Updated as of July 1, 2025

three-dimensional topographical map of Michigan showing both the Upper and Lower Peninsulas, with colored elevation layers—green in the lowlands transitioning to brown and orange at higher terrain. The contours are sharply defined, and the map rests on a subtle dark surface. In the foreground, bold white text reads “Michigan Cannabis Tax Guide,” slightly raised and casting a soft shadow over the map beneath.Key Points

  • State excise tax: 10 % of retail price on adult‑use cannabis.

  • State sales tax: 6 % of the “sales price,” which by law includes the 10 % excise tax when calculating the 6 % charge.

  • Medical exemption: Properly documented medical‑cannabis sales are fully exempt from both excise and sales tax.

  • 280E decoupling: Michigan decouples from federal § 280E—licensees may deduct all ordinary and necessary business expenses (not just COGS) on their Michigan income‑tax return.

  • Local excise/sales taxes: Not permitted—only statewide rates apply.

  • Revenue distributions: Portions of excise‑tax receipts are allocated back to counties, host communities, schools, and the state’s Marihuana Regulation Fund.

  • Timely filing: Monthly excise and sales‑tax returns (even if zero‑sales) are due by the 20th; annual income‑tax returns are due April 15.

  • Noncompliance risks: Penalties, interest, audit exposure, and license suspension or revocation.

Understanding Michigan’s Cannabis Tax Structure

280E Decoupling: State vs. Federal

  • Michigan’s Marihuana Regulatory and Taxation Act decouples state‑income‑tax treatment from federal § 280E, allowing licensees to deduct:

    • All ordinary and necessary business expenses, and

    • Cost of goods sold

  • Benefit: Lower state tax liability and improved cash flow.

  • Compliance: The CRA publishes guidance on deductible expenses.

Excise Revenue Distribution

Recipient Percentage of Excise Receipts
County share 15 %
Host community share 15 %
School aid fund 10 %
Marihuana Regulation Fund 60 %

Source: Michigan Department of Treasury, Marihuana Retailers Excise Tax (MRE) program.

Michigan Cannabis Taxes Summary

Tax Type Rate / Structure Applies To Medical Exemption
Cannabis Excise Tax 10 % of retail price Adult‑use cannabis retailers Fully exempt
Michigan Sales Tax 6 % of “sales price” (includes excise) All retail cannabis sales Fully exempt (with docs)
Local/City Add‑ons Not permitted — —

Cannabis Excise Tax: Retailer Essentials

  • 2025 rate: 10 % flat statewide; no municipal add‑ons permitted.

  • Calculation order:

    1. Compute 10 % excise on retail price.

    2. Add excise to retail price, then compute 6 % sales tax on that combined amount.

  • Remittance: Retailer must report and pay monthly by the 20th via Treasury e‑Services.

Sales Tax: Local Impact

  • Base rate: 6 % state sales tax on combined retail + excise amount.

  • Local GRT/sales tax: Not allowed for cannabis.

2025 Rate Examples

Location Excise Tax Sales Tax Total Tax on Adult‑Use Sales
Detroit 10 % 6 % 16 %
Ann Arbor 10 % 6 % 16 %
Grand Rapids 10 % 6 % 16 %

Medical Cannabis: Exemptions & Requirements

  • Excise tax: 100 % exempt.

  • Sales tax: 100 % exempt with valid medical‑marijuana registry card.

  • Documentation:

    • Maintain patient registry card numbers and doctor certifications.

    • Retain records in accordance with CRA rules.

Filing and Payment Deadlines

Tax Type Frequency Return/Form Due Date Notes
Excise Tax Monthly Form 5748 (Marihuana Tax Return) 20th of following month Zero‑sales filings still required
Sales Tax Monthly/Quarterly State sales/use‑tax return via Treasury e‑Services 20th of following month Small retailers may qualify quarterly
Income Tax Annually Corporate (Form 1120) or Personal (MI‑1040) returns April 15 Standard state deadlines apply

Link: Filing Requirements & Forms (MRE)

Resources

Penalties and Compliance Risks

  • Late filing: 5 % penalty per month (max 25 %) + statutory interest.

  • License consequences: Suspension, revocation, non‑renewal.

  • Audit risk: High—state agencies frequently audit cannabis retailers.

How to Calculate Your Total Cannabis Tax Obligation

  1. Determine adult‑use gross sales.

  2. Excise tax: Multiply by 0.10.

  3. Sales tax: Compute 0.06 on (gross sales + excise).

  4. Medical sales: Apply 100 % exemption with proper docs.

Michigan Cannabis Trade Associations

Government Contact List

Agency Contact Information
Cannabis Regulatory Agency Main: (517) 284‑8599
2407 N. Grand River Ave., Lansing, MI 48906
Email: CRA‑Email@michigan.gov
Metrc (Track‑and‑Trace) support@metrc.com
MI Department of Treasury Email: Treas‑Contact@michigan.gov

Cannabis Taxes Financial Calendar (2025)

Tax Type Applies To Frequency Due Date
Excise Tax Adult‑use sales Monthly 20th of following month
Sales Tax Adult‑use (most) & medical sales Monthly/Quarterly 20th of following month
State Income Tax All licensees Annually April 15

Disclaimer: This guide is for informational purposes only. Always consult a qualified CPA or legal advisor and verify current requirements with the Michigan Cannabis Regulatory Agency and Department of Treasury before making any tax or compliance decisions.