Last verified: March 2026

Michigan's cannabis regulatory landscape is in one of its most active periods since legalization. The 2025–2026 legislative session has produced major tax changes, proposals to cap oversupply, hemp product regulation, testing reform, and expanded enforcement against the illicit market. A landmark court case on vehicle searches is reshaping law enforcement practice, and federal rescheduling efforts continue. This page tracks the most significant recent and pending legislation.

Recently Enacted Legislation

HB 4951 — 24% Wholesale Tax (Signed October 7, 2025)

The most consequential cannabis legislation since Proposal 1 itself. Governor Whitmer signed HB 4951, imposing a 24% excise tax on wholesale cannabis transactions effective January 1, 2026. The bill was part of a $1.8 billion infrastructure funding package.

• Originally proposed at 32% before being negotiated down to 24%
• Rushed through without a public hearing, according to industry critics
• Revenue directed to the Neighborhood Road Fund for local road and bridge repair
• Projected to generate approximately $420 million per year
• Medical cannabis is exempt from the wholesale tax
• Pushed Michigan's combined recreational tax rate from ~16% to approximately 40%

The tax has drawn fierce opposition from the industry. The Michigan Cannabis Industry Association (MiCIA) filed a constitutional challenge (see below), and a bipartisan repeal effort is underway. See Taxes & Revenue for the complete tax analysis.

Pending and Active Bills

SB 810 — Wholesale Tax Repeal (February 2026)

SB 810 would repeal the 24% wholesale tax entirely. The bill was introduced with bipartisan support from 8 senators, reflecting growing concern from both parties that the tax is damaging the legal industry while strengthening the illicit market. Key arguments from supporters:

• The ~40% combined rate makes legal cannabis uncompetitive against the $2 billion+ illicit market
• The tax was passed without adequate stakeholder input or public hearing
• Businesses already struggling with oversupply and compressed margins cannot absorb the additional burden
• The tax undermines the voter-approved MRTMA's intentionally low-tax design

SB 597-598 — License Caps and Freeze (October 2025)

These companion bills address Michigan's oversupply crisis through direct limits on market entry:

• SB 597: Cap cannabis retailers at 1 per 10,000 residents in each municipality
• SB 598: Freeze new large-scale grower and testing facility licenses
• Supported by both the MiCIA and the CRA

The rationale is straightforward: with 3.77 million active plants, 1.7 million pounds of frozen flower in storage, and prices down 85%, the market has far more supply than demand. These bills aim to stop the bleeding while natural attrition reduces the oversupply.

SB 599-602 — Hemp-Derived Product Regulation (December 2025)

Passed the Senate, these bills would bring intoxicating hemp-derived products under CRA oversight:

• Products containing more than 1.75mg THC would require CRA licensing
• Targets Delta-8 THC and similar hemp-derived intoxicating cannabinoids
• Establishes testing, labeling, and age-verification requirements aligned with the licensed cannabis market
• Aims to close the regulatory gap that has allowed intoxicating hemp products to be sold without oversight in gas stations, convenience stores, and smoke shops

The licensed cannabis industry has strongly advocated for this legislation, arguing that unregulated hemp products undercut the tested, taxed legal market and pose consumer safety risks.

HB 5884-5885 — Medical/Adult-Use License Merger

These bills would merge the separate medical and adult-use licensing systems under the MRTMA framework while preserving the MMMA patient and caregiver system. The goal is to streamline licensing for businesses that currently hold separate licenses for medical and recreational operations, reducing administrative burden and regulatory complexity.

HB 4501 — State-Run Reference Testing Lab

Introduced in response to the Viridis Labs scandal (whose founders were permanently banned from the industry in August 2025), this bill would create a state-operated reference testing laboratory to audit private testing facilities. The lab would:

• Conduct random verification testing of cannabis products already tested by private labs
• Identify discrepancies in potency, contaminant, and safety testing results
• Serve as an independent check on the private testing infrastructure

The Viridis case exposed how compromised testing can undermine consumer safety and market integrity across the entire supply chain.

HB 5104-5107 — Expanded Black Market Enforcement (October 2025)

This package of bills would expand enforcement tools against the illicit cannabis market, which is estimated at $2 billion+ annually in Michigan. Key provisions include:

• Enhanced penalties for unlicensed cultivation, processing, and distribution
• Expanded authority for law enforcement to investigate and disrupt illegal operations
• Additional resources for the CRA's enforcement division

Proponents argue that Michigan's legal market cannot compete when the illicit market operates with zero tax burden and no regulatory costs. Critics note that enforcement-heavy approaches have a troubled history and that price competitiveness — which the wholesale tax undermines — is the most effective tool against the black market.

Significant Court Decisions

People v. Armstrong (April 2025)

In a landmark ruling, the Michigan courts held that the smell of marijuana alone no longer constitutes probable cause for a vehicle search. This decision reflects the new legal landscape post-legalization — since cannabis possession is legal for adults 21+, the odor of cannabis does not inherently indicate criminal activity. The ruling has significant implications for law enforcement practices and Fourth Amendment protections during traffic stops.

MiCIA v. State of Michigan — Wholesale Tax Challenge

The Michigan Cannabis Industry Association (MiCIA) filed a lawsuit challenging the constitutionality of HB 4951's 24% wholesale tax. The central argument:

• The MRTMA was enacted as a voter-initiated statute through Proposal 1
• Under Michigan law, voter-initiated statutes can only be amended by the legislature with a three-fourths supermajority in both chambers
• HB 4951 effectively amends the MRTMA's tax structure without meeting that threshold
• A preliminary injunction was denied in December 2025, meaning the tax remains in effect during litigation
• The case continues through the courts as of March 2026

If MiCIA prevails, the wholesale tax could be struck down entirely, returning Michigan to the original ~16% tax rate.

Federal Developments

Federal Rescheduling (Ongoing)

In December 2025, President Trump issued an executive order directing federal agencies to complete the rescheduling of cannabis from Schedule I to Schedule III of the Controlled Substances Act. If implemented, rescheduling would have major implications for Michigan's industry:

• 280E relief: Cannabis businesses could deduct standard business expenses on federal tax returns, dramatically improving profitability
• Banking access: Financial institutions would face fewer barriers to serving cannabis businesses
• Research: Schedule III status would facilitate scientific research on cannabis
• State programs continue: Rescheduling does not federally legalize recreational cannabis — Michigan's regulatory framework would remain in place

The rescheduling process is ongoing as of March 2026. The timeline and final outcome remain uncertain.

What These Bills Mean for Michigan Cannabis

The 2025–2026 legislative agenda reflects an industry at a critical juncture:

• Tax tension. The wholesale tax fight — in court, in the legislature, and in public opinion — is the defining issue. The outcome will shape the industry's competitive position for years
• Supply correction. License caps and production freezes represent an acknowledgment that uncapped growth created a crisis that market forces alone may not resolve quickly enough
• Regulatory maturation. Hemp regulation, testing reform, and license mergers show a market moving from startup-era governance to mature oversight
• Illicit market competition. Every tax and regulatory decision is now viewed through the lens of its impact on the legal market's ability to compete with the estimated $2B+ illegal market

Staying Informed

• CRA website — Regulatory updates, license data, and industry guidance
• Michigan Legislature bill tracker — Search and follow specific bills
• CRA email alerts — Subscribe through the CRA website for regulatory notifications