Michigan cannabis industry leaders oppose proposed 32% tax on wholesale sales

During a recent Michigan House of Representatives meeting on May 15, 2025, significant concerns were raised regarding proposed tax changes affecting the cannabis industry. Stakeholders emphasized that the new 32% wholesale tax, which would replace the existing 10% excise tax, could severely impact small businesses and lead to a surge in black market activity.

John Wagoner, compliance manager at Willow Joe LLC, articulated the challenges faced by vertically integrated companies that grow and process cannabis without retail locations. He argued that the proposed tax structure favors larger, out-of-state operators while placing smaller businesses at a disadvantage. "If I am vertically integrated, I'm charging myself a penny for every single item to send to these stores, then I'm surpassing that 32% tax," he explained, highlighting how the new tax could undermine local businesses.

Wagoner also pointed out the rapid growth of dispensaries in certain areas, likening their prevalence to fast food restaurants. He advocated for immediate moratoriums on new licenses in oversaturated markets to prevent further strain on local economies. He noted that the cannabis industry has already contributed significantly to Michigan's economy, generating over $331 million in tax revenue, which supports essential services like road repairs and education.

The meeting also touched on the broader implications of the cannabis industry on local businesses, including hotels and restaurants that benefit from increased traffic. Wagoner expressed concern that a decline in the cannabis sector could lead to job losses for the 38,000 employees currently working in the industry, making it difficult for them to support their families.

As discussions continue, stakeholders are urging lawmakers to reconsider the proposed tax changes to ensure the sustainability of small businesses and the overall health of Michigan's cannabis market. The outcome of these deliberations could have lasting effects on the state's economy and the livelihoods of many residents.