LANSING — Michigan’s legal cannabis market generated nearly $260 million in sales in November, but the headline figure masks deep stress in the industry as average prices for an ounce of marijuana fell to historic lows, leaving growers, processors and retailers fighting for margins.

According to industry data, the average retail price for an ounce of adult-use flower dipped below $60 in November, a record low for the state’s regulated market and among the cheapest in the nation.

Oversupply, Competition Drive Prices Down

Prices have tumbled as Michigan’s cannabis market shifts from rapid growth to intense competition.

When adult-use sales launched in late 2019, retail prices topped several hundred dollars per ounce. Over time, however, the number of licensed growers, processors and dispensaries expanded dramatically, creating an oversupply of product that has far outpaced demand.

This year’s large outdoor harvest — sometimes called “Croptober” — flooded the market with low-cost, fresh frozen inventory, pushing more product through retailers at discounted rates as mature cannabis markets. As growers increase yields and more competitors enter the market, retail prices have steadily declined, even as sales volumes remain relatively stable.

Market Maturation and License Proliferation

Michigan’s regulatory framework does not cap cultivation or retail licenses, leading to a large number of producers relative to consumer demand. The result is fierce price competition as businesses strive to move inventory.

Industry observers note that Michigan now has one of the highest densities of cannabis stores in the country, which squeezes prices further — especially on basic flower products that dominate transactions.

Some analysts also point to shifting consumer behavior and broader industry trends. As more jurisdictions legalize cannabis, Michigan no longer benefits as much from cross-border demand. When Ohio’s recreational market came online, some out-of-state cannabis shoppers stopped crossing into Michigan, slightly dampening demand.

Impact on Businesses

While low prices benefit consumers, they have squeezed profits for many cannabis operators.

“We’ve never had this much product on hand, and we’re selling ounces for less than many of us can produce it,” said one Michigan cultivator who asked not to be identified. “We’re fighting for every dollar.” Industry insiders point out that tight margins are pushing smaller operators to scale back or exit.

Several cannabis businesses have closed or reduced operations in recent months, citing unsustainable pricing and an inability to remain profitable in a crowded market.

Taxation and Regulatory Pressure

Compounding the pricing stress, a new 24% wholesale tax on marijuana transactions — in addition to existing state and local taxes — is set to take effect Jan. 1 as part of Michigan’s budget. Critics argue the tax could further strain already thin profit margins and raise retail prices for consumers.

Retailers and industry groups have challenged the tax in court, arguing it violates the state’s voter-approved marijuana law, but a recent ruling allowed the tax to stand.

Sales Trend and Consumer Behavior

Despite the price plunge, total sales remained robust in November — down only slightly from the previous year, suggesting demand has held up even as prices falll.

The combination of lower prices and strong consumer interest has resulted in higher unit sales, with shoppers buying more product per trip than in past years.

What Comes Next

Industry analysts say Michigan’s cannabis market is entering a maturing phase, where only the most efficient operators will survive and prices may begin to stabilize.

Some business owners and advocates are calling on lawmakers to consider limits on new licenses or other policy changes to reduce oversupply and support a sustainable industry.

For now, Michigan consumers are benefiting from bargain prices, while cannabis businesses adjust to a more competitive reality after years of rapid expansion.

Michigan’s New Wholesale Cannabis Tax — What It Could Mean

Michigan’s newly enacted 24% wholesale cannabis excise tax, set to take effect Jan. 1, 2026, adds a significant revenue layer on top of existing cannabis taxes. The state projects the tax will generate roughly $420 million annually for road and bridge funding as part of Gov. Whitmer’s infrastructure plan.

Triple Tax Burden

Once implemented, Michigan’s licensed cannabis operators will navigate three separate levies on a single product:

  • 24% wholesale excise tax on the first sale or transfer to a retailer

  • 10% retail excise tax approved by voters in 2018

  • 6% state sales tax on retail purchases

Together, these taxes could push the effective tax burden above 50% of the product’s final price once layered — not including local taxes or fees.

Market Impact

Industry advocates argue that layering the wholesale tax with existing retail and sales taxes:

  • Raises average prices at dispensaries, even as producers struggle with low wholesale rates

  • Compresses profit margins for small growers and processors

  • Rewards larger, vertically integrated operators better able to absorb tax costs

  • Could push some consumers back toward the black market if legal prices climb too high

State officials contend the revenue supports long-term infrastructure needs without raising general taxes.

Estimated Revenue Impact (Michigan)

  • Projected annual revenue from 24% wholesale tax: ≈ $400–$420 million

  • Primary use: Road and bridge funding

  • Industry concern: Revenue projections assume current production levels, even as low prices and closures may shrink the tax base.

If you have a cannabis news event you want to share, email it to Editor Mike Brennan