Amid a looming wholesale tax hike, Senate Democrats in Michigan this week introduced new legislation designed to help support the state’s legal cannabis industry.
A total of four Senate Bills were referred to the state’s Senate Regulatory Affairs Committee.
Senator Jermey Moss (D-Bloomfield), who introduced bills 597 and 598, said, “as Chair of the Senate Regulatory Affairs Committee, I’ve heard directly from those in the emerging cannabis industry about how they’ve been working to navigate through the relatively new rules and regulations to be successful. We want them to continue to grow here in Michigan.”
He added, “that’s why we are taking up our bills with their input to address some licensing barriers, safely expand product, and increase revenue to our state.”
The bills introduced by Moss and State Senator Sam Singh (D-East Lansing) will put a statewide cap on licenses for retail and provisioning centers.
“Limiting retailer and provisioning center licenses by population offers a lifeline to existing businesses and a common-sense approach to addressing the growing threats faced by our retailers,” Singh said.
Under two bills presented by Senator Dayna Polehanki, the regulatory framework for legal cannabis would be extended to include consumable hemp processors. It would establish an application process for consumable hemp manufacturing and define the responsibilities of the Michigan Cannabis Regulatory Agency in regards to hemp.
“This legislation demonstrates our support for conscientious entrepreneurs who prioritize integrity and safety while also protecting consumers — particularly our youth — from dangerous contaminants and misleading packaging. By promoting accountability and safety, we’re helping the cannabis industry thrive on a foundation of public trust and health,” Polehanki said.
Robin Schneider, Executive Director of the Michigan Cannabis Industry Association, said of the proposed bills that “addressing unlimited and overcrowding licenses will create better market stability for our members. Requiring all hemp-derived consumable products to be regulated will stop the proliferation of out-of-state, unregulated THC products that create a danger to public health and safety.”
The proposed Senate bills were introduced as the Michigan cannabis industry prepares to deal with a highly publicized tax increase on wholesale cannabis.
Earlier this month, the Michigan Cannabis Industry Association filed a lawsuit to challenge the 24% wholesale cannabis tax passed by the state’s Senate. The lawsuit argues that the tax hike violates the state constitution, including requirements for amending the state’s 2018 cannabis legalization law.
In late September, the Michigan House of Representatives approved the “Comprehensive Road Funding Tax Act,” which includes a 24% tax on wholesale cannabis sold to retail dispensaries. Supporters say the tax increase will bring in $420 million in extra revenue per year to help repair roads and bridges.
In a press release after the vote on Friday, Governor Gretchen Whitmer said, “I’m proud to deliver on my promise and look forward to driving on safer, smoother roads long after my time as governor.”
Under the state’s current legal laws, there is a 10% excise tax on retail cannabis sales in addition to a 6% sales tax.
Despite low prices, the state still managed to bring in $3.2 billion in legal cannabis sales in 2024.
In September, California lawmakers voted to roll back an increase in the state’s cannabis excise tax rate to 15%. The vote came after the tax was increased to 19% on July 1st, which cannabis industry professionals said would be yet another hurdle for an industry already struggling to compete with the legacy cannabis market.
The California Senate voted 39-1 to approve the rollback.
For the average California dispensary, the difference between a 15% and 19% excise tax can easily run into the tens of thousands of dollars.
Following the vote, Matt Haney (D-San Francisco) said, “if we want to support our cannabis industry that drives millions of visitors to California every year, adding more costs makes absolutely no sense.”
"By stopping this misguided tax hike, the Legislature recognized that smart policy grows revenue by keeping the legal market viable," Amy O'Gorman Jenkins, executive director of the California Cannabis Operators Association, said.