New Michigan Cannabis Tax in 2026

Michigan changed how cannabis is taxed starting January 1, 2026. The shift happens before products reach dispensary shelves. A new wholesale tax now applies earlier in the supply chain, according to the State of Michigan.

So, what does that mean for you? Below, we explain why prices are changing, how the tax works, who it affects, and what to expect as the market adjusts.

Why Cannabis Prices Are Changing in 2026

Governor Gretchen Whitmer signed a new law that changed how cannabis is taxed in Michigan. The change came through the Comprehensive Road Funding Tax Act, which adds a 24 percent excise tax at the wholesale level. This means the tax applies before cannabis products ever reach dispensary shelves.

This shift matters because it changes where costs start. Growers and processors now face higher taxes when they sell or transfer products to retailers. As a result, the base cost of legal cannabis increases earlier in the process.

Before 2026, pricing was shaped mainly by the 10% retail excise tax and 6% standard sales tax. Now, with an added wholesale marihuana tax layered in, overall costs are higher across the supply chain. Over time, those higher costs can influence the prices consumers see at dispensaries.

When the New Cannabis Tax Took Effect

Michigan’s new 24 percent wholesale cannabis tax officially took effect on January 1, 2026. From that date forward, the tax began applying to qualifying sales and transfers of adult-use cannabis between licensed businesses. The change came through the Comprehensive Road Funding Tax Act, which created a new revenue stream tied to infrastructure funding.

In the weeks leading up to the deadline, some shoppers chose to buy early, expecting prices could change once the tax started. After January 1, the rollout began, but its effects were not immediate across all products or dispensaries.

How the New Tax Affects Cannabis Prices

The wholesale tax does not appear as a line item at checkout, but it still influences pricing. Retailers pay more for newly taxed inventory, and those higher costs shape how prices are set over time.

Because the tax applies earlier in the supply chain, price changes tend to be gradual rather than sudden. Some dispensaries may adjust prices sooner, while others may hold steady longer, depending on inventory flow and business strategy.

Even with the added tax, Michigan remains a competitive cannabis market. Still, as newly taxed products replace older inventory, pricing pressure can slowly ripple across menus.

Medical vs Recreational Cannabis and the New Tax

The new wholesale cannabis tax applies to adult-use recreational cannabis, not medical marijuana. That distinction matters for pricing. Recreational products move through the supply chain with the added wholesale tax layered in, while medical cannabis follows a different tax structure.

For medical patients, this means prices are generally insulated from the new wholesale tax. Medical marijuana is not subject to the adult-use excise taxes that shape recreational pricing. As a result, the overall cost difference between medical and recreational cannabis may become more noticeable over time.

Why Michigan Added This New Cannabis Tax

The law was part of a larger budget deal aimed at fixing Michigan’s roads. Governor Gretchen Whitmer signed the Comprehensive Road Funding Tax Act on October 7, 2025. The act includes a 24 percent wholesale excise on adult-use cannabis that took effect January 1, 2026.

Put simply, lawmakers needed revenue for a big road plan. The wholesale tax was chosen to create a steady funding stream without raising the general sales tax.

Key reasons the state added the tax:

   • Fund local roads and bridges. The new revenue is directed to the Neighborhood Road Fund.

   • Raise predictable revenue. Officials estimate roughly $420 million a year from the wholesale tax alone.

   • Shift funding strategy. The tax is part of a package that reallocates other transportation revenues to amplify road investment.

   • Spread the burden. Lawmakers framed the tax as asking a specific industry to help pay for statewide infrastructure needs.

How Dispensaries Are Adjusting to the Change

Dispensaries are adjusting in quiet, practical ways. The changes are not dramatic overnight, but they are happening behind the scenes.

First, retailers are paying closer attention to inventory. Products purchased before January 1 were not affected by the new wholesale tax, while newer inventory is. That difference influences when and how prices change on menus.

At the same time, some dispensaries are spacing out price adjustments. Rather than raising prices all at once, many are making gradual changes as taxed inventory replaces older stock. This helps avoid sudden jumps for customers.

Others are leaning more on promotions and loyalty programs. Deals, bundles, and discounts remain one way dispensaries try to balance higher costs while keeping regular shoppers comfortable.

In practice, this means some Michigan dispensaries, including Dacut Recreational Dispensary, may still offer reduced prices on certain products by managing inventory timing, promotions, and pricing strategy, even with the wholesale tax in place.

