LANSING — A major agreement in the state capital is reshaping Michigan’s Budget for the coming year. On Thursday, the Republican-led Michigan House approved a package of bills that increases taxes on marijuana and delays business tax cuts, all while ensuring Michigan’s Budget funds crucial infrastructure projects and avoids a government shutdown next week.
The bills passed 78-21 and 95-4 with broad bipartisan support impose a 24% wholesale tax on marijuana and “decouple” Michigan from federal tax law changes signed under former President Donald Trump. Legislative leaders say these moves will generate an estimated $420 million for roads while preserving up to $540 million in business tax revenue over five years, stabilizing Michigan’s Budget at a time of national economic uncertainty.
Governor Gretchen Whitmer, House Speaker Matt Hall and Senate Majority Leader Winnie Brinks issued a joint statement highlighting the compromise. They said Michigan’s Budget reflects a shared commitment to lowering costs, cutting taxes for seniors, funding schools, and fixing roads the kind of “kitchen-table” issues that resonate with voters.
Yet marijuana industry advocates warn the deal could backfire. Robin Schneider of the Michigan Cannabis Industry Association said the new tax would push customers toward the illicit market, threatening jobs and storefronts across the state. Her group argues Michigan’s Budget should support a legal cannabis sector instead of burdening it with higher taxes.
According to a House Fiscal Agency analysis, the marijuana wholesale tax will bring in about $420 million annually, combining with other revenue shifts to generate $1.5 to $1.8 billion more for road funding. Speaker Hall emphasized that every revenue increase must be paired with cuts elsewhere, keeping Michigan’s Budget leaner than last year’s $82.5 billion spending plan.
Supporters say this gradual approach helps protect Michigan’s Budget from shocks while still honoring key tax credits. Critics, however, fear “decoupling” from federal law may raise costs for small businesses, undermining Michigan’s competitiveness.
With the new marijuana tax tied to a broader road-funding plan and a shift of sales tax revenue from fuel purchases, lawmakers promise schools will be held harmless through general fund allocations. If executed as planned, Michigan’s Budget will simultaneously boost infrastructure spending, stabilize revenue streams, and keep core services intact.
As details emerge, one thing is clear: Michigan’s Budget negotiations this year are rewriting how the state funds roads, regulates cannabis, and balances competing priorities a high-stakes test of bipartisan problem solving.
