Michigan marijuana sales revenue in 2025 declined for the first time since the market opened in December 2019.
Michigan marijuana retailers collected about $3.17 billion in sales last year, a $113 million dip from the $3.29 billion tallied in 2024, according to compiled Cannabis Regulatory Agency (CRA) monthly reports.
The total number of retailers also shrunk from 848 licenses in December 2024, to 838 at the end of 2025, with a peak of 853 stores in April.
“It was clear that this industry was not going to expand in perpetuity,” CRA spokesman David Harns said. “What we’re seeing now is a period of market maturation after several years of rapid growth.”
Record-low prices
While total revenue is down, total sales reached a record high. Retailers rang up nearly 260,000 more pounds of marijuana flower in 2025 than during the year prior – but they sold it for less.
Marijuana flower prices averaged an all-time low of $58.22 per ounce in December, down 16% from the year prior.
Related: Michigan marijuana prices expected to rise
The same trend occurred with vaping products, the industry’s second most lucrative market segment, which sold at prices nearly 20% lower this December, compared to the year prior.
The saturated market has caused some within the industry to look at structural changes that could limit competition.
Michigan currently has a decentralized licensing program that allows local municipalities to determine if and how many marijuana retailers and other businesses they will allow.
Robin Schneider, director of the Michigan Cannabis Industry Association (MiCIA), the state’s largest cannabis lobbying firm, advocated for the voter-passed law that created that decentralized structure. She’s since expressed support for a change to licensing caps set by the state.
Related: New marijuana tax hike in Michigan prompts push for license caps
“Unlimited cultivation licenses have created over-supply, causing wholesale prices to plummet, financially harming businesses all the way down the supply chain,” she said at an October state Senate Regulatory Affairs Committee hearing addressing cap legislation.
“As we’ve seen in other states, unlimited cannabis production in the licensed market leads to failing businesses and sometimes diversion of product into the illicit market, and that puts our entire program at risk of federal non compliance … ”
New tax
As competition and profits tighten across the industry, businesses are facing a new challenge in 2026: a 24% wholesale tax that took effect Jan. 1.
MiCIA spokesperson Rose Tantraphol said the new tax “threatens to accelerate” revenue shrinkage caused by inflation and other economic factors.
“Michigan risks destroying a thriving industry that employs 47,000 people and generates hundreds of millions in tax revenue annually,” she said. “We’re already seeing closures and layoffs.
“Companies from Webberville to the Upper Peninsula have already announced closures … Other members are warning us they won’t make it through the quarter.”
The tax, which still faces legal challenges in a lawsuit led by the MiCIA, is expected to artificially inflate revenue figures and increase prices, as businesses pass along the new cost to customers.
The legislature expects the new tax to raise nearly $420 million of nearly $1.8 billion budgeted as part of Gov. Gretchen Whitmer’s road funding plan.
Related: Black market fears spark call for Michigan marijuana licensing freeze
Some opponents think the revenue estimate is overinflated and don’t take into account the amount of sales that will be lost, especially in border communities that attract out-of-state customers based, in part, on the traditionally low taxes.
Another concern is that higher prices may push customers back to black market sources.
“We were kicking everybody else’s butts on bringing legal cannabis sales into the market,” said state Sen. Jeff Irwin, D-Ann Arbor, who opposed the tax. “And the reason why it happened in Michigan and it didn’t happen in California and it didn’t happen in Washington and it didn’t happen in Colorado was because we had a reasonable tax structure.”
Now, Irwin believes Michigan has lost that edge.
“We have basically walked away from having the best law in the country,” he said. “And I predict that we will lose a lot of customers in the legal market, and as a result, we’ll lose a lot of revenue (and) we’ll empower criminal organizations.”
Reclassification
Amid tax hikes, businesses are optimistic that they may have new opportunities to reduce their federal tax burden.
President Donald Trump on Dec. 18, issued a directive ordering that marijuana be reclassified as a Schedule III drug under federal law.
