Consumer demand for regulated cannabis products remains near an all-time high in Michigan, but low prices and high taxes mean more licensed businesses are closing or consolidating their operations.
The Higher Love Cannabis Co. announced Aug. 10 that it closed five of its nine dispensaries across the state’s Upper Peninsula (UP) in a decision company officials said was driven primarily by the mounting tax burden on Michigan’s adult-use cannabis industry.
The closures come after Michigan Gov. Gretchen Whitmer signed an $81 billion budget bill that implemented a new 24% cannabis wholesale tax on Jan. 1, putting her road improvement funding plan on the shoulders of the regulated cannabis industry. This 24% wholesale tax is in addition to the state’s 10% cannabis excise tax and 6% sales tax at retail.
“While these taxes apply at different stages of the supply chain and do not constitute a single combined tax rate, their collective impact has created an increasingly unsustainable operating environment – particularly for compliant businesses serving smaller and rural communities,” according to a Higher Love press release.
The Marquette-based business announced that Aug. 9 was the final day to place and pick up orders at its Crystal Falls, Escanaba, Houghton, Munising and Ontonagon dispensary locations.
Higher Love will focus on its four remaining UP locations in Ironwood, Marquette, Menominee and Norway. The Menominee store, in particular, is one of the closest locations for residents 21 and older in Green Bay, Wis., to legally purchase cannabis.
“This decision comes amid broader pressure across Michigan’s cannabis industry, where oversupply, price compression and declining revenue have already forced numerous businesses to consolidate, suspend operations facilities and eliminate jobs,” the company stated. “The added tax burden has further strained the supply chain and made it increasingly difficult for responsible operators to remain viable. Higher Love joins industry leaders in calling for balanced policies that protect consumers while allowing businesses to retain employees, serve their communities and build a sustainable future.”
Michigan’s unlimited-license marketplace, in part, has led to some of these constraints. As of June 30, the state has 836 active adult-use dispensary licenses and 939 active cultivation licenses, according to the Michigan Cannabis Regulatory Agency (CRA). A year ago, in June 2025, the state had 845 active retail licenses and 1,016 active cultivation licenses.
Although Higher Love suspended operations at five dispensaries on Aug. 10, those locations will remain under “active” licensure until February 2027, when the company’s permits are due for renewal.
Despite the new 24% wholesale tax, the state’s dispensaries remain on pace to sell more than 1.3 million pounds of cannabis flower this year, roughly the same amount as sold in 2025, according to the CRA.
But as the average price for adult-use flower at retail dipped to an all-time low of $58.18 per ounce in June, according to the CRA, cannabis revenues have shrunk, indicating that the state’s licensed operators are eating the cost of the new tax – not the state’s consumers.
This is attributable to the oversupply of cannabis in the marketplace, including nearly 2 million pounds of adult-use flower in the state’s inventory as of June 30 – enough to supply consumer demand for 18 months – according to the CRA. This includes 659,342 pounds of flower and 635,668 pounds of fresh-frozen flower at processor facilities, and 184,000 pounds of flower at retailers, who don’t keep more than about two months of inventory on average.
The other roughly 477,000 pounds of flower remains at grow sites.
While a bipartisan coalition of eight Michigan senators filed legislation in February to repeal the state’s 24% cannabis wholesale tax, the Senate Government Operations Committee has yet to consider the bill.
“I opposed the new tax increase, first and foremost, because it represents an unnecessary growth of government,” Sen. Jonathan Lindsey, R-Coldwater, who sponsors the bill, said six months ago.
“Lansing’s budget does not need to grow larger; we simply need better discipline,” he said. “This tax will also damage Michigan businesses and lead to widespread job losses across the state, which are already being reported. I also don’t believe that in the long term this mechanism will generate the expected revenue, especially if sales go down as a result of the increased taxes or if legal challenges against the tax prevail.”
Michigan’s cannabis sales peaked at nearly $3.3 billion in 2024, before dipping 3.4% to just below $3.2 billion in 2025, according to the CRA.
In 2026, the state’s licensed dispensary sales are on pace to fall another 6.4%, dropping below $3 billion.
While Michigan’s sales figures still represent the second-largest adult-use market in the nation – after California’s projected $4.4 billion in 2026 sales – shrinking margins continue to force business owners to face difficult decisions.
“Higher Love’s four continuing locations will remain the foundation for the company’s next chapter,” the company stated.
