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October 15, 2025
Built by a former cannabis regulator, Policy, Decoded is your high-signal daily briefing for the executives, investors, and policymakers shaping cannabis and hemp’s next chapter.
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Michigan’s cannabis sales cratered 11% amid new taxes threatening border tourism, Ohio’s hemp ban was blocked hours before enforcement, and the Supreme Court will weigh multiple cannabis gun rights cases that could redefine federal precedent.
📉 Michigan Sales Crater, Tax Pressure Mounts
⚖️ Ohio Hemp Ban Blocked by Court
🔫 Supreme Court Eyes Cannabis and Guns
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Start here — the day’s most important development, decoded for impact.
📌 What Happened: Michigan cannabis sales plummeted 11% in September to $251.3 million from August's 2025 record of $283.3 million, even as average flower prices climbed for the first time in 14 months to $63.16 per ounce. The state added a net 11 retail stores in September while losing six Class C adult-use cultivation licenses and 34 medical cultivation licenses, underscoring how unlimited licensing continues flooding the market with supply that outpaces demand by more than two-to-one. Michigan's new 24% wholesale cannabis tax brings total state taxes to roughly 40% including existing 16% retail taxes, matching Illinois rates but unlikely to stop cross-border shopping since Michigan's pre-tax prices remain half of Illinois at $3.04 per gram versus $5.95. Three bills recently introduced would cap new retail and cultivation licenses but require three-quarters legislative supermajority to amend voter-initiated marijuana law, making passage unlikely while the Michigan Cannabis Industry Association challenges the new wholesale tax in court. Michigan legislators desperate for road funding imposed the wholesale tax despite the state tracking toward $3.1 billion in 2025 sales compared to Illinois' $1.7 billion despite Illinois having 25% more residents, with New Buffalo's two dozen dispensaries serving a town of 2,000 people built entirely on Illinois demand.
💡 Why It Matters: September's 11% sales collapse paired with the first price increase in 14 months proves that even rock-bottom pricing can no longer drive volume growth in an oversupplied market. The wholesale tax hits just as Michigan operators face shrinking revenue from declining sales, creating a dual revenue crisis where fewer transactions now carry higher tax burdens that squeeze already-compressed margins. Illinois operators expecting competitive relief from Michigan's tax increase will be disappointed since base price disparities of nearly 50% dwarf the tax impact, meaning Michigan remains cheaper even after the new levy takes effect. Michigan is on pace to sell $3.14 billion in 2025, down nearly 5% from 2024's record $3.3 billion and marking the first yearly decline since recreational sales began in late 2019. Legislators knew they needed to capture revenue while cross-border traffic still exists rather than waiting for the market to deteriorate further. Illinois border dispensaries built on arbitrage tourism face the reality that convenience traffic may reconsider two-hour drives for smaller savings while bulk buyers continue making the trek, creating a smaller but more committed customer base.
🧠 THC Group Take: Michigan legislators looked at a $3 billion cannabis market and decided it was time to pay for roads. They can't cap licenses without a three-quarters supermajority they'll never get, can't stop the oversupply death spiral, and just watched sales drop 11% in a single month, but none of that matters when you need revenue and cannabis is the only politically viable tax increase available. The wholesale tax extracts money from operators who have nowhere else to go, regardless of whether some border traffic returns to Illinois. Michigan still collects 40% on every transaction that remains, which beats the current arrangement where Illinois customers buy Michigan weed while Michigan gets minimal tax revenue. Illinois operators expecting competitive relief are missing the point. When your base prices are double Michigan's even after the new tax, you're competing on convenience rather than price, and that's a much smaller market. The court challenge matters more than the tax itself. If the wholesale tax gets struck down on constitutional grounds, Michigan returns to the status quo where unlimited licensing continues flooding the market while legislators watch helplessly as operators fail. The three-quarters supermajority requirement means the oversupply problem is legislatively unfixable, so treating cannabis as a piggy bank makes sense when it's the only lever you can actually pull. What legislators are gambling on is that Illinois price disparities are so extreme that even a 24% wholesale tax won't meaningfully slow cross-border traffic, making this free money with minimal political cost.
Fast-moving headlines, flagged for what matters.
