Michigan flower prices steadied near $60 an ounce, yet revenue, volume, and margins all fell. That is the paradox at the center of the state’s latest numbers: a price chart that looks like stabilization, and a business reality that looks nothing like a recovery.
The reported adult use flower price reached $59.99 an ounce in September, about 5 percent below a year earlier. Between September 2024 and September 2025 it had fallen almost 20 percent, so the slowdown in the decline is real. What followed it is the problem. Over the twelve months through September 2026, retailers sold 1.6 percent more flower by weight, yet flower revenue fell 7.3 percent to about $1.28 billion. Dividing revenue by weight sold produces a volume weighted price decline of 8.7 percent. More pounds softened the revenue loss only slightly.
Why did steadier prices not restore margins?
The more recent comparisons are less encouraging than the twelve month view. In the first nine months of 2026, flower volume fell 2.8 percent from the same period a year earlier. By the third quarter, volume was down 5.9 percent while the weighted price was 4.3 percent lower, leaving quarterly flower revenue almost 10 percent below the previous year. The annual total still contains a modest volume gain, but the deals done during 2026 increasingly reflect lower prices alongside fewer pounds sold.
Two forces sit on top of the price story. First, inventories are heavy. Retailers held about 212,000 pounds of flower at the end of September, 43 percent more than a year earlier, alongside declining third quarter volumes. There is little reason to infer a broad shortage of flower. Second, discounting is back. The gap between full price and discounted price averages narrowed in the opening months of 2026, then widened through spring and summer. By the third quarter, full price averages were higher than in the first quarter while discounted price averages were lower across the package sizes examined, a hint that the race to the bottom is still alive. The separation grew more strongly in larger standard packs than in eighths.
What role does the new wholesale tax play?
Michigan added a 24 percent wholesale excise tax effective January 1, 2026, under the Comprehensive Road Funding Tax Act signed on October 7, 2025, with proceeds directed to the Neighborhood Roads Fund. It sits alongside the existing 10 percent retail excise tax and 6 percent sales tax. Those rates apply to different values at different stages, so adding them together would misstate the effective tax on a purchase.
Wholesalers are legally responsible for remitting the new levy and may collect it from retailers. Where that raises a retailer’s acquisition cost, and competition prevents a corresponding increase in the selling price, gross profit per sale falls unless other purchasing costs decline. What is clear is that the tax increase was not followed by a sustained rise in the statewide flower price. Prices alone cannot establish how much of the tax operators absorbed, and the data do not establish whether dispensaries at the end of the line took the biggest hit.
One operator’s numbers show the squeeze in miniature. Grown Rogue reported that its Michigan bulk flower selling price fell from $734 to $615 per pound between the second quarters of 2025 and 2026, a 16.2 percent decline excluding the wholesale tax, while its production cost fell from $323 to $277 per pound. Its Michigan adjusted EBITDA margin fell to 22.7 percent from 26.8 percent after excluding wholesale tax amounts from revenue, even as adjusted EBITDA dollars rose on expansion. The company earned a smaller margin on its revenue.
How broad is the damage?
Flower is doing most of the damage to the statewide total. Total adult use revenue across the latest twelve months fell 4.1 percent to approximately $3.05 billion, but flower accounted for about $100 million of the market’s $131 million revenue decline, roughly three quarters. Other categories followed different paths: vape cartridge revenue was approximately flat across those twelve months even as reported product weight increased 14.4 percent, and shake and trim showed a similar separation, with weight sold up 15 percent while revenue slipped slightly. Selling more material continued to provide limited revenue relief.
For operators, the report’s practical takeaway is to compare full price and discounted price sales, and per unit margin after the wholesale tax and promotions, to see whether the market’s flat price masks margin erosion in their own numbers. Until the revenue retained on sales recovers relative to acquisition and operating costs, a flower price holding near $60 an ounce offers limited evidence that profitability is recovering with it.
The pressures facing Michigan operators also reflect broader questions about taxation, competition, and the economics of regulated cannabis markets. Those issues will be part of the conversation at IgniteIt’s Cannabis Capital and Policy Summit in Washington, DC, on November 18.
This is the same price compression story playing out in a new form. For the longer version of the argument, see Price Compression Is a Filter, Not a Funeral: https://brianholler.com/2025/06/17/price-compression-filter-not-funeral/. For the tax side of the same squeeze, see Nevada Weighs Its First Cannabis Tax Reform Since 2017: https://brianholler.com/2026/11/01/nevada-cannabis-tax-reform-wholesale-retail/
Frequently asked questions
Why are Michigan operators still struggling if prices stabilized?
Because volume weakened during 2026, inventories stayed elevated, and discounting widened again. A flat average price hides margin erosion when sales require larger reductions from full price and acquisition costs rose with the wholesale tax.
What is Michigan’s new wholesale cannabis tax?
A 24 percent wholesale excise tax effective January 1, 2026, under the Comprehensive Road Funding Tax Act, generally applying at the first sale or transfer of adult use cannabis to a retailer. It sits alongside the 10 percent retail excise tax and 6 percent sales tax, each applying to different values at different stages.
Does the $60 ounce price mean the market bottomed?
Not on this evidence. The statewide average reflects the flower actually sold, including changes in quality and product mix, not an identical basket. Third quarter volume and revenue both fell, and discounted prices slipped, which points to continued pressure rather than a confirmed bottom.
Source: IgniteIt, The $60 Ounce Paradox: When Growing More and Spending Less Still Means Earning Less: https://www.igniteit.com/news/economics-60-dollar-ounce-michigan-cannabis-prices-profitability/