Michigan marijuana tax revenue has topped a billion dollars since recreational sales began in December 2019, collected through a 10% retail excise tax (replaced on January 1, 2026 by a 24% wholesale tax), the standard 6% state sales tax, and local licensing fees. The excise money is distributed by formula to industry regulation, veteran medical research, K-12 schools, road repairs, and the cities, villages, townships, counties, and tribes that host licensed cannabis businesses.
The Taxes Michigan Collects on Cannabis
From the start of adult-use sales through the end of 2025, every recreational purchase at a licensed retailer or microbusiness carried a 10% excise tax, collected by the Michigan Department of Treasury.1Michigan Legislature. Michigan Compiled Laws 333.27963 – Imposition of Excise Tax Medical marijuana was exempt from that excise. On top of the excise, Michigan’s 6% sales tax applies to all cannabis sales, both recreational and medical, so recreational buyers through 2025 paid an effective 16% in combined state tax at the register.
Local governments that allow cannabis businesses can also charge an annual licensing fee of up to $5,000 per establishment. Not every community charges the maximum, and many don’t allow cannabis at all, but where the fees are imposed they stack on top of state collections.
The 2026 Wholesale Tax
On January 1, 2026, Michigan replaced the 10% retail excise with a 24% wholesale marijuana tax assessed earlier in the supply chain, on sales and transfers to retailers.2Michigan Department of Treasury. Wholesale Marijuana Tax The 6% sales tax at the register still applies. Because the tax now hits growers, processors, and distributors rather than the final sale, how much reaches consumers depends on how much of the higher wholesale cost retailers pass through.
How Much Revenue the Market Has Generated
Michigan’s cannabis market grew quickly before leveling off. Licensed dispensaries recorded roughly $3.06 billion in total sales (recreational and medical combined) in 2023, up about a third from $2.29 billion in 2022. Sales climbed again in 2024 to approximately $3.29 billion, and sometime during that year cumulative adult-use sales since December 2019 crossed $10 billion. In 2025, totals pulled back to around $3.17 billion as price compression and oversupply caught up with the market.
Tax collections tracked those sales. Based on recreational sales of about $2.74 billion in fiscal year 2023, the 10% excise alone brought in roughly $274 million, and the 6% sales tax on all $3.06 billion in cannabis transactions added about $184 million, for a combined take approaching $460 million that year. For fiscal year 2024, excise tax and related fees deposited more than $331 million into the Marihuana Regulation Fund before distribution.3Michigan Department of Treasury. Adult-Use Marijuana Distributions Based on Marijuana Revenues Collected in Fiscal Year 2024 Sales tax collections push the overall total higher still.
The 2025 dip matters for revenue even when volume holds up. When price per gram falls, the dollar value of each sale falls with it, and the excise and sales taxes shrink proportionally even if customers keep buying similar amounts.
Where the Excise Revenue Goes
Michigan law dictates how the Marihuana Regulation Fund gets spent. The state first covers administrative and enforcement costs for regulating the industry. Then $20 million per year is set aside for clinical trials studying whether marijuana can help treat medical conditions affecting military veterans and prevent veteran suicide.4Michigan Legislature. Michigan Compiled Laws 333.27964 – Marihuana Regulation Fund
Everything left after those obligations is split four ways:
- 35% to the School Aid Fund for K-12 education. In fiscal year 2024, this share came to roughly $116 million.
- 35% to the Michigan Transportation Fund for road and bridge repairs. The fiscal year 2024 allocation was also about $116 million.
- 15% to cities, villages, and townships that allow licensed cannabis businesses, divided based on the number of retail stores and microbusinesses within each jurisdiction.
- 15% to counties, allocated on the same per-license basis.4Michigan Legislature. Michigan Compiled Laws 333.27964 – Marihuana Regulation Fund
The 6% sales tax on cannabis is not part of this formula. It flows through the state’s general fund and School Aid Fund the same way sales tax on any other product does.
What Host Communities Actually Receive
The 30% local share has become real money for towns and counties that allow cannabis businesses. Recent distributions show both the scale and the direction of travel:
- Fiscal year 2023: about $87.1 million to 269 cities, villages, townships, and counties, which worked out to roughly $59,000 per licensed retail store or microbusiness.5Michigan Department of Treasury. Adult-Use Marijuana Payments Based on Marijuana Revenues Collected in Fiscal Year 2023
- Fiscal year 2024: nearly $99.5 million to 302 local entities and tribes, at about $58,229 per license. Four federally recognized tribal nations received payments for the first time, totaling over $931,000.3Michigan Department of Treasury. Adult-Use Marijuana Distributions Based on Marijuana Revenues Collected in Fiscal Year 2024
- Fiscal year 2025: nearly $94 million to 313 entities and tribes, including 114 cities, 39 villages, 81 townships, 75 counties, and four tribal nations. The per-license payment dropped to $54,017.6Michigan Department of Licensing and Regulatory Affairs. Press Release: Nearly $94 Million in Adult-Use Marijuana Payments for Fiscal Year 2025
The falling per-license figure reflects two trends pulling in the same direction. Total revenue stopped growing after FY2024, while the count of licensed businesses kept climbing, so the pot gets sliced thinner each cycle. A community with two dispensaries received about $118,000 in FY2023 for those licenses and roughly $108,000 in FY2025 for the same two. Local governments can spend the payments on whatever they choose, from public safety and infrastructure to general operations.