Michigan ended 2023 as the nation’s unofficial marijuana king.
In 2023, the state’s cannabis industry sold nearly $3.06 billion in medical and adult-recreational use marijuana — or about $305 worth of marijuana for every man, woman and child in the state for the year — according to data released today by the Michigan Cannabis Regulatory Agency.
Michigan’s cannabis sales total last year is more than the gross domestic product of 51 nations, nearly reaching the GDP of the African nation of Burundi.
The yearly total got a boost from the best sales month on record in December. Michigan operators sold $279.9 million worth of marijuana in December, up from $260.5 million in November.
The state’s per capita spend on marijuana in 2023 surpassed all other rival states, based on year-end estimates. Californians were projected to spend $5.9 billion in marijuana last year, or roughly $150 per capita. Colorado remains closest to Michigan, at about $290 per capita spending on marijuana last year.
Marijuana sales in Colorado have peaked. The state’s operators sold $2.23 billion worth of marijuana in 2021, well above the 2022 total of $1.77 billion. The state was projected to fall short of the 2022 total in 2023.
California, however, saw more marijuana sales in 2023 than in 2022, but the state is plagued by the well-established illicit market that thrived before legalization in 2018.
Michigan’s market has yet to peak. Marijuana sales appeared to slow and stabilize in August for the first time since legalization, but December’s totals pushed the market to new heights, with an average monthly sales of $254.8 million for the year. The market opened the year in January 2023 with $207.3 million in sales, more than 41% below December’s total.
Previous expert projections have estimated that Michigan’s market will peak at $3.1 billion or $3.2 billion. This year will likely determine whether the market plateaus or surpasses those projections.
Michigan’s success in the marijuana game is correlated directly to the state’s regulatory, tax and overall business framework.
Following the legalization of adult-use recreational marijuana by voters in 2018, Michigan’s framework solidified it into an unlimited licensure state with comparatively low taxes.
The unlimited licensure allowed businesses to get approved to operate grow operations, processing plants and retail stores quickly. There still are problems with local municipality business licensing, but those roadblocks are eroding.
Michigan also taxes consumers among the lowest in the U.S. with a 10% excise tax on recreational marijuana sales. Colorado has a 15% excise tax on wholesale and retail sales. California has a 15% excise tax on wholesale and a per ounce tax on fresh plants and cultivation. Other top players like Washington and Oregon have a 37% excise tax and 17% excise tax on retail, respectively.
Though the state likely surpassed $1 billion in tax revenue last year from marijuana sales since the first recreational marijuana dispensary opened in December 2019.
In fact, weed is more lucrative to the state and communities than booze.
During the 2023 fiscal year, which ended on Sept. 30, the state of Michigan collected $73.6 million more in recreational marijuana excise taxes in fiscal year 2023 than beer, wine and liquor taxes combined, according to a House Fiscal Agency report released in November.
The marijuana tax totaled $266.2 million, a 49.1% increase over the year prior, and 38% higher than the $192.6 million collected from the sales of beer, wine and liquor in the state during the fiscal year.
The growing gap between beer, wine and liquor and recreational marijuana is representative of Michigan’s powerful marijuana consumer market, but also in how taxes are collected for each product.
Recreational marijuana is taxed at a 10% excise tax at the wholesale and consumer level. Alcohol wholesales are responsible for a $6.30 per 31-gallon barrel excise tax on beer and a $0.51-per-gallon excise tax on wine and champagne.
None of those taxes include the state’s 6% sales tax, which is collected on both cannabis and alcohol on top of any excise taxes.