BERKLEY, Mich. (WXYZ) — Michigan's marijuana industry faces a significant tax increase as a new 24% wholesale excise tax takes effect January 1, 2026, prompting cannabis users to stock up on products before the deadline.
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The additional tax will be imposed on top of the existing 10% retail tax and 6% sales tax, bringing the total tax rate to 40%. The measure is expected to generate over $400 million per year to fund road and bridge work, along with other infrastructure projects.
"It's really unfortunate," said Sam from Berkley, one of several cannabis users I spoke with who are purchasing products before the tax increase.
The tax hike has already forced some businesses to make difficult decisions. Eric Slutzky, CEO of Dog House Farms, said his wholesale growing operation has had to scale back operations.
"We've implemented things to try to get leaner. We went through every expense over the past few months with a fine-tooth comb to try and figure out what needs to happen here. We had lay-offs too," Slutzky said.
Several cannabis companies in Michigan have laid off workers or shut down entirely due to market saturation and the new marijuana tax. Others are strategizing for the long term.
Aric Klar, founder of Quality Roots, said his company has prepared for the tax increase by stocking inventory.
"Quality Roots has stocked our shelves for the next two to three months to maximize our ability to keep our price points where they've been and hopefully continue to keep them as long as we can," Klar said.
Cannabis users said they're taking advantage of current prices before the tax takes effect.
FULL INTERVIEW: Aric Klar, founder of Quality Roots, talks about marijuana tax
"I think that's probably a great idea for a consumer to do today before the prices increase that much," said Kristin Hinchman from Berkley.
"When I heard the news, I was definitely surprised. It's definitely going to have a huge impact, so I plan on stocking up before midnight," Sam said.
Cannabis industry groups are challenging the new tax in court as the implementation date arrives.
Some customers expressed mixed feelings about the tax increase. Brenden Bowers from Berkley said the tax makes sense to some extent, but questioned whether the revenue could be found elsewhere.
"I feel like it makes sense to a certain extent, but on the other hand, they can probably find that tax within other places," Bowers said.
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