Preliminary information for the Wholesale Marihuana Tax is now available.
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Issued: November 25, 2025
On October 7, 2025, the Comprehensive Road Funding Tax Act (“CRFTA”) was signed into law and goes into effect on January 1, 2026. CRFTA imposes a new excise tax on wholesale sales of adult-use (sometimes called “recreational”) marihuana. The use, possession, and sale of adult-use marihuana to individuals over 21 years of age became legal in Michigan following voter approval of a 2018 ballot initiative which became the Michigan Regulation and Taxation of Marihuana Act (“MRTMA”). CRFTA will be administered by the Department of Treasury.
Specifically, CRFTA imposes an excise tax at the rate of 24 percent on sales of adult-use marihuana at the wholesale level. The new 24 percent excise tax is levied in addition to other applicable state taxes, including the current 10 percent excise tax on retail sales of adult-use marihuana imposed pursuant to MRTMA, as well as Michigan’s existing 6 percent sales tax. The new tax will be imposed on the “wholesale price” of certain sales or transfers of adult-use marihuana. The tax will apply to (a) the first sale or transfer of marihuana from a “marihuana establishment” to a “marihuana retail licensee,” (b) marihuana cultivated and processed for retail sale by a marihuana retail licensee itself, and (c) sales or transfers of marihuana from provisioning centers (facilities licensed under the Medical Marihuana Facilities Licensing Act) to adult-use marihuana retail licensees.
CRFTA’s definition of “marihuana establishment” references the definition provided in MRTMA, meaning any marihuana-related entity licensed by the Cannabis Regulatory Agency (“CRA”) under that statute, including a marihuana grower, marihuana safety compliance facility, marihuana processor, marihuana microbusiness, marihuana retailer, and marihuana secure transporter. “Marihuana retail licensee” is defined as a CRA licensee holding a license issued under MRTMA authorizing it to make retail sales of marihuana to individuals over 21 years of age.
With respect to typical wholesale transactions, the new 24 percent wholesale tax is imposed on the entity acting as the wholesaler – the “marihuana establishment” (such as a cultivator or processor) that makes the first sale or transfer of marihuana to a marihuana retail licensee. The wholesaler entity is legally responsible for paying the tax on all applicable transactions, as well as remitting the tax to the Department of Treasury. The wholesaler is permitted to recoup the tax due on a transaction by collecting it from the retail licensee, but the wholesaler remains legally liable for both the payment and remittance of the tax. This is similar to Michigan’s general sales tax, which is imposed upon sellers of tangible personal property.
For retail licensees under MRTMA that cultivate, process, and package their own product for retail sale, as well as sell marihuana products at retail (sometimes called “seed-to-sale” businesses such as microbusinesses), the new wholesale tax will be applied at the point that marihuana product is packaged for retail sale.
For each transaction between non-affiliated persons, CRFTA provides that “wholesale price” (the price to which the 24 percent excise tax is applied) means the actual price paid to the marihuana establishment by the marihuana retail licensee to acquire the marihuana. The “wholesale price” includes any tax, fee, or other charge reflected on the invoice or other document evidencing the sale or transfer of the marihuana; however, the term “any tax” does not include the CRFTA 24 percent wholesale tax itself. The definition also prohibits reduction of the wholesale price due to any rebate, trade allowance, exclusivity agreement, or other discount or reduction that may be given by the marihuana establishment.
For transactions between “affiliated persons,” including transactions between medical marihuana provisioning centers and marihuana retail licensees, and for marihuana that is cultivated and processed for retail sale by the marihuana retail licensee itself (i.e., seed-to-sale businesses such as microbusinesses), CRFTA defines “wholesale price” as the “average wholesale price” of the marihuana. “Average wholesale price” means the price of marihuana as “calculated and published by [the Department of Treasury] each quarter based on the best available information.” An “affiliated person” is defined under CRFTA as one that, “directly or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, another person.” Generally, direct control means ownership of more than 50% of an entity, while indirect control means control exercised through a chain of other companies. Treasury is currently in the process of determining how the “average wholesale price” for agricultural marihuana products for each quarter will be determined. More information on this topic will be provided to taxpayers as it becomes available.
The Department of Treasury anticipates that taxpayers will file tax returns and remit the new wholesale tax on a quarterly basis; however, filing and payment details have not yet been finalized. Treasury anticipates publishing information regarding filing and payment as soon as that information is available.