Frequently Asked Questions

Wholesale Marihuana Tax FAQ

Which entity, the wholesaler or the retailer, is legally responsible for paying the Wholesale Marihuana Tax and remitting it to the Michigan Department of Treasury?

The statute provides that the new 24% wholesale tax is imposed on the wholesaler – the “marihuana establishment” that makes the first sale or transfer of marihuana to a retailer. That entity is legally responsible for paying the tax on all applicable transactions, as well as remitting the tax to Treasury.

Does the wholesale marihuana tax only apply to the first sale or other transfer from a wholesaler to a retailer?

Yes. The imposition of the tax on the “first sale or transfer” to a retailer and precludes the possibility the same product will be taxed multiple times, at different points in the chain of production. For example, the wholesale tax would not be imposed on a transfer of adult-use marihuana from a grower or cultivator to a processor, because that transaction does not represent the “first sale or transfer” to an entity licensed to make retail sales of adult-use marihuana.

Does the new 24% Wholesale Marihuana Tax apply in addition to other taxes imposed on adult-use marihuana?

Yes, the new Wholesale Marihuana Tax applies in addition to the existing 10% excise tax on retail sales of adult-use marihuana, and the 6% state sales tax imposed on all non-exempt sales of tangible personal property, but at a different stage of the supply chain. The10% excise tax and the 6% sales tax are applied at the time of retail purchase and are imposed on the retailer. Conversely, the new wholesale tax is applied on the transaction between the wholesaler and the retailer.

Can a wholesaler reimburse itself the incidence of the tax from the retailer?

Yes, the wholesaler is permitted to recoup the tax due on a transaction by collecting it from the retailer, but the wholesaler remains legally liable for both the payment and remittance of the tax even if it does not collect the tax from the retailer. This is like Michigan’s general sales tax, which is imposed upon sellers of tangible personal property. Sellers are legally liable for paying and remitting the sales tax even though they typically recoup the cost of the tax by passing it through to their customers. 

What is the “wholesale price” for transactions between non-affiliated persons?

In short, between non-affiliated persons, the taxable wholesale price is the amount paid by a marihuana retailer to a wholesaler for marihuana without any discounts or reductions. More specifically, the statute defines “wholesale price” as the “actual price paid to a marihuana establishment by a marihuana retail licensee to acquire marihuana from the marihuana establishment”, and includes “any tax, fee, or other charge reflected on the invoice … or other document evidencing the sale or transfer of the marihuana”. The definition also prohibits reduction of the wholesale price due to any rebate, trade allowance, exclusivity agreement, or other discount or reduction given by the marihuana establishment.

The definition in the new law of “wholesale price” applicable to transactions between non-affiliated persons states the defined price “includes any tax, fee, or other charge reflected on the invoice … evidencing the sale or transfer of the marihuana.” Does “any tax” include the Wholesale Marihuana Tax itself, causing a spiraling effect and increasing the effective rate of the tax?

What is the “wholesale price” for transactions or transfers between affiliated persons, between medical provisioning centers and marihuana retail licensees, and seed-to-sale operations (e.g., microbusinesses) where no transaction between a wholesaler and retailer takes place?

For these situations the wholesale price is the “average wholesale price” which is the price of marihuana as “calculated and published by Treasury each quarter based on the best available information”. Treasury will provide more information soon regarding how the average wholesale price will be calculated.

The statute states retail licensees under MRTMA that operate “seed-to-sale” businesses (e.g., microbusinesses) will be taxed “at the rate of 24% of the wholesale price on the aggregate amount or quantity of marihuana that is cultivated or processed for retail sale by that marihuana retail licensee”. At what point in the production process does the “seed-to-sale” retail licensee apply the tax?

For retail licensees under MRTMA that cultivate, process, and package their own product for retail sale, as well as sell marihuana products at retail (“seed-to-sale” businesses), the new wholesale tax will be applied at the point that marihuana product is packaged for retail sale.

If my business holds dual licenses as both a medical marihuana provisioning center and a retail seller under MRTMA, can I avoid the new wholesale tax by making regular daily transfers of marihuana from my medical marihuana inventory to my adult-use marihuana inventory, or making transfers from medical inventory to adult-use inventory concurrently with each retail sale of adult-use marihuana to an individual?

No. The 24% Wholesale Marihuana Tax will legally apply to every transfer or sale of marihuana between the provisioning center side of your business, and the retail sale side of your business, regardless of the timing or frequency of those transfers. All transfers of marihuana product are required to be tracked in the METRC system.

What happens if a retail marihuana product is returned to the wholesaler and the wholesaler refunds the purchase price, but the wholesale tax charged on the transaction has already been remitted to Treasury? Will Treasury refund the amount of tax paid?

If retail marihuana product is returned, the wholesaler should return or credit the retail licensee’s entire purchase price, including the wholesale tax. The wholesaler should then deduct the amount of tax refunded or credited on its next wholesale tax return, provided the merchandise was voluntarily returned, and the return was made within the time period for returns stated in the wholesaler’s refund policy or 180 days after the initial sale, whichever is earlier. This is similar to how sellers account for refunds of Michigan’s general sales tax made to purchasers when products are returned.

How often will wholesalers need to remit the new wholesale tax and file returns with Treasury?

Treasury will require taxpayers to remit the new wholesale tax on a quarterly basis; however, for tax year 2026 only, taxpayers will be required to remit and report the annual total of all tax for calendar year 2026 on the 2026 4th quarter wholesale tax return. For all subsequent tax years, taxpayers will submit both tax payments and tax returns to Treasury on a quarterly basis.

Where does the revenue from the new wholesale marihuana tax go?

The revenue generated by the new 24% wholesale marihuana tax is deposited into the neighborhood road fund for infrastructure improvements.