💸 The Tape

Rep. James DeSana (R) has filed HB 6224, a bill exactly one sentence long: repeal the Comprehensive Road Funding Tax Act, 2025 PA 23. In practical terms, it would kill the 24% wholesale cannabis tax enacted last year in legislation negotiated by Gov. Gretchen Whitmer and House and Senate leaders, and effective January 1, 2026.

DeSana's argument is not ideological. It's arithmetic. The tax was projected to raise $420 million annually for road repairs. It is running at less than half that — roughly $70 million short in the first four months of the fiscal year, which he told WNEM could reach a $210 million shortfall against projections.

The bill has been referred to the House Appropriations Committee. The industry is separately challenging the tax in court, with a Michigan judge allowing the lawsuit to proceed.

First, understand what market this tax landed on

Michigan is the cheapest legal cannabis market in America, and it isn't close.

The state's Cannabis Regulatory Agency reported adult-use flower at $58.18 per ounce in June 2026. That's after $58.22 in December 2025 and $59.85 in February 2026, itself down 8.2% from $65.21 a year earlier. Go back a couple of years and the average was near $95. That's roughly a 39% collapse in per-ounce pricing.

For context, California — the world's largest market, with its own famously punitive tax stack — hit an all-time low of $62.25 per ounce in November 2025 and still prices above Michigan. Michigan has fallen below Oklahoma, a medical-only program with over 2,100 growers and no cultivation caps, which is the closest thing the industry has to a structural oversupply control group.

The cause is licensing. Michigan issued over 1,000 cultivation licenses with inventory levels described as years' worth of supply. Headset data puts the average Michigan item price at $8.49 in May 2026, down from $9.37 a year prior.

Now the revenue picture. Demand is not the problem — retailers sold more flower in 2025 than 2024. But total sales slipped from roughly $3.29 billion to $3.17 billion, with 2026 projections closer to $2.7 billion. February 2026 dispensary sales were $234.5 million, down 3% year-over-year, and analysts were explicit that the decline reflected lower prices, not lower demand.

Active licenses have declined for the first time since adult-use began in 2019 — from a 2024 peak near 2,256 to roughly 2,100, about a 7% contraction.

That is the market Lansing chose to add a 24% wholesale tax to.

Why the design was broken from the start

Three structural problems, none of which required hindsight to identify.

One: it taxes revenue, not profit. A wholesale excise applies to the transfer price regardless of whether the seller made money. In a market where flower has fallen 39% and cultivators are operating at or below cost, a 24% levy on the first sale is a tax on gross transactions in a business that frequently has no net. Stack it on the existing 10% retail excise and 6% sales tax — as Higher Love Cannabis Co. did explicitly when announcing it would suspend operations at five of its nine dispensaries this week — and you have three separate claims on a dollar that increasingly doesn't exist.

Two: the revenue projection assumed a static market. The $420 million figure implicitly required wholesale volumes and prices to hold. But a wholesale tax is itself a price event. It raises the landed cost of every unit moving through the licensed supply chain, which either compresses cultivator margin further or pushes retail prices up into a market where the illicit alternative is already competitive. Either outcome shrinks the taxable base. Michigan built a forecast that its own policy invalidated.

Three: the shortfall is self-reinforcing. Fewer licensed operators means fewer taxable transactions means a wider gap versus projection. Higher Love's five closures don't just represent lost jobs — they represent permanently removed tax base. Every business that exits makes the $420 million target harder to reach, which is precisely why a $70 million four-month gap extrapolates to $210 million rather than narrowing.

The part that should trouble everyone

Whether this was designed to fail is a fair question, and the honest answer is that intent doesn't much matter — the incentive structure does.

The tax was attached to road funding. That's a politically durable use, and it means the constituency defending the tax is not a cannabis constituency; it's a roads constituency. When the money underperforms, the pressure isn't necessarily to fix the tax. It can just as easily be to find the missing revenue somewhere else in the same industry.

More to the point: Michigan already had a functioning revenue system. The CRA distributed nearly $100 million to over 300 local governments and tribes — 313 municipalities, counties and tribal areas — from existing marijuana tax revenue for infrastructure, education and local services. That system worked because it took a share of a market operating at sustainable margins.

The wholesale tax was layered on top of a market that had already lost 39% of its pricing power. Taxing your way to $420 million out of an industry whose total sales are contracting toward $2.7 billion requires the industry to absorb a levy roughly equal to 15% of statewide retail sales — from the wholesale tier, where the margin is thinnest.

Federally funded research this year reached the obvious conclusion: set cannabis taxes too high and consumers migrate to the illegal market. Michigan's illicit competition is priced against $58 legal ounces. There is very little room left.

The read

DeSana frames repeal as helping legal businesses compete with the unregulated market, and Higher Love's statement names the same forces — oversupply, price compression and declining revenue already forcing consolidation and job losses before the tax arrived.

Both are correct. But the sharper point is this: a tax that collects less than half its projection while accelerating business failure isn't a policy that needs adjustment. It's a policy whose own revenue data is telling you the base can't support it.

Michigan will likely learn the same lesson California and Washington are still absorbing. You cannot tax margin that doesn't exist. The question is how many operators are left when the legislature finishes learning it.

