Michigan GOP Candidate John James Backs Repealing 24% Cannabis Wholesale Tax

James Opposes January Tax Hike Passed Under Road-Funding Deal

John James, the Republican nominee for Michigan governor, publicly endorsed repealing the state's 24% wholesale cannabis tax during a September campaign event. The tax took effect January 1, 2026, as part of a bipartisan infrastructure bill that diverted cannabis revenue to road construction and restoration projects. Whitmer signed the measure in late 2025 over objections from cannabis operators who argued the wholesale levy would compound Michigan's existing 10% retail excise tax and 6% sales tax.

James framed the repeal as pro-business relief. He didn't specify whether he'd redirect the lost revenue to roads through another mechanism or allow the funding gap to remain. Michigan's Cannabis Regulatory Agency projects the wholesale tax will generate $112 million annually once collections stabilize in fiscal 2027.

Wholesale Tax Stacks Atop Retail Excise and Sales Levies

Michigan now imposes three separate taxes on adult-use cannabis: a 24% wholesale tax on cultivator-to-processor and cultivator-to-retailer transfers, a 10% retail excise tax at point of sale, and the standard 6% state sales tax. Operators calculate the wholesale tax on transaction value between license holders, not on the final consumer price. They report the stacked structure creates effective tax rates exceeding 45% when compounded through the supply chain.

All cannabis flower, concentrate, and infused-product transfers face the wholesale tax. Hemp-derived products containing ≤0.3% delta-9 THC on a dry-weight basis are exempt, creating a price gap that's driven some Michigan retailers to expand THCA and delta-8 SKU counts. For background on Michigan's evolving tax structure and operator challenges, see the CannIntel topic hub on Michigan Cannabis Tax Policy.

Repeal Would Require Legislative Action in Split Government

James can't unilaterally repeal the wholesale tax if elected. Any rollback requires passage in Michigan's Legislature, where Democrats hold narrow majorities in both chambers through at least January 2027. Democratic leadership has signaled no appetite to revisit the tax before the November 2026 election. Senate Majority Leader Winnie Brinks (D-Grand Rapids) told Bridge Michigan in August that the wholesale tax is "a stable revenue source for critical infrastructure" and that revisiting it would require identifying replacement funding.

A repeal bill could advance in early 2027 if James wins in November and Republicans flip one or both chambers. Cook Political Report rates Michigan's gubernatorial election a toss-up. Whitmer is term-limited and not on the ballot.