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Michigan is Live

Announcing the latest Tax API release

Another state is available now in our Tax API! Michigan joins California, Oregon, Washington State, Florida and Massachusetts bringing the number of supported states to six.

The State of Michigan imposes a 10% Marihuana Retailer Excise Tax, otherwise known as the MRE. A State Sales and Use Tax of 6% also applies and, like California, it applies to the sales price plus the excise tax.

Michigan Adult-use Example

$10.00

1g Sour Diesel

$1.00

($10.00 x 10.00%)

Marihuana Retailer Excise Tax (MRE)

$11.00

Subtotal

$0.66

($11.00 x 6.00%)

State Sales Tax

$11.66

Total

Medical cannabis had a 3% excise tax imposed under the Marihuana Facilities Act but it was phased out in March 2019 when the adult-use market came online and the current tax regime was adpoted. Now, medical cannabis is exempt from the MRE, but state sales tax does apply.

There's a few quirks lurking in Michigan that are worth noting.

One is their tax reporting form. Because the state explicitly allows both the MRE and sales tax to be included in the sales price they actually provide a formula to calculate taxes for that case. For example, the formula to calculate included sales tax divides gross receipts by 17.6667. This looks a bit strange at first glance. The catch is that the formula calculates the deduction from your gross receipts, not the tax owed. Then the 6% tax is applied to the result to arrive at the tax owed.

Another thing to pay attention to in Michigan relates to bundled products—meaning a cannabis item bundled with a non-cannabis item, like a cartridge and battery. Selling bundled products is prohibited by the Michigan Regulation and Taxation of Marihuana Act (MRMTA). That said, if a bundled item is sold despite the prohibition then the excise tax of 10% applies to the sales price of the entire bundled item, regardless of the fact that the non-cannabis item would not have been subject to the MRE had it been sold separately.

Really it means you're paying higher taxes for no reason if you bundle products. So don't.

For more information the Michigan Department of Treasury issued a Revenue Administrative Bulletin in 2019 that's a great resource complete with example transactions that goes into much more depth.

Have a look at our cannabis tax rate lookup tool for current tax rates across the state. Better yet, get your API key and never think about cannabis tax calculations in Michigan again!

Waiting on your state? Drop us a line and let us know which one!

Don't go this alone
Keeping up with the rapid changes in the cannabis tax landscape requires constant attention. Pact offers a variety of products with one aim: to let you focus on your business, not taxes. If your Point of Sale system has you configuring and managing your tax rates yourself using complicated tables and compound tax ordering rules, insist they level up and power their tax lookups by Pact.

Cannabis Tax Rate Lookup (It's free!)

For Developers

Get real-time tax calculations for every required tax directly in your application with our easy-to-integrate API. Focus on your core business and protect your customers from mistakes.
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