One of Michigan’s fastest-growing industries is facing a major tax hike this New Year’s Day.
On Thursday, a new 24% marijuana wholesale tax was imposed on top of the state’s already existing 10% retail tax and 6% sales tax, placing a 40% total tax on the products.
“That’s an extra cost I wasn’t paying before, and now, I don’t have the margins to keep the prices the same, for my products, for the customers,” said Abbas Chami, chief financial officer for Green Acres Cannabis.
Chami says the need to adjust weighs heavily on his team and the potential impacts on their future bottom line.
“I have to eat up some of it, but also, I have to pass down some of it. I don’t, we don’t have the room to eat up all of it. We would. We’re very competitive. We try to be very competitive in this market, because you have to be. Otherwise, you won’t be able to survive,” he said.
While the new tax is expected to create an additional $420 million in annual revenue to fund state infrastructure projects, Chami says some business owners may struggle to keep up.
“It’s very extreme, the way they went about it, because the market can’t survive this,” said Chami.
Although the tax has already gone into effect, many of the industry’s advocacy groups – including the Michigan Cannabis Industry Association – have filed appeals to challenge it.
The association, which represents more than 400 cannabis producers across the state, hoped to strike the tax in its entirety. Business owners in the cannabis industry fear the tax could result in job losses and other issues.