Related: Trump orders marijuana reclassification. Michigan users won’t notice much difference
Current IRS rules meant to punish businesses generating revenue from drug trafficking forbid certain tax deductions because marijuana is a Schedule I drug. The same rules don’t apply if marijuana is reclassified.
The existing tax code “has forced cannabis operators to pay taxes on gross income rather than net income,” said Ross Sloan, a vice president of cannabis banking with Michigan-based Dart Bank. “Eliminating that burden should free up capital for reinvestment, improve cash flow and strengthen operators’ ability to service debt over time.”
Border wars
November election results indicate a shift in how voters in two border communities view marijuana commerce.
In Niles Township, located along the Indiana border, voters rejected marijuana business altogether.
After voters narrowly approved a ballot initiative allowing for a minimum of four marijuana shops in November 2024, elected officials opened licensing to an unlimited number of applicants.
Nearly 30 businesses submitted applications and residents became wary. The stage was set for properties along a major thoroughfare to be gobbled up and transformed by marijuana businesses.
Sensing a shift in support, a ballot initiative reversing course was launched. It would ban all marijuana shops. An MLive investigation revealed funding for the ballot initiative was linked to a competing business that was already operating nearby.
About 58% of voters supported the pot business ban.
Related: A Michigan town was on track to become a marijuana mecca until voters shut it down
In Menominee, where eight marijuana shops currently operate, residents are becoming concerned about future expansion.
Some residents feel “a little bit lied to,” said Menominee City Councilman Michael DeDamos.
“They expected a lot more money to come flooding in to benefit the community in some tangible way” and “the pot tourism never materialized,” he said. “People drive up … spend another hour sitting in their car at Lume, and by the time they’re done with that, they fill up some gas and maybe get some Taco Bell. But they’re not stopping to see the sights of Menominee.”
Nearly 78% of Menominee voters passed a ballot initiative capping the previously unlimited number of available licenses at nine.
Enforcement
Since CRA Director Brian Hanna took the licensing agency’s helm in 2022, he has been committed to increasing enforcement and reducing the presence of illicit marijuana entering the legal market.
CRA enforcement statistics reveal Hanna is keeping that promise.
On average, the CRA took 111 enforcement actions per month in 2023. That figure rose to 164 per month in 2024 and climbed again to 192 per month in 2025, indicating a steady increase year over year.
“Our focus remains on creating and maintaining a level playing field for licensees who are following the rules and operating in compliance,” Harns said. “Regular education sessions, bulletins and consistent enforcement continue to be an important part of that effort.
“Transparency and accountability are critical to maintaining market integrity, and those principles will remain central in the year ahead.”
Related: China’s black-market marijuana ‘tentacles’ have reached Michigan
Beyond the licensed market, state police last year conducted several high-profile arrests, raids and seizures focused on black market marijuana operations.
Some of those arrests and raids exposed suspected connections to a growing national trend of illicit operations with connections to Chinese nationals and multi-layered criminal operations.
State police seized 13,400 cannabis plants from an illegal grow in Lake County’s Baldwin in July and 5,000-plus plants from a warehouse in Iosco County’s Alabaster Township.
Each of the nine people arrested were born in China, some now American citizens, others with green cards or asylum status, defense attorneys told MLive.
In response, Hanna said: “Based on recent law enforcement actions in Michigan pertaining to the apprehension of Chinese nationals growing marijuana illegally in our state, it makes sense to be concerned that what is happening across the United States is happening in Michigan as well.”
Reference lab
The CRA previously planned to open a $4.4 million state-run marijuana testing lab in 2025.
That didn’t happen, in part because of existing laws that don’t allow state employees to handle and test marijuana.
There is proposed legislation in committee that could allow the lab to open, if passed.
“The House Rules Committee took testimony on the bill (Jan. 15),” Harns said. “We expect the bill to be reported to the floor soon.”
CRA representatives said in August that they hope to have the lab operational by spring of this year.
The lab would be tasked with double-checking data produced by existing marijuana labs and assisting with enforcement investigations.
I am an investigative and cannabis industry reporter. Please call me with any tips, leads or story ideas, 989-372-2495.
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