LANSING, MI – Michigan lawmakers face a crucial deadline today as they race to finalize the 2026 state fiscal budget. Without an agreement, the state risks a government shutdown on Wednesday. At the center of negotiations is a proposed tax increase that could reshape the state’s booming cannabis industry, specifically targeting marijuana sales.
Governor Gretchen Whitmer, Speaker Matt Hall, and Senate Majority Leader Winnie Brinks recently announced a budget framework agreement. However, one major sticking point remains: whether to include a tax increase on the state’s marijuana market. State Senator Jonathon Lindsey of Coldwater voiced concern in a Facebook video, warning that the proposed tax increase could be devastating for Michigan’s cannabis economy.
Michigan currently imposes a 16% tax on marijuana sales, split between a 10% excise tax and a 6% sales tax. This structure has fueled a steady stream of revenue, with marijuana sales generating approximately $3.5 billion annually. A significant portion of this comes from out-of-state buyers who cross into Michigan for cheaper cannabis products. According to Lindsey, another tax increase could risk driving those customers away and shrinking overall marijuana sales.
Proponents of the tax increase argue that additional revenue from marijuana sales could help fund vital state programs, infrastructure, and education. Opponents counter that Michigan’s competitive edge in cannabis pricing relies on keeping marijuana sales affordable, especially compared to neighboring states.
The stakes are high. Since legalization, Michigan has emerged as a national leader in marijuana sales, with billions flowing into local and state coffers. Cities and municipalities also benefit, as a portion of cannabis tax revenue is redistributed to communities hosting dispensaries. A steep tax increase could undermine these benefits by reducing customer demand and possibly encouraging a return to unregulated markets.
Industry advocates stress that predictable tax policy is critical to sustaining growth. They argue that Michigan’s relatively stable framework has allowed marijuana sales to thrive, attract investment, and create jobs. A sudden tax increase could disrupt this progress and discourage future expansion.
As lawmakers continue budget negotiations, both sides recognize the importance of cannabis revenue. Whether they pursue a tax increase or maintain the current structure, the decision will have lasting implications for Michigan’s economy and for the trajectory of marijuana sales in the state.
With billions at stake, the conversation over tax increase proposals and their impact on marijuana sales will remain central to Michigan’s fiscal strategy well beyond today’s budget deadline.
