John James Calls for Repeal of Michigan’s 24% Marijuana Tax

Michigan Republican gubernatorial nominee John James is taking aim at the state’s new 24% wholesale marijuana tax, arguing the levy is driving up costs and giving the illegal market an advantage. 

The tax took effect on January 1 of this year as part of a package signed into law last year by Democratic Gov. Gretchen Whitmer. The deal imposes a 24% excise tax on wholesale adult-use marijuana transactions on top of Michigan’s existing 10% retail marijuana excise tax and 6% sales tax. 

James has pledged to roll back the tax if elected governor. 

“It drives up prices, gives illegal operators a competitive edge and has already fallen far short of revenue projections,” James said, according to Bridge Michigan. 

The tax was originally projected to raise approximately $420 million annually for Michigan’s Neighborhood Roads Fund. Current state transportation revenue estimates project the tax will generate $315 million in fiscal year 2026, before rising to $418 million in fiscal year 2027. 

Michigan voters legalized recreational marijuana in 2018 under a system that included a 10% retail excise tax. The Michigan Cannabis Industry Association and marijuana businesses subsequently sued the state over the new wholesale tax, arguing in part that lawmakers could not impose it without complying with constitutional requirements governing amendments to voter-approved laws. 

The Michigan Court of Claims rejected several of the industry’s claims but allowed a challenge over whether the new tax conflicts with the purposes of the voter-approved marijuana law to continue. 

The Michigan Department of Treasury makes clear that the new tax is stacked on top of taxes already imposed on legal marijuana. The 24% wholesale tax applies earlier in the supply chain, while the 10% excise tax and 6% sales tax are imposed at the retail level. 

Wholesalers are legally responsible for paying the new tax but are permitted to pass the cost on to retailers. 

James argues the additional tax risks pushing consumers away from the legal market while failing to deliver the revenue lawmakers anticipated. 

Democratic gubernatorial nominee Jocelyn Benson, meanwhile, has declined to take a firm position on whether Michigan should keep the 24% wholesale tax. 

Calling it a “new and emerging issue,” Benson said there is still “a lot of data yet to be determined” about where the revenue is going and how the tax is affecting the industry. 

The tax, however, has been in effect since January, giving state officials months of revenue collections and industry data to examine. 

Benson’s running mate, Democratic Senate Majority Leader Winnie Brinks, supported the road funding deal that created the tax. Benson has so far stopped short of either defending the 24% levy or joining James in calling for its repeal. 

The divide leaves Michigan voters with a clear difference between the two nominees on one of the state’s newest taxes: James has called for its repeal or sharp reduction, while Benson says she is still waiting for more information before taking a position.