Source: Marijuana Moment

📈 Dog Walkers

$MRMD ( ▼ 8.18% ) Reports Q2: Betty’s Eddies #1

MariMed Inc. (CSE: MRMD) (OTCQB: MRMD) posted Q2 revenue of $41.9 million, up from $39.5 million a year ago — the highest quarterly revenue in company history, with sequential growth in both wholesale and retail.

The operating detail behind it is genuinely good. Wholesale revenue grew 6% sequentially, retail grew 7%, and 12 of 13 Thrive Dispensary locations posted sequential gains. Transactions across the retail network rose 7%, and Thrive Perks loyalty membership is up 14% year-to-date. Betty's Eddies remains the #1-selling edible brand across Massachusetts, Maryland, Illinois and Delaware, with Vibations holding a top-10 position in the same states. Distribution reached 85% of available storefronts on a trailing twelve-month basis, and the branded portfolio outgrew the broader industry by 70 basis points in core markets.

Then the margins. GAAP gross margin slipped to 39% from 40%, non-GAAP to 40% from 42%. Adjusted EBITDA fell to $3.9 million from $4.8 million, with margin down to 9% from 12%. GAAP net loss widened to $3.6 million from $1.4 million; the non-GAAP loss of $2.4 million compares to positive $0.3 million last year.

CEO Jon Levine called the quarter meaningful progress and pointed to positive operating cash flow — accurate, and worth something in this tape. Adjusted gross margin also held flat sequentially at 40%, which he frames as stabilizing profitability.

The strategy ahead is "Expand the Brand" — deepening existing states and entering new ones through capital-light brand licensing rather than buying dispensaries. Sensible for a company this size.

Record revenue, market-leading brands, and every profitability line moving down. MariMed is selling more and keeping less of it.

Full Report

$AAWH ( ▼ 1.19% ) $19.5M in FCF in Q2

Ascend Wellness Holdings (CSE: AAWH-U.CN) (OTCQX: AAWH) posted Q2 net revenue of $126.1 million, up 7.9% sequentially, with adjusted EBITDA of $29.1 million — a 23.1% margin, up 60 basis points. In a quarter where most operators grew revenue while destroying operating income, Ascend improved both.

The engine is retail. Retail revenue rose 11.5% sequentially to $92.7 million, led by Ohio expansion and partner locations, partially offset by pricing pressure in Pennsylvania. The footprint reached 55 locations, up from 48 at the end of Q1 — and from 39 stores in August 2024, a 45% increase in under two years. Management expects to meet or exceed 60 stores by year-end.

Wholesale went the other way: $33.4 million, down about 1%, on pricing and volume declines in New Jersey. That inversion is notable — most of the cohort this quarter reported the opposite.

The margin math is worth understanding. GAAP gross margin fell to 36.1% from 38.4%, but adjusted gross margin rose 10bps to 46.2%, driven by a 240 basis point increase in retail's share of total revenue. Selling more of your own product through your own doors is the entire thesis, and it's showing up where it should. Net loss narrowed sharply to $9.8 million from $29.5 million.

Cash performance backs it: $22.5 million from operations, $19.5 million free cash flow, and a cash balance up $6.1 million to $67.0 million. Net debt sits at $251.8 million — the one number keeping this from being a clean story.

Operationally, Ascend grew combined market share ~5% sequentially in a contracting environment, holds the #2 brand house position by sales and units across Illinois, New Jersey and Massachusetts, and launched 199 new SKUs — up 50% sequentially.

Corporate moves point toward a US listing: a reverse split vote August 28 and DEA registration applications filed under the expedited Schedule III pathway.

One flag for Q3. The Barry, Illinois work stoppage that began June 25 cost only a few days of wholesale deliveries in Q2, but employees didn't return until August 3. Ascend guides to 2–4% revenue growth with flat margins next quarter — and is still evaluating that impact.

Retail densification is working. The Illinois disruption is the thing to watch.

Full Report

📺 Trade To Black

Here's What's Changing In The Cannabis Industry | TTB Presented by Flowhub

• Ohio keeps outperforming two years into adult-use. Earnings season has shown operators with Ohio exposure benefiting from strong consumer demand and improving retail dynamics — Lauren Delande, VP of Retail Operations at Klutch Cannabis, joins alongside Flowhub CEO Kyle Sherman. Founded in 2020 and based in Akron, Klutch has built its reputation on rare genetics, small-batch cultivation and a patient-first philosophy.

• Rubicon Organics (TSXV: ROMJ) CEO Margaret Brodie unpacks Q2. Net revenue of $18.5M, up 23% year-over-year on stronger Pacifica yields and the Cascadia ramp, with adjusted EBITDA of $1.1M reflecting investments to scale production.

• Rubicon's premium and international position. Still Canada's leading premium producer, with the 1964 brand now rolling out in the UK medical market — and management expecting revenue, margins and operating cash flow to strengthen through H2 2026.

• Dr. Paul Shields returns for the Vantage Standard segment, covering APIs, DEA licensing, and how Vantage's regulatory position enables white-label manufacturing and international distribution for US cannabis companies.