How Sales Remain Stable – Thanks to Michigan’s low prices, strong demand, and retailer willingness to absorb some of the tax.
Michigan’s newly implemented 24% wholesale cannabis tax has introduced one of the most aggressive tax structures in the U.S. cannabis market. Yet despite the steep increase in upstream costs, early 2026 data suggests that consumer demand remains remarkably resilient, and the state’s retail prices—while rising—have not surged as dramatically as many operators feared.
The tax, which applies before products ever reach dispensary shelves, compounds Michigan’s existing 10% retail excise tax and 6% sales tax, creating a layered burden that affects every step of the supply chain. Growers and processors are feeling the pressure most acutely. Their margins, already thin due to years of oversupply and price compression, are now being squeezed further as the wholesale tax inflates transfer costs.
Despite these upstream challenges, retailers have been cautious about passing the full cost to consumers. As a result, early price increases have been modest rather than dramatic, especially for high velocity categories like flower and vape cartridges.
Most striking is that sales volumes have not meaningfully declined. Michigan remains a high consumption state with a mature customer base and strong product diversity. Even with rising costs, the state’s prices remain lower than those in many neighboring markets, giving consumers little incentive to reduce purchases or seek alternatives. The Stability:
- The market’s unusually low baseline prices
- Even after modest increases, Michigan cannabis remains affordable relative to national averages
- Retailers willingness to absorb some of the rising costs
However, the long-term outlook is more uncertain. The real test will come as operators renegotiate contracts, adjust supply strategies, and determine how much of the tax burden they can continue to shoulder without compromising longterm viability.
For now, Michigan’s cannabis market is demonstrating resilience. Prices are rising, but not sharply. Sales are holding steady. And the state’s consumers, accustomed to abundant supply and competitive pricing, appear willing to absorb modest increases.
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