JENISON, Mich. — Michigan lawmakers approved a new 24% wholesale tax on marijuana as part of the state's $75 billion budget, expected to generate approximately $420 million annually for road infrastructure improvements.
The tax, which takes effect January 1, will impact recreational marijuana stores across the state and bring Michigan's cannabis taxation more in line with how alcohol is taxed.
WATCH: State Rep. explains impact of new tax on marijuana
"The new tax at 24% is a wholesale tax on marijuana, and we're intending to use that mainly for the roads. The dollars from that tax are earmarked to go there," said State Rep. Bradley Slagh, who represents Zeeland.
The budget passed after an all-night legislative session in Lansing.
Slagh said the new tax aligns marijuana taxation with Michigan's approach to alcohol regulation.
"When recreational marijuana was put in place, it was determined we were going to try to do that similar to what we're doing with alcohol. And this brings us much more toward a parity with that," Slagh said.
Consumers should expect to see the tax reflected in retail prices, as businesses are likely to pass the cost along to customers.
"The customers are definitely going to see this. The middleman folks are not going to eat this tax. They're going to pass it along," Slagh said.
While the new revenue stream represents progress toward addressing Michigan's road funding needs, Slagh acknowledged it won't completely solve the infrastructure challenges.
"What we're ending up with right now is about $1.8 billion, but the agreement was we need three to three and a half billion every year. So we're definitely not there. This is a movement in a direction to try and help us get to those local roads," Slagh said.
Despite the increase, Michigan's marijuana tax rate remains competitive compared to other states.
"Michigan had one of the lowest tax rates on marijuana in the nation. Maybe that's not the thing we should be leading on. There is a need for the revenue, and those folks also drive on the roads," Slagh said.
