Potholes and pipe dreams

The great Michigan cannabis culling of 2025

By CHRIS SILVA

As 2025 comes to a close, the cannabis landscape in Michigan is shifting from a wide-open frontier to a walled garden. We’re continuing to see record-breaking sales numbers, but the reality on the ground is far from OK. The industry is seeing a massive contraction due to tax policy and market saturation.

Here is the year-end briefing on the state of Michigan cannabis:

 

The 24% excise cliff

The most significant threat to the industry is no longer just oversupply, but House Bill 4951. Effective Thursday (Jan. 1), the state will impose a 24% wholesale excise tax on all cannabis transfers. This is in addition to the existing 10% retail excise tax and 6% sales tax.

For the consumer, the math is grim.

While the tax is levied at the wholesale level, basic economics tells us these costs will be passed down. In a market where margins were already razor thin, retail prices are expected to climb significantly as dispensaries adjust.

If you want to mitigate the immediate impact on your wallet, the next few days are critical. Stocking up before the new year is the only way to lock in 2025 pricing. Focus on high-value items with long shelf lives:

• Concentrates: Live resin and rosin maintain potency for six to 12 months if stored in airtight glass containers in a cool, dark environment.
• Tinctures and Rick Simpson Oil: These are highly shelf stable and offer a better milligram-per-dollar ratio than traditional flower.
• The medical loophole: Now is the time to renew or apply for your medical marijuana card. Medical cannabis is exempt from both the 10% retail excise tax and the new 24% wholesale hike. Patients will continue to pay only the flat 6% sales tax. If your favorite shop still maintains a medical license, a $40 card could save you hundreds in the coming year.

 

An industry-wide culling

The legislative shift is already claiming casualties across the board. C3 Industries — the powerhouse behind the High Profile retail chain — confirmed it will shutter its 125,000-square-foot cultivation hub in Webberville by mid-February. That means 62 layoffs, with leadership explicitly naming the new wholesale tax as the reason the facility is now “economically unviable.”

But this isn’t just a localized issue; it’s a systemic collapse. Pincanna, the East Lansing-founded operator that once held a massive footprint in Pinconning, has officially folded and ceased all operations. We are seeing a similar pattern statewide: Higher Love in the UP has slashed 30% of its workforce, and TerrAscend (the parent of Gage) is effectively retreating from the Michigan market.

From the state capital to rural farms, the era of the “mega grow” is ending as companies realize they cannot outrun the state’s tax appetite.

 

Schedule III: A paper tiger

On the federal level, the DEA’s move to reclassify cannabis as a Schedule III drug remains the industry’s North Star, but it’s a distant one. While rescheduling will eventually nullify Section 280E of the Internal Revenue Code — allowing businesses to finally deduct standard operating expenses — the relief is not retroactive. For the operators facing the state’s 24% wholesale hike, a future federal tax break doesn’t solve today’s liquidity crisis.

 

The bottom line

The Lansterdam of 2026 will be leaner, more expensive and more consolidated. The transition from a voter-initiated open market to a state-leveraged piggy bank for road funding has fundamentally changed the game. For the consumer, the message is clear: buy now, store smart and get your medical card before the clock strikes midnight on New Year’s Eve.