Michigan Cannabis Industry Challenges New 24% Wholesale Tax in Court

Michigan's cannabis industry is taking legal action against a newly enacted 24% wholesale tax on marijuana, arguing it violates the state's constitution.

 

On October 7, Governor Gretchen Whitmer signed the tax into law, aiming to generate approximately $420 million annually for road construction and repairs.

 

However, the Michigan Cannabis Industry Association (MCIA) swiftly filed a lawsuit in the state Court of Claims, seeking to block the tax set to take effect on January 1, 2026.

 

The MCIA contends that the tax unlawfully amends the 2018 voter-approved Michigan Regulation and Taxation of Marihuana Act (MRTMA), which legalized recreational marijuana and established a 10% excise tax on retail sales.

 

According to the lawsuit, any changes to a voter-initiated law require either a public vote or a three-quarters supermajority in both legislative chambers.

 

The new tax was passed with a 78-21 vote in the House and a narrow 19-17 vote in the Senate, falling short of the supermajority threshold.

 

Critics argue that the additional tax burden could drive consumers back to the illicit market, undermining the legal cannabis industry.

 

They also express concern that higher prices may lead to a decline in sales, potentially resulting in job losses and business closures.

 

Supporters of the tax maintain that it is a separate law that does not infringe upon the rights stipulated in the 2018 voter-passed language.

 

They argue that the tax is necessary to fund much-needed infrastructure improvements across the state.

 

The outcome of this legal challenge could have significant implications for both the cannabis industry and Michigan's road funding plans.

 

As the case proceeds, stakeholders on both sides will be closely monitoring developments.