ANN ARBOR – The Midwest cannabis market is entering a new competitive phase — and pricing may decide the winner.

In Ohio, regulators recently announced cumulative marijuana sales have surpassed $3.5 billion since medical sales began, fueled by the continued rollout of adult-use retail and nearly 200 dual-use dispensaries.

Meanwhile in neighboring Michigan, January cannabis sales declined sharply from December and fell year-over-year — a warning sign in one of the nation’s most mature recreational marijuana markets.

But beneath the headlines lies a more strategic question:

Is Michigan’s lower pricing structure undercutting Ohio’s cannabis market — or is a new Michigan wholesale tax beginning to erase that advantage?

Ohio Cannabis Sales Surge Past $3.5 Billion

Ohio’s adult-use marijuana program remains in expansion mode.

Since recreational sales launched, the state has steadily increased its number of licensed dispensaries, cultivators and processors. Nearly 200 retailers now hold dual-use certificates allowing them to serve both medical and adult-use customers.

The result: cumulative cannabis sales exceeding $3.5 billion. See breakdown below.

  • January 16, 2019 – The first legal medical marijuana dispensary sales occurred in the state.

  • August 2024 – Adult-use (recreational) sales began following voter approval of Issue 2 in 2023.

So the $3.5 billion cumulative sales figure being reported includes:

  • Medical marijuana sales from January 2019 through mid-2024

  • Combined medical + adult-use sales from August 2024 through early 2026

For Ohio operators, the narrative is scale and momentum. Retail access is widening. Consumer participation is strong. Infrastructure is still being built out.

This is what an early-stage adult-use market looks like — growth-driven, supply-controlled, and price-supported.

And prices in Ohio remain relatively high compared to more mature cannabis states.

Michigan Cannabis Sales Slide in January

Michigan tells a different story.

January 2026 cannabis sales declined from December and were also down compared to January 2025.

While Michigan remains one of the largest marijuana markets in the country by annual revenue, growth has slowed and margins are tightening.

Operators in Michigan face:

  • Persistent oversupply

  • Wholesale price compression

  • Shrinking medical marijuana sales

  • Dense retail competition

  • Increased tax and regulatory costs

Unlike Ohio, Michigan is no longer in expansion mode. It is in optimization mode — where efficiency and scale determine survival. And many cannabis companies have pulled out of Michigan or gone out of business as a result.

But Michigan’s greatest competitive weapon has been price.

The Border Effect: Why Pricing Matters

Michigan’s average retail cannabis prices — particularly for flower — have remained substantially lower than Ohio’s.

In many cases, adult-use flower in Michigan has sold for 30% to 50% less than comparable products in Ohio.

For consumers living in northern Ohio within driving distance of Monroe, Adrian, or the Detroit metro region, that gap has created a strong incentive to cross state lines.

Even factoring in gas costs, regular buyers could save meaningful amounts per transaction.

Southern Michigan dispensaries have long benefited from out-of-state demand — first from Illinois and Indiana, and now increasingly from Ohio.

As long as Michigan’s pricing advantage holds, cross-border purchasing behavior is economically rational.

But that dynamic may be shifting.

Michigan’s New 24% Wholesale Tax Enters the Equation

January marked the first month Michigan’s newly implemented 24 percent wholesale excise tax on cannabis plant material took effect.

The tax is applied at the grower-to-retailer transfer level, increasing the cost of goods for dispensaries.

That cost shock landed January 1.

Retailers faced two options:

  1. Absorb the tax and accept thinner margins.

  2. Pass part or all of it along to consumers through higher retail prices.

Many operators appear to have done some of both.

The timing is notable.

January sales dropped from December — a month that typically benefits from holiday demand — but the new wholesale tax likely added upward pressure on shelf prices at precisely the wrong moment.

In a price-sensitive market like cannabis, even modest increases can dampen short-term consumer demand.

The tax may not be the sole reason for the January slide — seasonal patterns and oversupply remain major factors — but it almost certainly contributed.

Cannabis Price Comparison: Michigan vs. Ohio

Estimated Retail Flower Pricing (Early 2026)

Estimates based on publicly advertised retail pricing across multiple dispensaries in border regions. Actual pricing varies by product and potency.

Even after the new wholesale tax, Michigan generally remains less expensive.

But the pricing gap has narrowed compared to prior years.

If that gap compresses further, the economic incentive for Ohio consumers to cross into Michigan weakens.

Two Markets, Two Stages of the Same Industry Cycle

The contrast between Ohio and Michigan is not simply rivalry — it is timing.

Ohio resembles Michigan’s early adult-use phase:

  • Controlled supply

  • Higher retail pricing

  • Rapid cumulative growth

  • Expanding store counts

Michigan now reflects a mature market:

  • Intense competition

  • Margin compression

  • Price normalization

  • Consolidation pressure

Over time, most cannabis markets follow this arc.

Prices begin high. Supply increases. Competition intensifies. Margins shrink.

Ohio is climbing that curve. Michigan has already moved down it.

What Happens Next in the Midwest Cannabis Competition?

Three forces will shape the regional dynamic:

1. Ohio Price Compression

As more cultivation capacity comes online and retail density increases, Ohio prices are likely to decline. That alone could reduce cross-border demand.

2. Michigan Consolidation

If weaker operators exit Michigan’s saturated market, supply could stabilize and pricing could firm up.

3. Wholesale Tax Policy

If Michigan’s 24% wholesale tax remains in place, it may continue narrowing the state’s pricing advantage. If modified or repealed, Michigan could reassert its discount positioning.

For now, Ohio’s headline is growth.

Michigan’s headline is discipline.

But the deeper story is economic gravity.

Consumers respond to price. Operators respond to margins. States compete for tax revenue.

And until pricing equalizes across state lines, the Midwest cannabis market will remain less about geography — and more about economics.