Michigan Lawmakers Push to Repeal 24% Cannabis Tax

LANSING – Less than eight months after Michigan imposed a new wholesale Cannabis tax to shore up its road repair budget, a Republican state lawmaker has introduced legislation to eliminate it entirely.

House Bill 6224, filed by State Representative James DeSana (R) on July 29 and formally reproduced by the legislature on August 11, would repeal the Comprehensive Road Funding Tax Act – the statute that established a 24% wholesale levy on adult-use Cannabis, effective January 1, 2026.

The tax applies to the first sale or transfer of Cannabis from a grower or processor to a licensed retailer and was projected to generate approximately $420 million annually for Michigan’s Neighborhood Road Fund. Collections have fallen well short. According to the State Budget Office data, the tax generated roughly $34 million through the first four months of 2026 against approximately $105 million that had been projected for that period. DeSana has placed the shortfall for the first third of the fiscal year at approximately $70 million, with the full-year gap potentially reaching $210 million.

HB 6224 has been referred to the House Appropriations Committee and has not advanced to a floor vote.

DeSana is not the first to target the levy. State Senator Jonathan Lindsey (R) introduced Senate Bill 810 in February with seven cosponsors [three of them Democrats] establishing the repeal effort as a bipartisan concern from the outset. SB 810 remains pending before the Senate Government Operations Committee.

The tax is also under legal pressure. The Michigan Cannabis Industry Association filed a lawsuit alleging lawmakers amended the voter-initiated law without the constitutionally required three-quarters majority. The Michigan Department of Transportation acknowledged the litigation risk in a financial planning document released this month, noting that future collections remain subject to court outcomes.

Road funding agencies are watching the debate closely. Mid-Michigan transportation officials have warned that eliminating the tax would directly affect their capacity to manage and improve local infrastructure.

The industry numbers reinforce the argument for repeal. Michigan’s adult-use dispensaries posted $3.17 billion in sales in 2025, down from $3.27 billion the prior year and the first annual contraction since recreational sales launched in late 2019. Sales fell roughly 16% between December 2025 and January 2026, with flower prices near record lows. Active retail licenses also slipped, dropping from 845 in June 2025 to 836 a year later.

Repealing the wholesale levy would leave Michigan’s existing Cannabis taxes intact – the 10% retail excise tax established by voters at legalization and the state’s standard 6% sales tax.

Michigan’s wholesale Cannabis tax experiment has produced a tension familiar across regulated markets. A state leans on a sector already under price and margin compression, and the revenue math stops working before the policy can stabilize. The bipartisan case for repeal, backed by both fiscal and constitutional arguments, signals this is not a fringe legislative position. For investors monitoring developments in Michigan, the central question has shifted from whether the tax will survive in its current form to how much pressure will build up across the supply chain before the legislature responds. HB 6224’s trajectory through the House Appropriations Committee, and SB 810’s standing in the Senate, will be meaningful indicators to track through the remainder of the 2026 session.