A Michigan judge has ruled that a new 24% wholesale tax on marijuana sales is legal and will take effect in 2026. The decision came after the Michigan Cannabis Industry Association (MiCIA) filed a lawsuit, arguing that the tax violated the state's constitution by altering the 2018 voter-approved law that legalized recreational marijuana with a 10% retail tax. Judge Sima Patel determined that the new tax did not amend the original law but was an additional tax.
The tax is part of a plan to fund road repairs in Michigan, with projections estimating it will generate approximately $417 million in revenue next year. Governor Gretchen Whitmer has emphasized the importance of this funding for improving the state's infrastructure. Despite the ruling, the legal battle is not over, as the court will continue to examine whether the tax conflicts with the original marijuana law's purposes.
Industry leaders, like Nick Hannawa from Puff Cannabis, have expressed concerns that the tax will increase retail prices, potentially driving consumers to the black market. The Michigan Senate Fiscal Agency predicts a 14.4% decline in sales due to the tax, which will be added to the existing 10% retail excise tax and 6% sales tax.
The legal proceedings are set to continue with a scheduling conference on January 13, leaving the future of the tax uncertain. Meanwhile, the revenue from the tax may be held in escrow until the legal challenges are fully resolved.
