LANSING, MI — Marijuana is lucrative and state government has taken notice.

Michigan Gov. Gretchen Whitmer proposed a 32% tax on wholesale marijuana transactions to generate nearly $470 million annually for roads and infrastructure spending.

That’s in addition to $232 million the state government received for schools and roads from the 10% excise tax on marijuana sales in 2024. In total – not including the 6% sales tax – Michigan generated $331 million in marijuana excise tax last year from nearly $3.3 billion in sales.

The proposed tax comes at a time when the market is saturated, revenue is stagnant and profits are shrinking.

Marijuana insiders and a local township supervisor appeared before the House Licensing and Regulatory Affairs and Insurance and Financial Services Subcommittee on Thursday, May 15, to urge against new taxes.

“You’re going to kill the industry,” said cannabis attorney Denise Pollicella with Omnus Law. “They just can’t take it. They’re already financially burdened enough.”

Marijuana prices hit another all-time low in April when the average retail cost for an ounce of marijuana flower dipped to $62.23.

After years of increases, a growing number of retailers and other businesses are dropping out of the market. For the last two months the total number of retailers, 853 as of April, have decreased slightly.

Bangor Township Supervisor Glenn Rowley said the industry has provided much-needed tax revenue, property improvements and employment. His community reaped nearly $760,000 in excise taxes last year and $880,000 the year prior.

“Businessworld Darwinism and the laws of supply and demand have caused some of the players to shut down,” Rowley said. “This industry is not a Cheech and Chong movie, these are business professionals.

“Now is not the time to impose new taxes or fees on them.”

He equated hefty new taxes to “strangling the goose that lays the golden eggs.”

“If you keep strangling them, they’re going to go back to the black market,” Rowley said.

Tyler Wejrowski, the CEO of Pinconning-based Wojo, a grow and processing facility, told legislators a wholesale tax would help “out-of-state operators and huge companies” that operate their own production facilities and retail stores.

“If I’m vertically integrated, I’m charging myself a penny for every single item to send to these stores,” he said. “And then I’m (avoiding) that 32% tax.”

Michigan’s 10% excise tax is among the lowest in the nation. For comparison, Washington charges a 37% excise tax, while Illinois charges up to 25% in excise tax in addition to a 7% wholesale tax.

This has been a boon for Michigan’s border businesses in the Upper Peninsula and along the Indiana-Ohio border, where out-of-state customers regularly travel to take advantage of lower prices.

The House subcommittee that heard from the marijuana industry this week also makes policy recommendations.

The proposed revenue from a marijuana wholesale tax represents a portion of the $3 billion Whitmer plans to raise for roads as part of her “MI Road Ahead” plan.

“You’re already getting your fair share out of (marijuana businesses),” Rowley said. “Do we need to pay for roads and find funding – absolutely.

“Picking on this industry is not the way.”