October 3, 2025
Built by a former cannabis regulator, Policy, Decoded is your high-signal daily briefing for operators, investors, and policymakers navigating the collision of law, regulation, and business.
Today’s edition is brought to you by THC Group, the consulting firm that gets shit done, and The Hybrid podcast. Each episode at the intersection of cannabis policy, culture, and strategy.
Michigan’s 24% wholesale tax became law in a late-night budget vote that ended shutdown threats but left operators facing one of the harshest tax structures in the country. Oregon wholesalers are reviving dormant commerce clause challenges to open interstate markets despite federal prohibition. And Nebraska’s medical rollout has descended into political interference and restrictive regulations that undercut the voter mandate, raising questions about whether the state is undermining its own program before it starts.
🚨 Michigan’s 24% tax showdown
⚖️ Oregon export fight revived
🏛️ Nebraska rollout sabotaged
Start the day informed. Stay ahead. Have a great weekend.
Start here — the day’s most important development, decoded for impact.
📌 What Happened: Michigan lawmakers approved a $75.9 billion budget just after 3 a.m. Friday with the Senate voting 19-17 to pass a 24% wholesale cannabis tax after House Speaker Matt Hall threatened to shut down government if Democrats didn't deliver, ending days of protests over a measure expected to generate $420 million annually for roads starting January 1. The Senate held up the cannabis tax bill for hours after omnibus budget bills sailed through with bipartisan support, as Democrats argued legislators were routing around voter intent from 2018 legalization while Republicans countered the industry has failed to deliver promised benefits. The House passed the bill on September 25 with a 78-21 vote, falling five votes short of the three-quarters supermajority typically required to amend voter initiatives, with eleven Democrats absent apparently attending the Congressional Black Caucus Foundation conference in Washington. The Michigan Cannabis Industry Association is eyeing a lawsuit claiming the vote improperly amends the 2018 voter-initiated law without meeting constitutional thresholds, while Michigan business groups slammed accompanying corporate income tax changes as a $2 billion five-year increase.
💡 Why It Matters: Hall claimed Senate Majority Leader Winnie Brinks offered cannabis as the revenue source in private negotiations, then forced her to deliver a 19-17 vote or own a shutdown after two missed budget deadlines. That's pure political hardball: make a deal in private, announce it publicly with press releases, dare the other side to break it. The cannabis tax got held on the Senate floor for hours not because anyone thought it was good policy, but because leadership needed to count votes and twist arms to get exactly 19 Democrats in a 19-18 majority chamber. The constitutional argument matters for precedent: Michigan deliberately excluded wholesale taxes in 2018 legalization, and legislators just added one with a simple majority by calling it a "new" tax under the Comprehensive Road Funding Tax Act rather than an amendment to the voter-approved law. The 19-17 vote tells the story: leadership delivered exactly the votes needed, no more, meaning they gave political cover to colleagues who wanted to vote no.
🧠 THC Group Take: Cannabis became the sacrifice that let everyone declare victory after two missed deadlines and shutdown pressure forced legislators to vote yes on a tax they knew would push customers toward illicit product. The revenue math doesn't work because it assumes people will pay 40% total tax (24% wholesale plus 10% retail excise plus 6% sales) rather than text their old dealer, but that's a 2026 problem when projections miss. Michigan's wholesale flower prices hit $61.79 per ounce in August, down 23% year-over-year, with supply outpacing demand two-to-one and 37 companies already failing to renew licenses through July 2025 due to financial pressure. Adding 24% wholesale tax to that market doesn't create $420 million in sustainable revenue, it accelerates the licensed-to-illicit shift. Hall and Brinks cut a private deal, Hall went public claiming "she offered marijuana," and Brinks had to deliver or look weak. That's why the cannabis bill sat on the Senate floor for hours while everything else moved quickly. Michigan operators survived oversupply, price compression, and MSO exits to build America's second-largest market by keeping prices competitive and capturing 75% of sales in legal shops compared to California's 35%. Their reward is becoming a budget-balancing tool when road funding stalls. The business community mobilized immediately against their $2 billion corporate tax hit, while cannabis got 24% wholesale tax with nine days notice and no hearings. That gap in political response times tells you everything about relative power and why durable political relationships matter more than legalization itself.
Fast-moving headlines, flagged for what matters.
