Michigan Judge Denies Request to Block New Weed Tax, Citing Constitutional Flexibility
A Michigan judge has rejected a request to block a new 24% tax on the wholesale price of marijuana, which is set to take effect on January 1. The tax, aimed at generating an additional $420 million in annual revenue for local road repairs, was approved by lawmakers and Governor Gretchen Whitmer in October.
The Michigan Cannabis Industry Association (MCIA) and marijuana cultivator Holistic Research Group had filed a lawsuit, arguing that the tax violated the state’s constitution because it did not receive the required three-fourths super-majority vote from lawmakers.
However, Judge Sima Patel of the Michigan Court of Claims ruled that the new tax is allowable without a super-majority vote, citing the language in the 2018 voter-initiated Michigan Regulation and Taxation of Marihuana Act (MRTMA). The act states that the 10% retail excise tax is in addition to “all other taxes,” which the judge interpreted as broad and expansive.
The judge did not appear receptive to the industry’s argument that the new tax would push customers to the illicit market, saying that claim was speculative. Patel ordered further hearings in the case, scheduled for January 13.
The new tax is expected to have a significant impact on Michigan’s marijuana industry, with some stakeholders warning that it could lead to job cuts and price hikes for consumers. The industry has argued that it does not have the profit margins to absorb the new tax, which would make Michigan one of the highest-taxed states for marijuana in the country.
The revenue generated from the new tax is part of a state plan to pay for local road repairs, a key priority for Governor Whitmer. The Michigan Department of Treasury has confirmed that the new tax will take effect as planned on January 1.
The MCIA has announced plans to appeal the judge’s ruling, stating that the group believes the court made the wrong decision and that the fight is far from over.
