LANSING, Mich. (WLNS) — Representatives of Michigan’s cannabis industry have filed an appeal of the state Court of Claims decision to allow a 24% wholesale tax on cannabis products to go into effect next week.
Judge denies halt to Michigan’s 24% marijuana excise tax
In a Dec. 8 ruling, Judge Sima Patel ruled in Michigan Cannabis Industry Association v. Michigan that the plaintiffs had “not demonstrated they are likely to succeed on the merits,” following a Nov. 25 hearing where parties argued whether the tax violates state law.
Gov. Gretchen Whitmer signed the tax into law as part of the state’s $81 million 2025 budget. The 24% wholesale tax was intended by the Michigan Legislature to collect road funding, and would be levied on top of the state’s 10% retail excise tax and 6% sales tax. State analysts estimate it could raise about $420 million per year.
The lawsuit claimed the tax bypasses voters and violated a 2018 law that enacted a 10% tax with revenue split to local governments, schools and roads, arguing that any new cannabis excise tax must be approved by voters or pass with a three-quarters supermajority.
However, Patel shot their argument down, saying state lawmakers “did not amend the MRTMA through enactment of the CRFTA,” and instead “imposed another tax, which is permitted.” She also wrote that precedent holds that amendments to the bill were allowed so long as they were in line with the original bill’s intent — which she says they were, as they aligned with the law’s road funding intentions.
Now, the state’s cannabis industry is attempting to take the case to the Court of Appeals, hoping the process is expedited, as the tax, which they call “unconstitutional,” is set to go into effect Jan. 1.
“The stakes are incredibly high,” said Michigan Cannabis Industry Association (MiCIA) spokesperson Rose Tantraphol. “The Michigan cannabis industry has been an economic engine for our state since voters legalized marijuana in 2018.”
Advocates: 24% tax increase on cannabis could harm the industry
Tantraphol went on to say the industry has created “47,000 new jobs, pumped $331 million annually to schools, roads, and other public priorities through the 10% excise tax we collect, and generated $188 million in annual sales taxes,” and now cannabis businesses statewide have told the MiCIA they have closed up shop — or will do so very soon.
“Businesses will close and neighbors will lose jobs,” Tantraphol said. “Cannabis businesses operate on thin margins, so allowing the 24% wholesale tax to go into effect will mean a lower volume of sales. The state’s own Senate Fiscal Agency predicts that due to market elasticity, total sales will decrease by about 14%.”
