A Michigan judge has allowed a new 24% wholesale tax on cannabis to proceed. This tax is set to take effect on January 1, 2026. A lawsuit sought to block this tax. The Michigan Cannabis Industry Association (MCIA) filed the suit. Holistic Research Group also joined the legal challenge.
The lawsuit argued the tax was unconstitutional. Plaintiffs claimed it improperly altered a voter-approved law. Specifically, they cited the Michigan Regulation and Taxation of Marihuana Act (MRTMA). This 2018 initiative legalized recreational cannabis. It also established a 10% retail excise tax. The MCIA argued that changing this law requires a supermajority vote. They stated the new tax did not receive this vote. Furthermore, they invoked the state Constitution’s Title-Object Clause.
Judge Sima Patel of the Michigan Court of Claims made the ruling. She denied motions for a preliminary injunction. Judge Patel found the plaintiffs did not show a likelihood of success. The court determined the new law is a separate tax. It is consistent with the MRTMA’s allowance for “all other taxes.” The judge stated the Comprehensive Road Funding Tax Act (CRFTA) imposes “another tax.” It does not amend the original marijuana law.
This new tax is a key part of Michigan’s road funding plan. It is projected to generate $420 million annually. This revenue will support road construction and maintenance. Governor Gretchen Whitmer signed the tax into law. It was part of a larger budget deal. The state aims to fix its deteriorating roads. Michigan ranks poorly for road conditions nationally.
However, the lawsuit continues. Questions remain about the tax’s impact. The MCIA expressed deep disappointment. They believe the tax violates voters’ intent. Higher taxes could drive consumers to the illicit market. This might harm businesses. It could also jeopardize thousands of jobs. The association plans to appeal the ruling. The case could eventually reach the Michigan Supreme Court.
The state’s argument centers on the tax being a separate measure. It funds infrastructure, not marijuana regulation. The CRFTA is a new law. It does not alter the MRTMA’s text. The judge agreed with the state’s position for now. She noted the CRFTA is consistent with the MRTMA.
This legal battle is a significant development. It could influence cannabis tax laws nationwide. The outcome may shape how other states handle such initiatives. It is a trending topic in cannabis news. The industry faces uncertainty. The 24% wholesale tax is a major addition. It layers on top of existing retail and sales taxes. This makes Michigan’s tax structure one of the highest. Many businesses worry about their future.
The judge’s decision allows the tax to proceed. However, the legal fight is not over. The cannabis industry continues its challenge. The core issue remains the constitutionality of the tax. Its long-term effects on the market are yet to be seen. The ruling provides a temporary win for the state. It also keeps the possibility of future legal challenges open. This news is critical for understanding Michigan’s cannabis market.
