Michigan's cannabis industry is facing a bleak future as new tax threatens more closures and layoffs. Since recreational cannabis sales began in December 2019, prices have plummeted, leading to the closure of over 550 dispensaries and cultivators, with thousands of employees losing their jobs.
In 2025, the recreational market saw a decline in annual sales for the first time, with adult-use dispensaries ringing up $3.17 billion in sales, down from $3.27 billion in 2024, a decrease of about $100 million or 3.1%. The decline is attributed to an oversaturated supply and declining prices.
The dream of a "green rush" has given way to a cutthroat market where most businesses are fighting to survive. The industry's struggles have led to concerns over the long-term sustainability of Michigan's cannabis market.
To make matters worse, Governor Gretchen Whitmer has signed a bill that will impose a 24% wholesale tax on cannabis in 2026, which is expected to shrink the wholesale market by 14%. This move is likely to further exacerbate the industry's problems and lead to more closures and layoffs.
The new tax is already taking its toll on the industry, with sales at some dispensaries being slow due to consumers mistakenly believing they are responsible for paying the tax. The industry has struggled with prices, with the average retail price for an ounce of recreational flower falling to $58.20 in December 2025, down from $69.20 a year earlier.
The state's cannabis industry is also facing challenges on the supply side, with growers feeling the pressure. Michigan currently has 430 active grow operations, but 191 have closed since the industry began, representing about 30.8% of growers who have gone out of business over the past six years.
Despite efforts to limit competition and reduce oversupply, many in the industry fear that the new tax will deepen the downturn, forcing more dispensaries, processors, and cultivators to close their doors. The legislation introduced by the state Senate would limit each municipality to one dispensary for every 10,000 residents, but this move is expected to have significant implications for smaller cities like Hazel Park and Ferndale.
The industry's struggles are also affecting cannabis workers, with many employees worried about their jobs as the market continues to shrink. Municipal budgets are also at risk, with local distributions shrinking if more retailers shut down and sales weaken.
As frustration grows over the industry, business owners are warning that consumers may turn back to an illicit market that doesn't face steep tax rates, further threatening the long-term sustainability of Michigan's cannabis market.
"It's going to be difficult to navigate these waters," says Brian Farah, CEO and co-founder of Hello Farms. "We want to have a sustainable Michigan business that gives back to the customers, but with these changes, it will be tough."
In 2025, the recreational market saw a decline in annual sales for the first time, with adult-use dispensaries ringing up $3.17 billion in sales, down from $3.27 billion in 2024, a decrease of about $100 million or 3.1%. The decline is attributed to an oversaturated supply and declining prices.
The dream of a "green rush" has given way to a cutthroat market where most businesses are fighting to survive. The industry's struggles have led to concerns over the long-term sustainability of Michigan's cannabis market.
To make matters worse, Governor Gretchen Whitmer has signed a bill that will impose a 24% wholesale tax on cannabis in 2026, which is expected to shrink the wholesale market by 14%. This move is likely to further exacerbate the industry's problems and lead to more closures and layoffs.
The new tax is already taking its toll on the industry, with sales at some dispensaries being slow due to consumers mistakenly believing they are responsible for paying the tax. The industry has struggled with prices, with the average retail price for an ounce of recreational flower falling to $58.20 in December 2025, down from $69.20 a year earlier.
The state's cannabis industry is also facing challenges on the supply side, with growers feeling the pressure. Michigan currently has 430 active grow operations, but 191 have closed since the industry began, representing about 30.8% of growers who have gone out of business over the past six years.
Despite efforts to limit competition and reduce oversupply, many in the industry fear that the new tax will deepen the downturn, forcing more dispensaries, processors, and cultivators to close their doors. The legislation introduced by the state Senate would limit each municipality to one dispensary for every 10,000 residents, but this move is expected to have significant implications for smaller cities like Hazel Park and Ferndale.
