The Michigan Department of Treasury has issued detailed guidance outlining the implementation of a new 24% wholesale marijuana tax, which officially took effect on January 1, 2026. This tax applies to the first sale or transfer of adult-use marijuana from a licensed establishment to a retail licensee, marking a significant shift in the state’s cannabis regulatory framework. According to the release, the tax is intended to fund road and bridge infrastructure projects across Michigan.

Who Bears the Tax Responsibility?

Under the law, the responsibility for paying the tax falls on the wholesaler, which is the business making the first sale or transfer to a retailer. This includes growers, processors, seed-to-sale microbusinesses that package their own products for retail, and medical provisioning centers that move product to an adult-use license. The release clarifies that the tax applies when the retailer becomes the owner of the cannabis, typically determined by the terms of the business contract or the usual operational practices between parties.

“We know this is the first year of a new tax, and we want to help businesses adjust smoothly as we implement this policy,” said Michigan State Treasurer Rachael Eubanks. “As a transition-year measure, Treasury is providing relief from penalties and interest for businesses that make good-faith quarterly payments.”

Businesses are encouraged to start reporting and making their quarterly payments for the first period ending March 31, as per the guidance provided by the Treasury.

How is the Tax Calculated?

The tax calculation depends on the relationship between the businesses involved. If two businesses are not connected, the tax is based on the actual price the retailer pays for the product. However, if the businesses are related—such as a company that grows and sells its own product—the government uses a standard “average wholesale price list.” This list is updated every three months and is posted on the Treasury’s official website.

“Because these prices can change each quarter, businesses should report and pay their taxes on time,” the release states. This ensures compliance and avoids potential penalties or interest charges in the future.

The average wholesale price list is a crucial tool for businesses that operate vertically, such as those that grow, process, and sell their own products. By using this list, the government aims to standardize tax calculations and reduce discrepancies in reporting.

When Are Payments Due?

In 2026, businesses are expected to make quarterly payments reflecting their activity. These payments are due by the following dates: April 20, July 20, October 20, and January 20, 2027. The January 20, 2027, payment will include the full amount owed for the fourth quarter and any remaining tax from the first three quarters of the year.

However, businesses that pay at least 75% of what they owe for each quarter and then settle the full amount by January 20, 2027, will be exempt from penalties and interest for the first three quarters. This is a transition-year relief measure, as the Treasury states that full payments will be required each quarter starting in 2027.

The release emphasizes that businesses must stay informed about their tax obligations, as the rules are expected to become more stringent in the following year. Failure to meet the deadlines could result in financial penalties, even with the current relief measures in place.

The Treasury has provided detailed guidance on the wholesale marijuana tax and encourages businesses to visit its official website for more information. The guidance includes forms, payment procedures, and links to the average wholesale price list, which is updated quarterly.

With the new tax in place, Michigan’s cannabis industry faces a new set of regulatory challenges. The tax is expected to generate significant revenue for the state, which will be allocated toward infrastructure improvements, including roads and bridges. This marks a key moment for Michigan’s cannabis market, as it moves toward a more structured and transparent system of taxation and regulation.

Industry experts note that the new tax could impact the cost structure for cannabis businesses, especially those that operate vertically. While the transition-year relief offers some flexibility, businesses must prepare for more rigorous compliance requirements in the future. As the market evolves, the state’s ability to manage this new revenue stream will be closely watched.