(LANSING) - Michigan's new wholesale cannabis tax generated far less revenue than state officials originally projected during the first three months of 2026.
The 25-percent wholesale tax, which took effect January 1, brought in about $34 million during the first quarter of the year. State officials had projected the tax would generate roughly $86 million during that same period.
State officials say the tax is still in its early stages and that several factors could affect collections as the program continues to develop.
Cannabis industry leaders argue the shortfall was predictable. Critics of the tax say the higher wholesale rate encourages some consumers to turn to the illicit market, reducing taxable sales.
The tax was approved in part to help fund road improvements and other infrastructure needs. The revenue gap is adding pressure on lawmakers as they continue work on future budget plans.