In a strange twist for a once-outlawed industry, Michigan Republicans are emerging as saviors of the state’s legal cannabis industry.

Gov. Gretchen Whitmer’s plan to more than triple the state’s recreational marijuana excise tax is facing strong resistance in the GOP-controlled House, where Speaker Matt Hill has pledged to block any attempt to raise taxes, including on cannabis.

The proposal, part of Whitmer’s $3.5 billion plan to fix Michigan’s crumbling roads, would increase the cannabis excise tax from 10% to 32%, in addition to the state’s 6% sales tax. Industry advocates and lawmakers from both parties warn the tax hike could devastate small cannabis businesses and push consumers back to the illicit market.

Hall, a Republican from Richmond Township, said Wednesday that Whitmer’s proposal has no chance of advancing in the House. Since he’s the speaker, he controls the agenda.

“In a situation where the prices of marijuana are going so low because the black market is taking over, you don’t see any enforcement on marijuana from Gov. Whitmer,” Hall said at a news conference. “Everybody in the world can get a license for this. You flooded this with supply, and now they want to tax it and push more stuff into the black market.”

Instead, House Republicans passed a $3.1 billion road-funding plan of their own last week that avoids new taxes but would require deep cuts elsewhere in the budget, including programs Whitmer has championed. Their plan shifts $2 billion annually from corporate income tax revenue to road repairs and ends state funding for economic development incentives. It also replaces the state’s 6% sales tax on gas with a dedicated 20-cents-per-gallon motor fuel tax.

The legislation passed mostly along party lines, but as many as seven Democrats, including House Speaker Joe Tate of Detroit, voted in favor of parts of the plan.

While the GOP package is unlikely to pass the Democratic-led Senate in its current form, it positions Republicans as defenders of a cannabis industry they once opposed.

In a brief statement to Metro Times, Rep. Timothy Beson, a Republican from Bay City, said Whitmer’s plan “is sloppy and I’m definitely not a fan.”

Before voters approved the sale of recreational marijuana in Michigan in 2018, many Republicans were opposed to it. That quickly changed when Republicans saw an opportunity to make money. Some of them became pro-weed lobbyists, and one, former state Rep. Rick Johnson, was sentenced to nearly five years in prison for accepting bribes when he led the marijuana licensing board from 2017 to 2019.

Even some Democrats are balking at Whitmer’s cannabis tax proposal. Rep. Julie Brixie, D-Meridian Township, praises Whitmer for coming up with ways to fix the roads but says boosting the tax on cannabis is not the answer.

“I applaud the governor for putting forth a real solution for the roads,” Brixie tells me. “However, having said that, I would prefer to see additional sources of funding considered.”

Brixie says she views cannabis as part of Michigan’s broader agricultural economy, and the young, struggling industry employs nearly 38,000 residents.

“The industry is going through major disruptions, and what I don’t want to see is small businesses getting eaten up by massive corporations,” Brixie says. “Those small businesses reinvest in the communities they serve.”

The state’s legal cannabis industry brought in a record $3.3 billion in sales in 2024, but plummeting prices from an oversaturated supply is forcing dozens of businesses to close. At an average of just $69 for an ounce of flower, margins are slim, and adding a 32% tax would be fatal for many businesses, people in the industry tell me.

“The margins are incredibly tight in this industry, and companies are literally going out of business left and right,” Stuart Carter, owner of Utopia Gardens, a dispensary in Detroit, told me for a column on the tax in February. “This would drive people to the black market.”

Legal experts and industry leaders say Whitmer is mischaracterizing the tax hike by claiming her plan is closing “a loophole” that allowed the cannabis industry to dodge higher taxes. She insists marijuana should be taxed at the same rate as tobacco.

“This is plainly not the case,” attorneys Lance Boldrey and John Fraser at Dykema Cannabis Industry Group wrote in a recent analysis. “When Michigan voters legalized adult-use marijuana in 2018 by passing the initiative for the Michigan Regulation and Taxation of Marihuana Act (‘MRTMA’), they did not vote to assess a wholesale tax on adult-use marijuana. Instead, they levied a 10% excise tax at the point of retail sale (in addition to Michigan’s 6% sales tax).”

The attorneys warn that the tax would raise prices for consumers and cannabis businesses that cannot afford to absorb another blow.

“The economic reality of the Michigan industry is that most operators are in tremendous financial distress, and profitability is extremely challenging,” the attorneys wrote. “To put it mildly, we are not anecdotally aware of any grower or processor that sees close to a 32% net margin and could internally absorb a wholesale tax without raising prices. Even though the proposed tax would presumably be remitted by wholesalers, the cost will be passed from wholesalers to retailers, who will pass on the increased costs to the end customer.”

The House Republican plan sets the stage for contentious negotiations with the Democrat-controlled Senate and Whitmer, who is also a Democrat.

“There’s not a lot of great ideas coming from the Democrats, but we do have a proposal that we can put together that will solve this problem and that is putting road repairs above the corporations and corporate giveaways,” Hall said.

Although Senate Democrats have expressed opposition to the House plan, they have yet to offer an alternative of their own.

But Brixie says she plans to revive her “Raise Up Local” grant match program, a bill she previously introduced to address inequities in local road funding. The legislation aims to support municipalities with lower per capita taxable values, like Detroit, so they can fix their local roads. To qualify, a municipality must have a per capita taxable value below the statewide average and pass a millage increase.

“This is a way to be a lot more equitable in the distribution of funds for local roads,” Brixie explains.

As for Whitmer, she appears to see the writing on the wall: Her plan is going nowhere. Her office has repeatedly declined to answer my questions about the cannabis tax proposal and did not comment for this column.

In the meantime, cannabis businesses and consumers can rest easier knowing that the struggling industry won’t be burdened with yet another tax and challenge.