Frequently Asked Questions
Non-Affiliated
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?
No, the new 24% wholesale marihuana tax does not “tax itself”. The inclusion of other taxes and fees in the definition of “wholesale price” captures taxes and fees that are or may be imposed by other laws, including federal law. The provision mirrors a similar, long-standing definition in the Tobacco Products Tax Act (see MCL 205.422(ii)), and also prohibits reduction of the wholesale marihuana price due to any rebate, trade allowance, or similar discount.
Affiliated
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.
Regarding the average wholesale price list, will there be different prices for indoor versus outdoor cultivations and different products (edibles, flower, pre-rolls, distillates, concentrates, rosin, resin, etc.)? How often will the average price list be updated?
Treasury expects to publish an “average wholesale price” for various categories of marihuana product, and the first list will be published before the tax takes effect on January 1, 2026.
