Michigan judge allows new marijuana tax to stand for now
By Craig Mauger, cmauger@detroitnews.com
A Michigan judge ruled against marijuana businesses in the state Monday, rejecting their arguments that a new 24% wholesale tax on their products, imposed by the Legislature as part of a road-funding deal, should be immediately blocked.
The Michigan Cannabis Industry Association has contended that the new tax should have required supermajority support from lawmakers during votes in October, which it didn’t get, because the policy amends a ballot proposal that voters approved in 2018 to legalize recreational marijuana and set a 10% tax on retail sales.
However, Court of Claims Judge Sima Patel said in her 28-page decision Monday that the new wholesale tax bill was “consistent” with the text of the ballot proposal, which recognized “other taxes.”
“Plaintiffs have not met the stiff burden of demonstrating that they will likely succeed on the merits,” Patel wrote of not granting a preliminary injunction against the new law.
For now, her ruling allows the new 24% tax to go into effect Jan. 1.
But it wasn’t an outright victory for the Legislature and Gov. Gretchen Whitmer’s administration.
Patel said there “remain questions of fact” whether the 24% wholesale excise tax interferes with the purposes of the 2018 ballot proposal. Patel noted the businesses had argued that voters “purposefully selected the 10% excise tax on retail sales to keep retail prices reasonable” and to diminish the illicit market.
“Discovery will be required to develop the evidence needed to support the parties’ positions in this regard,” Patel wrote, rejecting the state’s pursuit of a summary judgment against the businesses on the matter.
Patel set a scheduling conference for Jan. 13 but referenced “the high likelihood that both parties will seek an appeal to the Court of Appeals.” Whitmer appointed Patel to the Court of Appeals in 2022.
In reaction to the decision, Rose Tantraphol, spokeswoman for the Michigan Cannabis Industry Association, said the organization plans a “swift appeal.”
“We don’t believe the Court of Claims made the right call,” Tantraphol said. “While we are deeply frustrated by this ruling, I can tell you this: The fight is far from over.”
The wholesale tax was at the center of a road-funding compromise that ended a months-long budget standoff between Democrats and Republicans in the Capitol in October.
The nonpartisan Michigan House Fiscal Agency has projected the wholesale marijuana tax would create about $420 million in additional revenue for roads annually.
Under the state Constitution, to amend a voter-approved policy, three-fourths of the lawmakers in the House and Senate would have to support the change. While the new wholesale tax wasn’t added directly to the voter-approved law, the lawyers argued the tax’s passage effectively amended it.
The 24% new tax didn’t get three-fourths support in the House or Senate. In the Senate, only 19 of the 37 lawmakers supported it.
The Michigan Cannabis Industry Association represents about 400 licensed marijuana businesses. Last year, Michigan’s recreational marijuana retail sales came in at about $3.2 billion, according to monthly reports from the Cannabis Regulatory Agency.













