Ohio dispensaries getting help from Michigan's government

SANDUSKY — Ohio marijuana dispensaries competing with cheap cannabis prices at Michigan dispensaries are getting help from Michigan's Democratic governor, Gretchen Whitmer, and her allies in Michigan's legislature. Last fall, Whitmer signed a budget bill that includes a 24% wholesale tax on marijuana. That whopping new tax went into effect on Jan. 1 and comes on top of Michigan's 10% excise tax at dispensaries and the state's 6% sales tax. Aided by relatively low taxes — at least, until now — and limited regulation, Michigan has had low prices in its dispensaries, inspiring many Ohio weed consumers to drive there to feed their habit, even though transporting marijuana across state lines is illegal. Ohio's marijuana industry hopes the rise in prices from the big new tax will help persuade more Ohio consumers to buy local, rather than burning gas and time to travel to Michigan. The new tax is expected to generate $420 million every year to pay for work on Michigan roads, according to a press release from Whitmer's office. The new Michigan tax will help make Ohio dispensaries more competitive on price, said Sean Cifranic, a Firelands Scientific vice president who runs the company's cannabis operation in Huron, which grows marijuana and produces a wide range of products. "We do anticipate that helps to align the two states a little bit more," Cifranic said. Michigan marijuana businesses, meanwhile, are feeling much less mellow about the new tax. "Businesses will close and neighbors will lose jobs," said Rose Tantraphol, a spokesperson for the Michigan Cannabis Industry Association. "Cannabis businesses operate on thin margins, so allowing the 24% wholesale tax to go into effect will mean a lower volume of sales. The state's own Senate Fiscal Agency predicts that due to market elasticity, total sales will decrease by about 14%." The Michigan group has filed a lawsuit claiming that the new Michigan law is illegal. The group lost in a lower court ruling and has appealed to a higher court. According to news coverage cited by the association, many Michigan dispensaries loaded up on inventory before the new tax took effect on Jan. 1 to try to avoid raising prices. But the tax is large enough that Michigan dispensaries are going to have to raise prices, according to a Detroit Free Press article the industry group posted to its website. Ohio also has a 10 percent retail tax. Although lawmakers last year made a number of changes in Ohio's marijuana laws, efforts by some Republican lawmakers in the Ohio Senate to raise Ohio's tax were defeated, giving a boost to Ohio consumers. Statistics kept by the Ohio Division of Cannabis Control show that prices in Ohio dispensaries have gone down significantly since recreational sales in Ohio in August 2024. In mid-August 2024, the average price for one-tenth of an ounce of plant material, also known as flower, was $26.67. In the first week of this month, it was $17.96. That's a decline of about 33%.