Steve Neavling

The Cake House in Pleasant Ridge is a popular dispensary for recreational cannabis.

For the fourth consecutive month, adult-use cannabis sales in Michigan dropped compared to the same time last year, a troubling trend for marijuana businesses and state and local governments that depend on the tax revenue.

Between January and May 2025, recreational dispensaries sold $1.31 billion worth of cannabis products, according to new data from the state’s Cannabis Regulatory Agency. That’s down from $1.34 billion during the same period in 2024, marking the industry’s first year-over-year decline since adult-use recreational sales began in December 2019.

While the dop may seem small, it marks a turning point for a market that has grown steadily since legal sales began. From 2022 to 2024, first-quarter sales rose sharply each year. In the first five months of 2024, for example, adult-use sales jumped more than 15% compared to the year before. In 2023, sales nearly doubled over 2022.

Now that trend has reversed, and the stakes go beyond cannabis businesses. Adult-use sales are subject to a 10% excise tax and a 6% sales tax. Since legalization, Michigan has collected more than $1.9 billion in cannabis-related tax revenue, which helps fund schools, infrastructure, and local governments.

In fiscal year 2024, cannabis taxes raised about $116 million for both schools and roads, and nearly $100 million was distributed to 302 cities, townships, and counties. That money helped support local nonprofits and community projects. If sales and tax revenue continue to fall, communities across the state could feel the squeeze.

The good news for consumers is that prices are lower than they have ever been.

In May, the average price of an ounce of flower hit a near-record low of $63. A year earlier, the average price was $88. When legal cannabis sales began in 2019, an ounce cost an average of more than $500.

Data from the Cannabis Regulatory Agency

Prices have steadily declined since then. In total, flower prices have plummeted about 87% in less than five years.

Despite the drop in dollar figures, Michigan residents are buying more cannabis than ever. It’s just cheaper. In May, dispensaries moved about 20% more flower, shake, concentrates, vape cartridges, kief, and edibles than they did the year prior, even though the total sales numbers were down.

The primary reason prices are falling is an oversupply of cannabis.

Simply put, there are too many growers, and many of them are barely hanging on.

State regulators and cannabis business owners are calling on state lawmakers to impose a moratorium on new cultivators.

Records show dispensaries held more than 160,000 pounds of flower in April, up from 143,300 pounds the prior year. Many of those growers were licensed during an aggressive expansion phase between 2020 and 2022, when the market was still maturing and few saw a ceiling. Under current law, the Cannabis Regulatory Agency is required to issue licenses to applicants that meet the criteria, leaving regulators with little flexibility.