M365 Copilot shows Basic via group-based licensing, Premium via direct assignment

Hello,

I wanted to share an issue we experienced with Microsoft 365 Copilot licensing and the workaround that resolved it, in case it helps others or Microsoft can confirm whether this is a known backend entitlement synchronization issue.

We assigned a Microsoft 365 Copilot license to an existing user through group-based licensing. The user also had Cowork permission enabled. However, Copilot kept showing as Basic instead of Premium in the Microsoft 365 Copilot experience.

We verified the license assignment through Microsoft Graph. The user had the Microsoft_365_Copilot SKU assigned, and all Copilot-related service plans were showing as Success.

The relevant service plans were:

M365_COPILOT_APPS: Success

M365_COPILOT_BUSINESS_CHAT: Success

M365_COPILOT_TEAMS: Success

M365_COPILOT_SHAREPOINT: Success

M365_COPILOT_INTELLIGENT_SEARCH: Success

GRAPH_CONNECTORS_COPILOT: Success

COPILOT_STUDIO_IN_COPILOT_FOR_M365: Success

There were no visible licenseAssignmentStates errors, and the Microsoft 365 admin center also showed the Copilot license as assigned.

We tried removing the user from the Copilot licensing group, waiting until the Copilot license was fully removed from the user, adding the user back to the same group, confirming that the Copilot license and service plans were assigned again, and testing again in a clean browser session and private browser session.

The issue persisted. Copilot still showed as Basic.

However, when we removed the user from the group-based licensing assignment and assigned the same Microsoft 365 Copilot license directly to the user from the Microsoft 365 admin center, the issue was resolved. Copilot changed from Basic to Premium, and Cowork became available.

The effective workaround was to remove the user from the group-based Microsoft 365 Copilot licensing group, wait until the group-based Copilot license was removed, assign the Microsoft 365 Copilot license directly to the user, sign out or refresh the session, and then Copilot changed to Premium.

This seems to suggest that the Microsoft 365 Copilot license was technically assigned through group-based licensing, but the downstream Copilot entitlement or Premium experience was not being correctly refreshed for that existing user. Direct user-based assignment appears to have triggered the Copilot entitlement refresh correctly.

Has anyone else seen this behavior with Microsoft 365 Copilot and group-based licensing?

Specifically, Microsoft Graph shows the Copilot license and all Copilot service plans as Success. Microsoft 365 admin center shows the license as assigned. The user still sees Copilot as Basic. Removing and re-adding the user to the licensing group does not fix it. Directly assigning the same Copilot license to the user fixes it.

This looks like a possible group-based licensing to Copilot entitlement synchronization issue, especially for existing users.

Any confirmation, known issue reference, or recommended remediation from Microsoft would be appreciated.