About 60 Minnesota hemp and cannabis industry representatives met with Office of Cannabis Management officials Wednesday to demand a six-month enforcement delay for new testing and labeling rules taking effect January 1, warning the requirements could devastate the THC beverage market that paved the way for the state's adult-use legalization. The state currently has only two licensed testing laboratories to handle demand from Minnesota's 240 craft breweries and hundreds of hemp beverage manufacturers, while new labeling rules require listing manufacturer, cultivator and processor names plus license numbers that haven't been issued yet. Industry leaders say three out-of-state beverage companies plan to exit Minnesota later this year due to regulatory uncertainty, and half the state's craft breweries could be at risk given their reliance on hemp beverage sales. OCM provided some relief during the meeting, clarifying that products tested under old rules before 2026 can remain on shelves until they expire, but the testing bottleneck reveals how Minnesota scheduled its transition to comprehensive supply chain transparency exactly when lab capacity couldn't support it, putting compliant operators at a disadvantage while creating enforcement chaos that benefits nobody except the illicit market. (Star Tribune)
Jefferson Packing House filed a new federal lawsuit Wednesday challenging Oregon's cannabis export ban as unconstitutional, targeting Gov. Tina Kotek and Attorney General Dan Rayfield in a case assigned to Magistrate Judge Jeffrey Armistead. The Medford-based wholesaler argues the state's interstate commerce restrictions discriminate against Oregon producers by blocking access to out-of-state demand despite federal illegality. This marks the company's second attempt at the same legal theory after voluntarily withdrawing an identical 2022 lawsuit in January 2024, just before a scheduled hearing, following a Washington state judge's ruling that the dormant commerce clause doesn't apply to federally illegal substances. The timing is curious: Oregon's oversupply crisis has only worsened since the first withdrawal, with wholesale prices hitting record lows and cultivators sitting on worthless inventory, yet Jefferson Packing now faces unfavorable precedent that didn't exist when they filed originally and rescheduling remains stalled at Schedule 3 where it wouldn't enable interstate commerce anyway. (Bloomberg Law)
An East Oregonian editorial highlights how Oregon's 2024 permanent license cap transformed what was once a low-barrier market into one requiring $100,000 or more to purchase existing dispensary licenses on the secondary market, pricing out small local operators in favor of corporate interests. Governor Tina Kotek told the editorial board she views the high secondary market prices as a "red flag" requiring examination with new OLCC Director Tara Wasiak, questioning whether the system actually works for operators struggling with record-low wholesale prices and massive oversupply. House Bill 4121 capped retail licenses at one per 7,500 adult residents (Oregon currently has 863 retail licenses against a cap of 324, meaning no new licenses will issue for decades) while cultivators harvested 12.3 million pounds in 2024 amid collapsing margins. The license cap was meant to stabilize oversupply by ending Oregon's open licensing experiment, but it created an entirely predictable consequence: turning licenses into tradeable assets that favor consolidation rather than the small craft operators who built the market, all while doing nothing to address the core problem that Oregon grows triple what it can consume and still cannot export a single gram across state lines. (East Oregonian)
State Senator John Cavanaugh filed a formal complaint Thursday challenging Nebraska Medical Cannabis Commission emergency regulations that he argues "override the clearly expressed will" of voters who approved medical cannabis with 71% support in November 2024. Cavanaugh's complaint targets commission restrictions barring raw flower, vapes and limiting patients to 5 grams of delta-9 THC every 14 days, along with requiring only in-state physicians to recommend cannabis, arguing the commission adopted definitions "more restrictive than the definition contained in statute" that voters approved for up to 5 ounces possession. The challenge comes after the commission missed its October 1 licensing deadline by at least one week following Governor Jim Pillen's forced resignation of two commissioners and their replacement with medical cannabis opponents Dr. Monica Oldenburg and Lorelle Mueting, while Attorney General Mike Hilgers has threatened to sue regulators who grant licenses claiming cannabis sales remain unconstitutional under federal law. Legislature failed in May to pass LB 677 that would have provided statutory guardrails, falling 23-22 on a cloture vote as opponents argued the commission should act alone first, leaving the voter-created commission free to impose restrictions that Cavanaugh now argues exceed statutory authority. Nebraska shows what happens when prohibition forces ignore clear voter mandates: a governor who opposed legalization appoints opponents to regulate it, an attorney general threatens enforcement against his own state's regulators, and the entire implementation becomes a test of whether administrative agencies can nullify ballot measures through restrictive rulemaking when legislators and executives lack the votes to overturn them directly. (News From The States / Nebraska Examiner)
Evart-based Lume Cannabis acquired three former TerrAscend retail locations in Center Line, Grand Rapids and Morenci, boosting its Michigan footprint to 42 stores as the multi-state operator completed its exit from what Executive Chairman Jason Wild called "an extremely difficult market" where resources could be "better utilized" in northeastern states. TerrAscend entered Michigan with a $545 million acquisition of Gage Growth Corp in March 2022 only to abandon all 20 dispensaries and four cultivation facilities three years later, citing saturated market conditions depressing prices and squeezing margins in the nation's second-largest cannabis market at $3.2 billion in annual sales behind only California. Lume President Doug Hellyar declined to disclose deal terms due to an NDA but said the acquisitions allow the company to serve more customers with products from its large Evart cultivation facility, while TerrAscend uses proceeds to pay down $183.5 million in debt and refocus on New Jersey, Maryland, Pennsylvania and Ohio. The deal reveals Michigan's market dynamics: MSOs acquire aggressively during expansion then retreat when commodity economics set in, while well-capitalized in-state operators like Lume with vertical integration and operational efficiency can consolidate assets at distressed prices, turning TerrAscend's failed $545 million bet into someone else's margin improvement opportunity in a market where survival depends on cultivation scale and cost control rather than financial engineering. (MJBizDaily)
