A Michigan judge has denied a request to block a new tax. This tax targets wholesale cannabis sales. It is a significant development in ongoing cannabis news. The ruling allows the tax to move forward for now.
Michigan is implementing a 24% wholesale tax. This tax is part of a larger road funding plan. It aims to generate substantial revenue for road repairs. The tax is slated to begin January 1, 2026. It is officially known as the Comprehensive Road Funding Tax Act. This new tax adds to existing cannabis levies. Michigan already has a 10% retail excise tax. A 6% state sales tax also applies to purchases. These combined taxes may rank among the highest nationally.
The Michigan Cannabis Industry Association (MCIA) led the legal challenge. They argued the new tax is unconstitutional. Their main point centered on the Michigan Regulation and Taxation of Marihuana Act (MRTMA). This 2018 law legalized recreational cannabis use. It requires a supermajority vote to amend. Lawmakers passed the new tax with only a simple majority. The MCIA stated this action violated voter intent. They argued it was an unlawful indirect amendment. The group sought an injunction. This would have blocked the tax from taking effect.
Court of Claims Judge Sima Patel issued the ruling. She denied the request for an injunction. Judge Patel reasoned the tax is not an MRTMA amendment. Instead, she found it is a separate law for road funding. She determined the MRTMA’s language is broad. It allows for “all other taxes.” The judge noted Michigan’s pressing need for road funding. However, she allowed the core legal case to continue. A key question remains for trial. This involves whether the tax undermines the MRTMA’s original purpose.
The MCIA expressed deep disappointment with the ruling. They vow to appeal the decision swiftly. The fight is far from over, they stated. Industry leaders worry about business viability. High taxes could push consumers back to the illicit market. This outcome contradicts legalization goals. The original 10% retail rate aimed to attract users. Higher taxes risk reversing this progress. Many businesses may face closure. The case could eventually reach the Michigan Supreme Court.
This ruling impacts Michigan’s cannabis market. It highlights trending debates on cannabis taxation nationwide. The cannabis industry is a dynamic sector. Future tax events could be shaped by this outcome. The state expects significant revenue from the tax. This funding is crucial for road infrastructure projects. This news is part of significant state events. It underscores ongoing fiscal policy discussions.
For now, the 24% wholesale tax will proceed. It is set to take effect on January 1, 2026. The legal battle continues through appeals. The future of cannabis taxation remains a key news focus. This legal contest will likely have lasting effects.