Franklin County Court of Common Pleas Judge Carl Aveni granted a 14-day temporary restraining order Tuesday blocking Governor Mike DeWine's 90-day intoxicating hemp ban just hours before it was set to take effect, telling the court he's concerned DeWine is adding definitions that don't exist in statute. Three hemp retailers and manufacturers sued arguing DeWine exceeded his authority by redefining hemp to exclude intoxicating products and declaring a consumer safety emergency, noting Ohio law explicitly classifies all products with less than 0.3% delta-9 THC as non-adulterated hemp. DeWine defended the order by citing 257 delta-8 poisoning reports since tracking began and claimed voters approved Issue 2's highly regulated dispensary market, not gas station hemp sales, though the ballot measure made no mention of hemp derivatives. The 14-day pause creates a window where DeWine must either convince the court he has emergency authority to unilaterally rewrite federal hemp definitions or push the legislature to act, though lawmakers have spent two years unable to pass hemp regulation despite DeWine repeatedly demanding they do so, and the restraining order confirms what hemp retailers argued from the start: governors can't simply declare products illegal because they don't like federal law. (WVXU, WOSU)
California Governor Gavin Newsom vetoed AB 1332, which would have allowed two microbusinesses to ship medical cannabis products directly to patients via FedEx or UPS for those living more than 60 miles from any retailer. The bill included track-and-trace integration, adult signature requirements, and a three-year sunset clause for evaluation, but Newsom cited administrative complexity and Department of Cannabis Control resource constraints in his veto message. The legislation targeted rare medical formulations for patients with intractable epilepsy and neurodegenerative disorders who cannot access specialized products locally. Meanwhile, California consumers can already order 50mg hemp seltzers delivered to their door through DoorDash for recreational use, creating the absurd situation where seriously ill patients cannot access medical cannabis via common carrier while anyone can get intoxicating hemp beverages shipped for fun. Newsom's cost-benefit analysis might be right that DCC lacks bandwidth for complex shipping compliance right now, but the three-year pilot was designed precisely to test whether patient access benefits justify the administrative lift as the agency matures. (Marijuana Moment)
The Supreme Court denied certiorari in U.S. v. Baxter on Tuesday but scheduled four other cases challenging the federal ban on gun ownership by cannabis consumers for Friday's closed-door conference, with DOJ specifically pushing justices to take U.S. v. Hemani involving both cannabis and cocaine use plus drug sales. Multiple circuit courts have recently ruled against the government's 922(g)(3) prohibition after the Supreme Court's 2022 Second Amendment ruling requiring gun restrictions to align with 1791 historical context, with the Tenth Circuit requiring proof that non-intoxicated cannabis users pose actual danger and the Eleventh Circuit siding with medical marijuana patients. DOJ's defense relies on antiquated precedents disarming Catholics, loyalists, slaves, and Indians, arguments that lower courts increasingly reject as courts demand individualized dangerousness assessments rather than blanket prohibitions. The conference creates a circuit split resolution opportunity where justices could either validate the categorical ban or require case-by-case dangerousness findings, fundamentally reshaping whether states can simultaneously legalize medical cannabis while federal law strips those patients of constitutional gun rights based solely on their medicine choice. (Marijuana Moment)
The Supreme Court denied certiorari in Thomas v. County of Humboldt on October 14, effectively ending property owners' attempt to overturn a 1916 precedent that lets local governments impose civil fines without jury trials. The Institute for Justice had petitioned on behalf of Humboldt County residents facing millions in cannabis abatement penalties based on satellite images, arguing the Seventh Amendment's jury trial right should apply to states just like most other Bill of Rights protections now do. Justice Gorsuch wrote separately to note that the 1916 Bombolis precedent "warrants a second look" and called it a "relic," though he agreed vehicle problems made this the wrong case for review. The Ninth Circuit already remanded excessive fines claims back to district court, where plaintiffs can still win on Eighth Amendment grounds without resolving the Seventh Amendment incorporation question. Gorsuch's invitation for a better vehicle means every municipality using administrative tribunals to impose substantial civil penalties without juries should expect constitutional challenges, and cannabis localities have uniquely large fine structures that make them prime targets for the test case that finally forces the incorporation question. (Reason/Volokh Conspiracy)
Retiring North Carolina Senator Thom Tillis asked Attorney General Pam Bondi during an October 7th Senate Judiciary Committee hearing to investigate the Eastern Band of Cherokee Indians' cannabis operations, alleging the tribe markets to children through Halloween promotions and pumpkin spice flavors while illegally transporting product across non-tribal roads between their non-contiguous farm and dispensary. Bondi said she was unfamiliar with the operation but would have her team look into the app-based ordering system and transportation logistics, marking the first time a federal official has responded to concerns Tillis and Senator Ted Budd raised in 2024 letters to eight law enforcement officials that went unanswered. Principal Chief Michell Hicks rejected the allegations as inaccurate and offensive, defending the tribe's sovereignty and insisting operations comply with federal and tribal law, while noting Tillis called them "an island" in a forgotten corner despite providing them no real representation. We covered Tillis's initial questioning when it happened, but local North Carolina coverage adds important context: the DOJ inquiry threatens to establish precedent on whether tribes with non-contiguous trust lands can transport cannabis across state highways without violating federal law, and whether seasonal flavor promotions constitute marketing to minors, potentially constraining tribal cannabis sovereignty just as more tribes consider entering the market. (NC Newsline, Carolina Journal, Asheville Citizen-Times)
Maricopa County Judge Joseph Kreamer dismissed a lawsuit alleging Arizona's health department, Governor Katie Hobbs, and her chief of staff Chad Campbell improperly awarded a dual-use dispensary license to Trulieve subsidiary Sherri Dunn LLC outside statutory deadlines through a settlement agreement. Cave's Arizona Wellness Center Springerville claimed the license violated the Gift Clause and court orders after ADHS settled with Sherri Dunn rather than risk losing on appeal, following Supreme Court rulings that ADHS had violated law by denying certificates to qualified applicants. Kreamer ruled Cave lacked standing to challenge the settlement, rejected arguments that regulatory licenses fall under Gift Clause restrictions, and found no ultra vires claim exists under Arizona law to challenge agency settlements even when they conflict with statutory timelines. The ruling establishes that Arizona agencies can settle litigation by awarding licenses outside statutory windows without Gift Clause exposure, though Cave's allegations that Trulieve lobbyists coordinated with the governor's chief of staff went largely unaddressed as the case never reached discovery on the political influence claims. (Arizona Capitol Times)
From the hearing room to the comment section — we’re watching it all.
