Distressed & receivership
Michigan cannabis distress, receivership and the 24% wholesale tax
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How does Michigan cannabis distress work?
Michigan cannabis operators cannot file federal bankruptcy, so distress runs through state-court receivership. A 24% wholesale tax took effect 1 January 2026 on top of the 10% excise and 6% sales tax, projected to raise about $420.7M annually. Licenses do not transfer with real estate — the CRA bars two active licenses at one location, so buyers must obtain their own.
Indicators
What the contraction looks like in numbers
24%
Wholesale tax effective 1 Jan 2026
Stacked on the 10% excise and 6% sales tax.
~$420.7M
Projected annual wholesale tax revenue
Dedicated to roads and infrastructure.
≈1 in 3
Michigan grow operations closed
Cultivation consolidation is the dominant source of available industrial cannabis space.
848 → 838
Adult-use retail store count
2024 to 2025 — the first contraction in the program's history.
Tax
The 24% wholesale tax
On top of the existing 10% adult-use excise tax and 6% sales tax.
24%
Effective 1 January 2026
On top of the existing 10% adult-use excise tax and 6% sales tax.
Projected revenue: ~$420.7M annually, dedicated to roads and infrastructure.
Treasury average wholesale price guidance — 2026 Q3
Source: Michigan Treasury ·| Product | Average wholesale price |
|---|---|
| Flower | $641.41 / lb |
| Shake / trim | $349.82 / lb |
| Concentrate | $2,042.73 / lb |
| Vape cartridge | $2,329.67 / lb |
| Kief | $818.65 / lb |
Treasury's quarterly guidance is the base the tax is computed against, so it is also the number that decides whether a cultivation asset covers its own debt service. Flower at $641.41 per pound with a 24% wholesale layer, a 10% excise and 6% sales tax is why grow buildings are coming back to market faster than retail.
Mechanics
Receivership, licensing gaps, and what actually clears
Receivership, not bankruptcy
Cannabis businesses cannot access federal bankruptcy court, so Michigan workouts run through state-court receivership. The receiver, not a debtor-in-possession, controls the asset and the sale process.
Licenses do not travel with the real estate
The CRA will not allow two companies to hold active licenses at the same location, so a license cannot simply be assigned along with the building. The buyer must obtain its own CRA licensing for the site.
The licensing gap
That rule creates a gap: the seller's license has terminated but the buyer's has not activated, and inventory sits in legal limbo. Deals are structured around the gap, not through it.
The workarounds that actually clear
Staggered license changes across multiple locations, and consent orders placing licenses in "closed pending" status, are the two mechanisms that keep a multi-site portfolio saleable. METRC records must stay current through closing or the inventory becomes unsellable.
Case in point
TerrAscend Corp. exits Michigan
The largest Michigan cannabis receivership to date, and a template for what a multi-site workout looks like.
- Defaulted on a $210M loan from FocusGrowth Asset Management.
- Receivership order issued 6 May 2026.
- Covers 20 retail dispensaries — Gage, Cookies, Lemonnade and Pinnacle Emporium banners.
- Also covers four cultivation and processing facilities plus the associated real estate.
- As of 7 May 2026: $6.8M in Michigan accounts payable and lease liabilities against $5.2M of assets.
- Lume Cannabis Co. acquired three former Gage retail locations.
Process
Buying out of a Michigan cannabis receivership
- 01
Confirm the receiver's authority and the sale process
Read the receivership order: what property is covered, what the receiver may sell, and whether court approval is required for the sale. The receiver, not a debtor-in-possession, controls the asset.
- 02
Separate the real estate from the license
Underwrite the building on its own merits — power, mechanical, zoning — because the CRA license will not convey. Value any license-adjacent benefit as schedule savings, not as an asset.
- 03
Verify municipal status and remaining license capacity
Confirm the municipality has not opted out, that the district still permits the use, and that license capacity remains. A distressed building in a closed jurisdiction is industrial real estate, priced accordingly.
- 04
Structure around the licensing gap
Use staggered license changes across locations and consent orders placing licenses in closed-pending status so the portfolio stays saleable while the buyer's licensing activates.
- 05
Keep METRC current through closing
Inventory whose METRC records lapse becomes unsellable. Track compliance reporting as a closing condition, with the receiver on the hook for it.
