Michigan’s cannabis industry started the year on a chilly note.
Recreational marijuana sales in Michigan dropped nearly 16% in January compared with December as heavy snow, cold temperatures and fears of higher prices due to a new 24% wholesale cannabis tax kept consumers at home.
While January and February are typically the slowest months of the year for cannabis sales, this year’s decline was steeper than usual. When compared with January 2025, sales were down 8% last month to $226 million, according to recently released data from Michigan’s Cannabis Regulatory Agency.
December’s sales, however, were higher than the previous December’s, suggesting consumers were stocking up ahead of the tax’s implementation. Michigan Gov. Gretchen Whitmer signed into law a road funding plan in October that pays for fixes to local roads through a new wholesale tax on marijuana. The tax went into effect on Jan. 1 and faces legal challenges.
At the dispensary Utopia Gardens in Detroit, sales were down about 12% in January and the first few weeks of February compared with the same period last year, owner Stuart Carter said. He attributed the decline mostly to the weather.
Detroit received 17.1 inches of snow in January — well above average — amid bitterly cold temperatures.
Cannabis stores weren’t the only retailers impacted by the weather. A recent survey of Michigan retailers found 55% of respondents reported a sales decrease in January compared with December, up from 49% last year.
William Hallan, president and CEO of the Michigan Retailers Association, which represents about 5,000 businesses, said in a recent news release that the winter weather kept “many shoppers snowed in at home,” although he noted the weather brought more recreation and tourism to the state.
Carter also said he suspects some customers were stockpiling marijuana in December ahead of the tax’s implementation. Consumers spent $269 million with recreational marijuana retailers in December, up nearly 2% compared with the same month a year prior.
He said part of why he believes the tax pulled sales to December is because he has heard from customers who think they pay the tax. The tax is instead paid for by the wholesaler who makes the first sale or transfer of marijuana to a retailer.
Carter said the industry is still trying to figure out how to share the burden of the tax. While the wholesaler has to ultimately pay the tax, those costs could be passed along to the retailer and the customer.
So far, though, the tax hasn’t had much of an impact on the price consumers pay for marijuana. The average retail price for an ounce of recreational marijuana flower in January was $59.07, according to the CRA, up 1.5% from December but down 11% compared with January 2025.
Carter said Michigan’s competitive recreational marijuana market should keep prices low for consumers when compared with other states, but he expects prices will increase throughout the year.
“Even without the tax going into play, margins were already very problematic in terms of trying to make our balance sheet work,” Carter said. “So then when you add the tax on top of that, it’s pushing up the wholesale price of extracts and flower, and so it’s putting a lot of pressure on retail.”
As a result, he thinks more cannabis companies will go out of business. Already, a multistate Ann Arbor-based cannabis company, C3 Industries, said in December that it will close its cultivation facility in Webberville, near Lansing, citing the “continuing decline of Michigan market conditions, exacerbated by oversupply and the looming wholesale tax. …”
Carter said his company, which includes the grow facility Utopia Flower and processor Utopia Extracts, is doing OK so far. He attributes that to vertical integration, meaning that because he grows, produces and sells marijuana, he has different revenue streams and more control over margins.
Contact Adrienne Roberts: amroberts@freepress.com