Bipartisan Governors In Multiple States Propose Significant Marijuana Tax Increases

Governors in at least four U.S. states are proposing significant tax increases for legal marijuana products.

In Maine, Maryland, Michigan and Ohio, bipartisan governors are floating tax hikes within their state cannabis programs—a trend that raises questions about balancing revenue goals with the need to bring consumers into the legal marketplace.

These aren’t small tax proposals on the table, either. Here’s a rundown of the governors’ plans that they hope to see legislatures implement in the 2025 session:

Maine

In Maine, Gov. Janet Mills (D) put forward a budget request late last month that would increase the sales tax on marijuana by 40 percent, raising it from 10 percent to 14 percent beginning January 1, 2026.

The governor’s office estimates that the tax rate change would generate almost $4.2 million in additional revenue in the 2026 fiscal year and $11.5 million in the next fiscal year.

Maryland

Under Gov. Wes Moore’s (D) budget plan, the tax rate on marijuana would increase from 9 percent to 15 percent—a 67 percent hike—starting in July 2026.

Meanwhile, the budget also calls for a strategic investment of $5 million to convert a vacant armory in Catonsville “into an incubator space for cannabis businesses.”

Meanwhile, last week at his State of the State address, Moore touted legislation that would expand opportunities for people to have their criminal records for marijuana expunged.

Michigan

Michigan Gov. Gretchen Whitmer (D) is seeking to impose a new wholesale marijuana tax that would be paid by licensed cannabis operators, rather than consumers.

Her office said that the intent is to close a “loophole” that’s exempted the industry from such a tax. However, while the policy change is projected to bring in $470 million in new revenue—which would go toward road repairs—the governor didn’t specify what she thinks the exact tax rate should be, saying that would be up for negotiation with the legislature.

“After voters legalized marijuana, the industry has grown exponentially thanks in part to Michigan’s industry-friendly taxes, the fourth lowest in the nation,” Whitmer’s office said in a press release. “The industry, which recorded billions in sales in 2024, uses Michigan roads to transport marijuana multiple times throughout the process, including to grow operations, testing labs, distribution hubs and finally retail stores.”

Ohio

In Ohio, Gov. Mike DeWine (R) is proposing to double the 10 percent tax rate on cannabis under the state’s voter-approved legalization law to 20 percent.

The hike would go even further than a bill that passed the state Senate in late 2023. That legislation, which the governor tentatively supported, called for a 15 percent tax on cannabis.

Last month, Ohio Republican lawmakers separately revived an effort to significantly alter the state’s voter-approved marijuana legalization law—in part by raising the tax on cannabis products to 15 percent, halving the number of plants adults could grow and eliminating certain social equity provisions.

Notably, DeWine—who opposes legalization but pledged to implement the will of voters that approved the reform—is proposing a tax rate on cannabis that matches what pro-legalization Pennsylvania Gov. Josh Shapiro (D) called for in his latest budget request. That plan has drawn criticism from legislators who view it as unworkable.

Meanwhile, in California, there’s anxiety within the cannabis market over a proposed tax hike that’s expected to take effect this summer, raising the marijuana excise tax by 25 percent.

Marijuana tax policy has also been a focal point of industry interest at the federal level, especially amid the ongoing marijuana rescheduling process.

If cannabis is moved to Schedule III of the Controlled Substances Act (CSA) as proposed under the Biden administration, it would allow state-licensed marijuana businesses to take federal tax deductions they’ve been barred from under an Internal Revenue Service (IRS) code known as 280E.

But last week, two GOP senators introduced a bill that would continue to block marijuana businesses from taking those deductions, even if cannabis is ultimately rescheduled.