Who we work with
Receivers, secured lenders, special servicers and note buyers. Rair Capital sits on the debt side of the same market, so we can quote the asset and the capital in the same conversation rather than sending you to find both.
Questions
Distress and receivership questions
- Can a Michigan cannabis business file for bankruptcy?
- No. Because cannabis remains federally illegal, Michigan cannabis operators cannot access federal bankruptcy court. State-court receivership is the workout path, which is why cannabis distress in Michigan appears as receivership orders rather than Chapter 11 filings.
- Can I buy a cannabis license along with the building?
- Not directly. The CRA will not allow two companies to hold active licenses at the same location, so licenses cannot simply be assigned with the real estate. The buyer must obtain its own CRA licensing, and the transaction is structured around the gap between the seller's license terminating and the buyer's activating.
- What is the Michigan 24% cannabis wholesale tax?
- A 24% wholesale tax effective 1 January 2026, layered on the existing 10% adult-use excise tax and 6% sales tax, projected to raise about $420.7M annually for roads and infrastructure. The Michigan Cannabis Industry Association challenged it in the Court of Claims on 7 October 2025.
- How does Michigan Treasury set the wholesale price used for the tax?
- Treasury publishes quarterly average wholesale price guidance by product category. For 2026 Q3 the figures are flower $641.41/lb, shake and trim $349.82/lb, concentrate $2,042.73/lb, vape cartridge $2,329.67/lb and kief $818.65/lb.
- Is the Michigan cannabis market oversaturated?
- By the license count, yes in aggregate: active licenses fell to 2,171 at year-end 2025, a net decline of 85 and the first annual drop since 2019, while average adult-use flower price sits at $58.18/oz as of June 2026. Consolidation, not expansion, is now driving Michigan cannabis real estate transaction volume. Full answer →
- What is the average price of cannabis in Michigan right now?
- $58.18 per ounce for average adult-use flower, as reported by the Michigan CRA as of June 2026. That figure is down sharply from triple-digit per-ounce pricing three years earlier, reflecting sustained oversupply relative to demand as license counts grew faster than retail sales through most of that period. Full answer →
- How does Michigan's 24% wholesale tax affect operators?
- The 24% wholesale tax, effective 1 January 2026, stacks on top of the existing 10% adult-use excise tax and 6% sales tax, compressing margins for growers and processors and projecting roughly $420.7 million annually for roads and infrastructure. It faces an active legal challenge from the Michigan Cannabis Industry Association. Full answer →
- How many dispensaries are there in Michigan?
- 838 active adult-use retailers statewide, per the Michigan CRA as of 31 July 2026, down from 848 in 2024. The same snapshot counts 935 active growers and 270 active processors, and total active licenses across all types stood at 2,171 at year-end 2025 — a net decline of 85 from the prior year. Full answer →
- Why are Michigan cannabis businesses closing?
- Compressed retail and wholesale pricing — average flower at $58.18/oz, down from triple-digit prices — combined with the new 24% wholesale tax effective January 2026 have squeezed margins hard enough that active licenses fell by a net 85 in 2025, the first annual decline since 2019, concentrated among thinly capitalized operators. Full answer →
- How do I buy a distressed dispensary in Michigan?
- Source through receivership proceedings, broker networks tracking defaults, and direct outreach to operators showing distress signals — then verify license status with the CRA before committing capital, since a distressed property's value depends entirely on whether its license survives receivership or transfer, unlike a conventional distressed asset. Full answer →
- How much marijuana tax revenue does my city get?
- In FY2025, Michigan Treasury distributed $54,017.10 per adult-use retailer/microbusiness license — $93,773,685.60 total across 868 licenses in 238 municipalities. A city's total equals that per-license figure multiplied by its license count: Detroit received $3,295,043.10 across 61 licenses; smaller municipalities with a handful of licenses receive proportionally less. Full answer →
- Does Schedule III rescheduling change cannabis real estate?
- Partially. In April 2026 the Acting Attorney General issued a final order moving FDA-approved marijuana products and state-licensed medical marijuana to Schedule III, easing Section 280E's tax burden for medical operators and improving after-tax margins. Adult-use remains Schedule I, banking access is unchanged, and municipal zoning authority is entirely unaffected. Full answer →
Keep reading
The rest of the cannabis desk
Next step
Bring us a note, a receivership or a building
We work both sides of Michigan cannabis distress — disposition for receivers and lenders, acquisition for operators and note buyers.
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