A Kentucky cultivator completed the state's first medical cannabis harvest with products expected in dispensaries by November, while Governor Andy Beshear announced approval of Natural State GreenGrass CannaCo, a tier III facility that will eventually expand to 25,000 square feet of cultivation space as one of the state's two largest operations. Office of Medical Cannabis Executive Director Cannon Armstrong said the timeline pushed back slightly from earlier October estimates but confirmed the first harvest is complete and moving toward dispensaries. Beshear signed medical marijuana legalization into law in 2023 and has ceremonially awarded the state's first patient cards, launched an online dispensary directory, and signed executive orders waiving renewal fees for 2025 cardholders and protecting patients who purchase out-of-state until Kentucky dispensaries open. The governor sent a letter to President Trump in July urging him to oppose congressional provisions blocking marijuana rescheduling, arguing it would help patients and reduce illicit markets, while separately pushing Kentucky's congressional delegation to repeal the federal gun ban for medical cannabis patients after ATF warned Kentucky cardholders will be prohibited from firearm possession. (Marijuana Moment)
Smart Approaches to Marijuana fabricated claims in its August letter to President Trump opposing rescheduling, citing a Wall Street Journal article about unlicensed Chinese cultivation operations while adding the invented detail that international cartels operate "thousands of marijuana farms...many licensed at the state level" when the source explicitly stated the farms were unlicensed. SAM President Kevin Sabet served as drug policy advisor to three presidential administrations and maintains influence with lawmakers and journalists, while the group's communications director refused to provide evidence for the cartel licensing claim and shut down questioning with "you're gonna have to do your own research." The organization sits on over $9 million in assets, pays its top four executives six figures annually, and refuses to disclose major donors while SAMHSA invited Sabet to speak at a federal webinar on legalization's "potential negative impacts." SAM's willingness to fabricate details in correspondence with the President while maintaining access to federal platforms and policymakers shows how prohibition's last defenders have abandoned factual arguments entirely, yet regulators and journalists continue treating the group as credible opposition rather than what advocacy experts call "deliberate disinformation" with undisclosed financial incentives to maintain criminalization. (High Times)
A previously unreported May lawsuit against Famous Yeti's Pizza in Stoughton details how customer Samuel Hoffland crashed his car and ended up in the emergency room after eating pizza contaminated with THC oil from Turtle Crossing Cannabis, which shared kitchen space with the restaurant, part of an incident that sent 27 people to hospitals out of over 80 affected. Public Health Madison and Dane County investigated and determined the food was mistakenly contaminated with bulk THC oil but concluded it had no enforcement authority because Wisconsin doesn't regulate Delta-9 THC derived from hemp, meaning no laws prohibit preparing THC and non-THC products in the same industrial kitchen. Wisconsin is one of only six states that neither ban nor regulate Delta-8 THC, leaving age restrictions to individual counties after two Milwaukee children were hospitalized in June when their mother unknowingly bought 600mg THC gummies at a convenience store that faced no citation because the sale wasn't illegal. Governor Tony Evers tried including hemp regulation in the 2025-27 budget requiring processors to hold permits and restricting sales near schools, but Republicans stripped the provision while their own 2024 medical marijuana bill explicitly refused to regulate hemp-derived THC products. The lawsuit shows what happens when states allow unregulated intoxicating cannabinoid markets alongside food service: shared commercial kitchens with no separation requirements, no testing standards, and victims left proving negligence in civil court because public health agencies have zero enforcement tools despite dozens ending up in emergency rooms. (Wisconsin Law Journal)
From the hearing room to the comment section — we’re watching it all.
✅ California banned synthetic cannabinoids and required all intoxicating hemp products to enter the licensed cannabis market, achieving 99.78% compliance after removing 7,210 illegal products from shelves since emergency regulations started in September 2024. Turns out enforcement actually works when you give agencies the tools and political will to use them. (Office of Governor Gavin Newsom)
👑 British police stumbled onto 225 cannabis plants in an industrial unit near King Charles' Highgrove estate, ran out of evidence bags, and borrowed the grower's duvet covers to haul everything away. Even the Cotswolds can't escape prohibition economics. (Fox 28 Spokane)
🎮 Fox News warns that cannabis and video games both link to psychosis in studies, with synthetic cannabinoids showing more severe symptoms than natural cannabis and younger users more susceptible than adults. Apparently we're one controller away from a mental health crisis. (Fox News)
🚗 A medical marijuana delivery driver was robbed at gunpoint in Victorville's Brentwood community, with suspects stealing cash and product. Delivery drivers carry cash and high-value goods while working alone, making them vulnerable targets. Worth remembering the people on the front lines of this industry as it expands. (Victor Valley Daily Press)