The industry's struggles are also affecting cannabis workers, with many employees worried about their jobs as the market continues to shrink. Municipal budgets are also at risk, with local distributions shrinking if more retailers shut down and sales weaken.
As frustration grows over the industry, business owners are warning that consumers may turn back to an illicit market that doesn't face steep tax rates, further threatening the long-term sustainability of Michigan's cannabis market.
"It's going to be difficult to navigate these waters," says Brian Farah, CEO and co-founder of Hello Farms. "We want to have a sustainable Michigan business that gives back to the customers, but with these changes, it will be tough."
I'm literally shaking my head thinking about this new tax on cannabis in MI. It's like they're just trying to kill off the last remaining hope for a legit industry here... I mean, what's next? Telling them to go back to growing in their basements or something 
. The whole "green rush" thing was supposed to bring jobs and revenue, but now it seems like we're headed straight for a disaster 
. These business owners are already struggling, and then you throw this 24% wholesale tax on top of it? It's just too much... I feel bad for the people who actually invested in this industry and are trying to make it work 
. Can't we find a way to regulate this stuff without suffocating it first? 
I'm so over this new tax on cannabis in MI! 
24% wholesale tax is just ridiculous. How are dispensaries supposed to stay afloat at this point? 
Prices have already dropped so low that people are even getting ripped off by unlicensed sellers. It's not like they're going to switch back to the black market, but with tax rates this high, it's definitely a possibility 
. And don't even get me started on the supply side... 30.8% of growers have closed shop already? That's just devastating for the whole industry. I mean, what's next? 
like, I'm all for supporting local businesses and stuff, but this new tax is just too much 
it's not like they're gonna start growing their own or anything 
. and the prices? $58.20 for an ounce of flower? that's like, half what it used to be! 
. i wish michigan would think about how this is affecting the community and not just the profiteers 
. anywayz, can we pls just get some more regulations in place that make sense for the ppl who actually use cannabis? it's like, we need something more than just cutting taxes 
. I mean, they're already struggling to stay afloat with prices plummeting and oversupply 
. Now they gotta worry about paying 24% wholesale tax on top of it all? It's a tough pill to swallow 
. I mean, what's wrong with a little competition? 
It drives prices down and gives consumers more options 
. Sure, there are risks involved, but that's just part of doing business, right? 
. Maybe instead of blaming the industry, we should be looking at why the state is imposing this new tax in the first place? 
. But now it just feels like a nightmare for so many small businesses. The state needs to find a way to make the industry more sustainable, not just throw more obstacles their way 
. He's one of the CEOs of Hello Farms, and he knows firsthand how tough it is for businesses in this industry. I hope the state listens to him and others like him - we need some solutions to this problem ASAP! 
. I mean, who wants to pay 24% wholesale tax? It's like they're squeezing the life out of these businesses 
Thousands of employees have already lost their jobs and now they're worried about losing theirs too 
. And what about the consumers? They're going to turn back to the illicit market because it's cheaper? That's just a recipe for disaster 
. I hope the state comes up with a new plan to support these businesses before it's too late 
. Now look at 'em: prices have dropped so low they're barely covering costs 
.
. They're just trying to make ends meet and now they gotta worry about losing their jobs because of some politician's idea 
. We need some TLC from our state reps and some kind of support for these entrepreneurs, 'cause they're already stuck between a rock and a hard place 
.
. And those small towns are gonna get hit hard too 
Hazel Park and Ferndale are gonna be left with just one dispensary for every 10k people? Not cool 
. This is so not what they were expecting when they got into this industry all those years ago 
. Just, ugh 
It's like you want to suck the life out of this industry... I'm just so frustrated for everyone involved 
The market is so saturated and prices keep dropping, it's like they're walking on thin ice. And now with the new tax hitting, I don't know how many more will close down 
supply and demand, not some fancy gov tax law 
. Michigan should've thought of this before they decided to raise taxes