produce from their home-grown plants.

MRTA also legalized, regulated, and taxed the production and sales and directed regulators to come up with a plan to foster equity. Michigan’s legalization law includes on-site cannabis consumption and temporary events, so long as they are permitted by the local town or city government. MPP played a leading role in the effort, working with an amazing campaign staff and hundreds of dedicated volunteers. Check out MPP’s summary of the law here.

The first legal sales began in late 2019, but most cities still have no cannabis businesses. However, delivery is legal statewide. In 2024 alone, Michigan generated over $520 million in taxes on cannabis. As of fall 2025, there are more than 2,200 cannabis businesses licensed in Michigan, and more than 39,000 cannabis workers are registered with the state.

Michigan has recently experienced an oversupply of cannabis. While this has resulted in low prices for consumers, many cannabis businesses are already struggling. The massive tax hike is expected to make matters worse.

Michiganders Can Still Be Fired for Using Cannabis Off Hours

Michigan’s legalization law doesn’t protect workers from being fired — or not hired — for using cannabis in their spare time. But in 2023, the Michigan Civil Service Commission has approved a modest step forward for job applicants.

The state dropped cannabis from pre-employment drug testing for most jobs that are not test‐designated. Under previous policy, a person who tested positive for cannabis was not only prevented from getting that job, but from any state agency job for three years. The revised policy also removed sanctions for people who previously tested positive during the application process in non-test designated positions.

While this is an important step forward, it does nothing to prevent discrimination against local government staff or private employees. Those workers can continue to be fired or not hired for a positive test for metabolites, which can stay in one’s system for a month or longer.

Let your state legislators know Michigan should follow the lead of other states that have protected workers’ freedom to use cannabis on their own time.

Michigan Expunges Past Records

Hundreds of thousands of Michiganders have criminal records from the state’s decades of prohibition. Those scarlet letters derail dreams and lives, making it difficult to get a job, housing, and education.

In the fall of 2020, Gov. Gretchen Whitmer signed bills, allowing as many as 235,000 cannabis offenses to be expunged from records. HB 4982 allows an unlimited amount of marijuana misdemeanors to be expunged, as long as they are for conduct that was legalized in Prop. 1, and creates a presumption for expungement. The governor also signed Clean Slate laws, which reduced the waiting time and the number of felony convictions that can be expunged.

Under the Clean Slate laws, the expungement process became automatic — requiring no action from the person with the criminal record — in April 2023.

Check out the Michigan Attorney General’s FAQs about expungement and the Safe & Just Michigan handout for more information.

The Michigan Medical Marijuana Program

In 2008, 63% of voters approved a medical marijuana measure spearheaded by MPP. Michigan’s list of qualifying conditions, FAQs, and registry materials are available on the Michigan Medical Marijuana Program site.

Timeline of marijuana policy reform in Michigan

2008: Voters approved a ballot initiative legalizing medical marijuana for patients suffering from serious health issues.
2016: Michigan’s legislature enacted a law expanding the state’s existing medical marijuana program to include licensing and regulation of medical marijuana businesses.
2018: Michigan voters approved a ballot initiative legalizing marijuana for adults.
2019: Adult-use sales begin
2023: Automatic expungement launches
2025: Legislature passes a cannabis tax increase that was proposed by Gov. Whitmer at an even higher rate, adding a 24% wholesale tax to the total of 16% at retail

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