Legal Challenges and Industry Pushback

The tax drew swift legal challenges from the cannabis industry. Trade groups and businesses argue the wholesale levy amends voter-approved cannabis rules without the required supermajority, and they sued to stop it.

Courts have allowed the lawsuits to move forward while denying emergency requests to block the tax from taking effect. That meant the 24 percent rate began on January 1, 2026, even as litigation continues.

Industry groups warn the tax could force price hikes, layoffs, and tighter margins, especially for smaller operators. Lawmakers and supporters counter that the levy funds roads and was passed as part of the broader budget package. The dispute is now playing out in court and in public debate.

What Cannabis Shoppers Can Expect Going Forward

What you may notice as a shopper:

   • Small price differences between dispensaries, even for similar products
   • Menu prices are adjusting slowly instead of all at once
   • Continued deals and promotions as stores stay competitive

Where you shop will matter more. Inventory timing, pricing strategy, and local competition can all affect what you pay. That means checking menus and comparing options may become part of your routine.

The key takeaway is simple. You still have a choice. Understanding why prices move helps you shop with fewer surprises and more confidence.

As the market adjusts, a little planning can go a long way. You do not need to change how you shop entirely, but being more aware can help you manage costs.

Smart Shopping Tips for 2026

Here are a few ways to shop smarter in 2026:

   • Compare menus before you go. Prices may vary more between dispensaries, even for similar products.

   • Pay attention to deals. Promotions, bundles, and loyalty rewards can help offset higher prices.

   • Time your purchases. Some shoppers find better value by buying during sales or restock periods.

   • Ask questions. Budtenders can explain pricing differences or suggest alternatives at similar price points.

   • Know your options. Medical and recreational pricing can differ, and eligibility matters.

The goal is not to chase the lowest price every time. Instead, it’s about shopping with awareness. When you understand why prices vary and what influences them, it’s easier to make choices that fit your needs and budget. That applies whether you’re shopping near Flint, Monroe, Detroit, or visiting a local dispensary anywhere in Michigan.

New Michigan Cannabis Tax in 2026 FAQs

Is cannabis taxed at 24% in Michigan?

Not exactly. Michigan added a 24 percent wholesale excise tax on adult-use cannabis. It applies before products reach dispensaries, not directly to consumers at checkout.

What is the new cannabis tax in Michigan in 2026?

It is a 24 percent excise tax on wholesale adult-use cannabis transactions, effective January 1, 2026. The tax applies when licensed businesses transfer cannabis within the supply chain.

Is the 24% cannabis tax added at checkout?

No. You will not see a 24 percent tax line on your receipt. The tax is built into wholesale costs, which can influence shelf prices over time.

Does the 24% tax apply to all cannabis products?

It applies to adult-use recreational cannabis sold through licensed wholesale transactions. It does not apply to medical cannabis in the same way.

Are medical cannabis patients affected by the new tax?

Medical cannabis is not subject to the adult-use wholesale excise tax. However, availability and pricing can still vary by dispensary and product.

What is Michigan Bill HB 4951?

House Bill 4951 is part of the Comprehensive Road Funding Tax Act. It authorized the new wholesale cannabis tax to help fund road and infrastructure projects across Michigan.

Why didn’t voters approve this new cannabis tax?

The tax was passed by the Legislature as part of the state budget. It was not placed on the ballot for a public vote, which is why some industry groups challenged it.

Can dispensaries choose not to pass the tax on to customers?

Yes, in some cases. Dispensaries set their own prices. Some may absorb part of the cost, while others may adjust prices depending on inventory and margins.

Will cannabis prices keep increasing after 2026?

Not necessarily. Prices may adjust gradually, but future increases depend on market competition, supply, demand, and how businesses respond to costs.

Which state has the highest cannabis tax in the U.S.?

States like California and Washington are often cited among the highest when combining excise, sales, and local taxes. Rankings change as tax laws evolve.

How does Michigan’s cannabis tax compare to other states?

Michigan’s wholesale tax adds pressure earlier in the supply chain, but overall retail prices remain competitive compared to many states with higher combined tax rates.

Does this new tax affect cannabis deals and promotions?

Deals and promotions are still common. Dispensaries may use discounts, bundles, or loyalty programs to stay competitive, even as costs change.