LANSING, Mich. (WOWO) — A proposal to eliminate Michigan’s 24% wholesale marijuana tax is raising concerns among county road officials who say the money, despite falling far short of original projections, is needed to help address the state’s enormous infrastructure funding gap.

State Rep. James DeSana has introduced legislation to repeal the tax, which took effect January 1 as part of a broader road-funding agreement approved by lawmakers in 2025. The levy was projected to generate approximately $420 million a year for roads and infrastructure.

But collections have significantly lagged behind expectations.

According to Michigan Treasury data cited by WILX, the tax generated just under $34 million through the first four months of 2026, compared with approximately $105 million that had been projected for that period.

DeSana argues the tax is not producing the promised revenue while adding costs for licensed marijuana businesses. He says eliminating it would make it easier for legal cannabis operators to compete with Michigan’s illicit market.

“It’s time to repeal this failed tax and stop forcing taxpayers and businesses to pay for a policy that simply isn’t working,” DeSana said, according to WNEM.

The proposal is House Bill 6224 and has been introduced in the Michigan Legislature.

The Michigan Treasury confirms that the 24% wholesale tax applies to taxable sales and transfers of adult-use marijuana beginning January 1, 2026. Revenue from the tax is deposited into the state’s neighborhood road fund for infrastructure improvements.

That connection between marijuana sales and road construction is at the center of the debate.

Denise Donahue, CEO of the County Road Association of Michigan, told WILX that roughly two-thirds of roads in a typical Michigan county are considered to be in poor condition.

“Our typical need is about $4.4 billion a year, and what we receive is about $2.1 (billion),” Donahue said. “And so the unmet need is somewhere around $2.3 billion.”

Donahue said that gap represents what counties need simply to maintain existing roads, before accounting for broader improvements.

For local road departments, even a relatively small additional revenue stream can make a difference.

Jim Patton with the Ingham County Road Department said repealing the marijuana tax could force agencies to scale back projects.

“We probably wouldn’t be able to redo as many local roads as we would want, and we’re really relying on this to help fix our neighborhoods,” Patton said.

Michigan’s wholesale marijuana tax was approved as part of a larger road-funding package. State officials originally expected the levy to provide about $420 million annually, or roughly $105 million per quarter.

The early numbers have prompted criticism from both lawmakers and members of the cannabis industry.

DeSana says the tax’s poor performance demonstrates that the policy is counterproductive. Industry advocates have similarly argued that the additional wholesale cost is putting pressure on an already competitive legal market.

Michigan’s marijuana industry already faces a 10% retail excise tax and 6% sales tax, in addition to the new wholesale levy.

The issue is particularly significant because the tax was designed to send money directly toward local road infrastructure. Michigan Treasury says the wholesale-tax revenue is deposited into the neighborhood road fund.

Repealing the tax could therefore provide financial relief for licensed cannabis businesses, but lawmakers would face the question of how to replace whatever road revenue the tax ultimately produces.

And although collections have fallen well below the original forecast, road officials say Michigan’s underlying transportation needs remain unchanged.

The current debate comes as Michigan counties continue to contend with billions of dollars in road-maintenance needs. Donahue’s estimate puts the annual gap between what counties need and what they receive at approximately $2.3 billion.

For county road departments, officials say that means the loss of another dedicated funding source could translate directly into fewer reconstruction and maintenance projects.

The legislation now moves through the Michigan Legislature, where lawmakers will have to weigh the potential benefits of eliminating the wholesale tax against the consequences for road funding and infrastructure investment.