Tax Liability

Frequently Asked Questions

General Transactions

Who does the Wholesale Marijuana Tax apply to?

Beginning January 1, 2026, Michigan will impose a 24% wholesale tax on the “wholesale price” of certain sales or transfers of recreational or “adult-use” marijuana. The tax will apply to (a) the first sale or transfer of marijuana from a marijuana wholesaler to a marijuana retailer, (b) marijuana cultivated and processed for retail sale by a marijuana retailer itself (e.g., microbusinesses), and (c) sales or transfers of marijuana from medical marijuana provisioning centers to marijuana retailers.

Does the Wholesale Marijuana 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 marijuana 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 marijuana.

Which entity, the wholesaler or the retailer, is legally responsible for paying the Wholesale Marijuana 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 “marijuana establishment” that makes the first sale or transfer of marijuana to a retailer. That entity is legally responsible for paying the tax on all applicable transactions, as well as remitting the tax to Treasury.

Are shipping charges included in the Wholesale Marijuana Taxable amount?

Yes. For transactions between non-affiliated entities, the statute states that the “wholesale price” (to which the tax is applied) “includes any tax, fee, or other charge reflected on the invoice, bill of sale, purchase order, or other document evidencing the sale or transfer of the marijuana.” See Sec. 3(m)(i)

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

Yes, the new Wholesale Marijuana Tax applies in addition to the existing 10% excise tax on retail sales of adult-use marijuana, 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. The 10% 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

If an Adult Use Processor buys bulk distillate from another Adult Use Processor, will there be an additional 24% tax?

No, this transaction would not be subject to the 24% Wholesale Marijuana Tax because it does not represent the first sale or transfer from a wholesaler to an entity licensed to make retail sales of adult-use marijuana.

Does the Wholesale Marijuana Tax apply to the wholesale of medical marijuana?

The Wholesale Marijuana Tax does not apply to wholesale sales of medical marijuana, only to wholesale sales of adult-use or recreational marijuana. The only exception is the transfer, by a dual license holder, of product from medical marijuana inventory to adult-use inventory; the 24% wholesale tax does apply to these transfers.

How does the 24% wholesale tax affect medical marijuana cultivation to medical marijuana retailer?

The Wholesale Marijuana Tax does not apply to wholesale sales of medical marijuana, only to wholesale sales of adult-use or recreational marijuana. The only exception is the transfer, by a dual license holder, of product from medical marijuana inventory to adult-use inventory; the 24% wholesale tax does apply to these transfers.

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

No. The 24% Wholesale Marijuana Tax will legally apply to every transfer or sale of marijuana 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 marijuana product are required to be tracked in the METRC system.

We are a cannabis wholesaler. Some of our customers hold both processor and retailer licenses and they are requesting that we do not apply the 24% wholesale tax when we sell them retail ready marijuana products. Is this allowed?

A marijuana establishment that holds both processor and retailer licenses cannot use the processor license to avoid the Wholesale Marijuana Tax. If there is no indication that the product will undergo further processing, rebranding, etc., the product should be sold to the retailer license and subject to the 24% Wholesale Marijuana Tax.

Transactions Spanning January 1, 2026

A MRTMA licensed retailer buys cannabis from a wholesaler on December 30, 2025. On January 4, 2026, the retailer resells that same cannabis to another retailer. Would there be wholesale tax due on the January 4 transaction?

Yes. There was a sale of cannabis in December 25, prior to the date that the wholesale tax began to be imposed. However, the sale that takes place on January 4 from the purchasing retailer to another retailer, meets the definition of the “first sale or transfer” of the cannabis under the newly imposed tax. The sale would be subject to the wholesale tax. If both sales had occurred after January 1, 2026, only the first sale would be taxable, and not the subsequent resale.

A processor mixes cannabis inventory that was purchased in December 2025 with inventory purchased after January 1, 2026. When the processor sells the mixed inventory to retailers, how would they allocate the tax on those sales since only the inventory purchased after January 1 would be taxable?

It does not matter when the processor purchased its inventory, or that inventory purchased on various dates was mixed together. Every sale of marijuana made by the processor (a wholesaler entity) to a licensed retailer on or after January 1, 2026 is fully taxable. The entire sale price would be subject to the tax, without allocation with respect to when inventory was purchased.