⚕️ New York appointed Dr. June Chin as Chief Health Officer at its Office of Cannabis Management in July, making it one of the only states with both an equity chief and a medical officer overseeing cannabis policy. The state requires licensed pharmacists on-site at medical dispensaries and Governor Hochul is expected to sign legislation modernizing the medical program, while medical patient enrollments nationwide typically crater after adult-use launches. I've crossed paths with Dr. June quite a bit over the last year and a half, including her transition from Leafwell into OCM, and can confidently say that New York's patients have a fierce advocate in her. (MJBizDaily)
🚗 Missouri's Division of Cannabis Regulation published draft rules allowing dispensaries to offer curbside pickup and is collecting public feedback through October 28th before formal rulemaking begins. The two-week comment window is Missouri's approach to pre-rulemaking stakeholder engagement, gathering input before officially filing proposed changes. If navigating state rulemaking processes and crafting strategic comments isn't your organization's core competency, that's precisely what THC Group does - we help operators and industry groups submit feedback that actually moves regulators, whether it's Missouri curbside rules or any other state cannabis rulemaking that impacts your business. (KTVO)
🍬 Arkansas Tobacco Control warned parents to check Halloween candy for THC products despite the state banning them in 2023, claiming some remain on shelves and could be mistaken for regular candy. This is what we're warning kids about in 2025: the theoretical risk that strangers are handing out expensive intoxicating edibles for free, when your kid faces exponentially higher risks from the car ride to go trick-or-treating, choking hazards in actual candy, or crossing the street in a vision-obstructing costume. (KTLO)
🍺 Frontier Risk formed an advisory board including leaders from CounterMeasures Corp and BrightBev to expand its on-premise THC beverage insurance programs launched earlier this year, filling coverage gaps for bars, restaurants, and stadiums serving hemp-derived drinks as alcohol alternatives. The insurance industry is treating hemp beverages as legitimate hospitality products requiring sophisticated risk management rather than Schedule 1 contraband, which tells you everything about where institutional money thinks this market is headed regardless of what governors and legislators eventually decide. (Insurance Business America)
🎵 OK Magazine reported Gen Z is ditching alcohol at concerts for THC products, citing New Frontier Data showing 69% of 18-24 year olds prefer cannabis to alcohol. Las Vegas promoters report dramatic drops in alcohol sales at Gen Z shows since pandemic reopening, with one Tucson club manager noting 25% declines at Gen Z-focused events while simultaneously seeing increased demand for cannabis consumption options. The fact that OK Magazine is covering Gen Z cannabis preferences at concerts demonstrates how thoroughly mainstream the substitution narrative has become, which matters more for institutional investors and CPG strategists than another trade publication survey confirming what the industry already knows about demographics and consumption patterns. (OK Magazine)
🍺 Atlanta's Scofflaw Brewery pivoted from near-bankruptcy during COVID to manufacturing hemp-derived THC beverages, with 80% of revenue now coming from contract manufacturing for brands across the country as co-founder Matt Shirah predicts the THC beverage market could become 10 to 20 times larger than beer. Georgia doesn't tax the drinks and they can be shipped nationwide, creating what economics professor Kyle Townsend calls enormous untapped revenue potential through common-sense taxation. (CBS Atlanta)
💰 The Last Prisoner Project provides direct financial support to cannabis prisoners and their families through grant programs funded by legal cannabis industry donations, including $5,000 annual college grants for children, $300 quarterly commissary accounts, and pro bono clemency legal services. Bryan Reid received grants while serving six years in Virginia for cannabis charges, enabling his daughters to attend college and graduate while he was incarcerated, though Virginia legalized cultivation in 2021 without retroactive resentencing provisions. The model matters because it addresses what policy advocacy and legal work cannot: keeping families intact financially while parents serve sentences for conduct that's now legal and generating billions in tax revenue, creating a direct pipeline where profitable legal operators fund the families of people still imprisoned for the same plant. (Capital B News)