Senate Bill 810 Targets 24% Wholesale Cannabis Tax, Eases Triple-Tax Burden

(MICHIGAN) — State Senator Jonathan Lindsey, a Republican from Coldwater, introduced Senate Bill 810 to completely repeal Michigan’s 24% wholesale cannabis tax that took effect January 1, 2026.

The proposal has drawn attention because the wholesale levy sits upstream in the adult-use supply chain and adds to taxes charged at retail, a structure businesses describe as a triple-tax burden. Under Lindsey’s bill, only the standard 10% excise tax would remain at the point of sale, alongside Michigan’s 6% sales tax.

Senate Bill 810 has bipartisan support from four Republican and three Democratic co-sponsors, and supporters frame it as a bid to protect the regulated market while opponents warn it could deepen budget strains.

Lindsey’s push lands as Michigan wrestles with how to fund priorities tied to the tax and how to steady an industry that has reported layoffs and closures in the first month after the levy began.

House Bill 4951 enacted the wholesale excise tax, and Governor Gretchen Whitmer signed it into law as part of Michigan’s “Fix the Damn Roads” initiative.

The wholesale excise applies to adult-use cannabis products sold or transferred from licensed cultivators and processors to retailers. Businesses say the cost pressure does not stop there, because taxes collected at the counter layer on top of earlier supply-chain costs and can be reflected in prices or margins.

That dynamic sits at the center of the “triple-tax” argument. Industry participants describe a stacking effect in which taxes apply at multiple points, leaving less room for cultivators, processors, and retailers to absorb price swings.

Supporters of Senate Bill 810 also argue repeal would return Michigan to the original tax framework approved by voters in 2018. The lawsuits now challenging the wholesale tax similarly point back to voter action, but through a different route.

Early sales numbers added urgency to the fight. Michigan’s cannabis sales plunged 16% in January 2026 compared to December 2025, falling from $269.2 million to $226.4 million—the lowest monthly total since late 2022.

Businesses and some lawmakers tie that drop to the wholesale tax taking effect, though the sales figures alone do not explain how much any single factor drove the change. Still, operators say the timing intensified stress across the supply chain.

Reports of layoffs and permanent facility closures spread across the state after January’s decline, with cultivators and processors citing record-low flower prices and crushed profit margins.

Lindsey, who introduced the repeal bill, cast the tax as a government expansion that could undercut the legal industry. He said the tax represents “unnecessary growth of government” that threatens the long-term viability of the legal market.

“I have heard, especially from locals, some of them have described to me, that they’ve already had to do layoffs or, you know, make other adjustments that, you know, I don’t think we’ve seen the full magnitude of the impact yet, but it certainly has set in and already had deleterious effects,” Lindsey said.

Lindsey also said he prefers the state “stop growing larger, live within its means.”

Backers of Senate Bill 810 say the wholesale levy raises costs inside the regulated system and can widen the gap with illicit or unregulated sellers, an argument that has surfaced repeatedly in cannabis tax debates nationwide. They also point to the industry’s price pressures, saying an added tax can amplify stress when wholesale prices fall.

The bill’s bipartisan co-sponsorship reflects those concerns, even as the politics of cannabis and road funding often split lawmakers along different lines. Supporters describe repeal as a way to stabilize licensed businesses and preserve jobs, while keeping Michigan aligned with what voters approved in 2018.

Opponents do not all defend the wholesale tax as good policy. Instead, some warn that removing it without an alternative revenue plan creates another hole in an already strained budget picture.

Rep. Joseph Aragona, a Republican from Macomb Township who chairs the House Regulatory Reform Committee, opposes the repeal despite not supporting new taxes. He pointed to a $900 million budget shortfall expected for 2028 and questioned what would replace the wholesale tax revenue.

“It’s gonna be tough getting that proposal out of the senate, number one. Once it comes to the house, whether it’s in my committee or appropriations, we’re gonna have to take a hard look and say, all right, if these dollars are supposed to be going towards roads, then kind of what do we replace it with?” Aragona said.

That warning connects directly to where the wholesale tax revenue was designed to go. The levy was projected to generate approximately $420 million annually for the Neighborhood Road Fund, linking cannabis tax policy to road repairs and transportation politics.

Road funding has long been a high-stakes issue in Michigan, and the wholesale tax was folded into a broader push under the “Fix the Damn Roads” banner. For lawmakers who backed that effort, the question is not simply whether the cannabis market can carry a new levy, but what happens to road-related funding if it disappears.

Lindsey argues the revenue expectations may not hold if sales continue to decline, framing repeal as a way to prevent policymakers from relying on projections that could miss their mark.

The clash sets up a basic fiscal problem for the Legislature. If Senate Bill 810 advances, lawmakers would have to confront whether to replace the wholesale tax revenue, cut spending tied to those dollars, or revise road funding plans built around the Neighborhood Road Fund.

The budget debate also intersects with broader concerns about how cannabis tax structure shapes legal-market participation. Industry participants say the wholesale levy hits cultivators and processors first, and that pressure can travel through the chain, squeezing margins as products move toward store shelves.

Retailers, meanwhile, operate in a market where consumers often focus on final price. When costs rise earlier in the chain, businesses say, they must decide whether to pass them on, absorb them, or cut costs elsewhere.

Those tradeoffs have become sharper amid reports of low wholesale flower prices. Operators say a market already under pricing pressure has less room to absorb a new levy, making layoffs and facility closures more likely when sales soften.

The repeal effort is also unfolding alongside a separate fight in court. Industry lawsuits claim the wholesale tax is unconstitutional because it modified a voter-approved initiative without the required three-fourths supermajority in the Legislature.

That legal theory focuses on process rather than economics. Plaintiffs argue the Legislature effectively changed what voters enacted, and that the Michigan Constitution’s supermajority threshold should have applied.

The court challenge creates another path that could reshape the wholesale levy even if lawmakers do not repeal it. At the same time, legislative action could move on its own timeline, creating a parallel track in which the Legislature debates repeal while judges weigh whether the tax survived the state’s voter-initiative rules.

For businesses, the overlap matters because it extends uncertainty. Some operators say they are already making staffing and investment decisions in response to the new tax structure and January’s sales drop, while watching whether Senate Bill 810 gains traction and whether courts agree with the constitutional claims.

For lawmakers, the overlap creates competing pressures. Repeal supporters argue the market impact is immediate and measurable in sales, layoffs, and closures, and that relief should not wait. Repeal opponents argue that undoing a tax tied to road funding without a replacement plan risks worsening long-term fiscal constraints.

Whitmer’s role in signing House Bill 4951 also keeps the debate tethered to the state’s road-funding politics, not only its cannabis industry. The wholesale tax was presented as part of a wider plan, and any repeal reopens questions about the durability of that plan.

In the short term, the dispute has turned Senate Bill 810 into a focal point for a broader argument over how Michigan taxes legal cannabis and how much strain the regulated market can bear. The bill’s supporters say the state should step back from a structure they call a triple-tax burden, while opponents focus on what comes next for road money if the wholesale revenue stream vanishes.