Michigan's Cannabis Industry Association Urges Appeals Court to Block 24% Wholesale Tax on Marijuana
The Michigan Cannabis Industry Association (MiCIA) has urged the Michigan Court of Appeals to intervene and block a new 24% wholesale tax on marijuana before it takes effect on January 1, arguing that the tax is unconstitutional. The group has filed an application for leave to appeal a December 8 ruling by the Michigan Court of Claims that declined to stop the Legislature's wholesale tax from going into effect while the case continues.
"We stand by our belief that the Court of Claims did not make the right call when it issued an opinion that declined to block the Michigan Legislature's unconstitutional 24% wholesale tax on cannabis from going into effect on New Year's Day," said MiCIA spokesperson Rose Tantraphol. "Our filing requests that the Court of Appeals take up our lawsuit, which we continue to believe is an exceptionally strong case on the merits."
The 24% wholesale tax was part of a legislation signed by Governor Gretchen Whitmer, who supports the tax to pay for long-promised road repairs. However, industry leaders warn that the high tax will push Michigan's legal cannabis prices close to those in California, where high taxes have eroded parts of the market and driven consumers back underground.
The lawsuit argues that lawmakers need a three-quarters supermajority to change voter-approved cannabis laws under the Michigan Constitution. When voters legalized recreational marijuana in 2018, they approved a 10% excise tax and 6% sales tax on retail cannabis sales. Any new or higher tax amounts to an amendment of that ballot measure and therefore needs a supermajority vote.
MiCIA has sued in early October, seeking to eradicate the tax entirely and alleging lawmakers pushed it through using a "shell bill," changing the measure's purpose late in the legislative process in violation of the Michigan Constitution. The association is represented by attorneys from Honigman LLP and Dykema.
In its December 8 ruling, the Court of Claims rejected two of MiCIA's constitutional arguments related to change of purpose and amendment by reference, but left a third issue unresolved. A hearing on that remaining issue is scheduled for January 13.
Because the case has not been fully resolved at the trial court level, MiCIA filed an application for leave to appeal, asking the Court of Appeals to intervene now. The group argues that delaying an appellate review would cause unnecessary harm to an industry already under financial strain.
"We stand by our belief that this unconstitutional move by the Legislature jeopardizes all of [the cannabis industry's] accomplishments," said Tantraphol. "Businesses will close and neighbors will lose jobs. The state's own Senate Fiscal Agency predicts that due to market elasticity, total sales will decrease by about 14%."
MiCIA has warned that the tax could drive consumers back to the illicit market, which would be detrimental to the state's cannabis industry.
Let's get this case to the Court of Appeals so that we can start to right this wrong," said Tantraphol. The stakes are incredibly high, and it is imperative that the Court of Appeals intervenes now to protect Michigan's cannabis industry.
The Michigan Cannabis Industry Association (MiCIA) has urged the Michigan Court of Appeals to intervene and block a new 24% wholesale tax on marijuana before it takes effect on January 1, arguing that the tax is unconstitutional. The group has filed an application for leave to appeal a December 8 ruling by the Michigan Court of Claims that declined to stop the Legislature's wholesale tax from going into effect while the case continues.
"We stand by our belief that the Court of Claims did not make the right call when it issued an opinion that declined to block the Michigan Legislature's unconstitutional 24% wholesale tax on cannabis from going into effect on New Year's Day," said MiCIA spokesperson Rose Tantraphol. "Our filing requests that the Court of Appeals take up our lawsuit, which we continue to believe is an exceptionally strong case on the merits."
The 24% wholesale tax was part of a legislation signed by Governor Gretchen Whitmer, who supports the tax to pay for long-promised road repairs. However, industry leaders warn that the high tax will push Michigan's legal cannabis prices close to those in California, where high taxes have eroded parts of the market and driven consumers back underground.
The lawsuit argues that lawmakers need a three-quarters supermajority to change voter-approved cannabis laws under the Michigan Constitution. When voters legalized recreational marijuana in 2018, they approved a 10% excise tax and 6% sales tax on retail cannabis sales. Any new or higher tax amounts to an amendment of that ballot measure and therefore needs a supermajority vote.
MiCIA has sued in early October, seeking to eradicate the tax entirely and alleging lawmakers pushed it through using a "shell bill," changing the measure's purpose late in the legislative process in violation of the Michigan Constitution. The association is represented by attorneys from Honigman LLP and Dykema.
In its December 8 ruling, the Court of Claims rejected two of MiCIA's constitutional arguments related to change of purpose and amendment by reference, but left a third issue unresolved. A hearing on that remaining issue is scheduled for January 13.
Because the case has not been fully resolved at the trial court level, MiCIA filed an application for leave to appeal, asking the Court of Appeals to intervene now. The group argues that delaying an appellate review would cause unnecessary harm to an industry already under financial strain.
"We stand by our belief that this unconstitutional move by the Legislature jeopardizes all of [the cannabis industry's] accomplishments," said Tantraphol. "Businesses will close and neighbors will lose jobs. The state's own Senate Fiscal Agency predicts that due to market elasticity, total sales will decrease by about 14%."
MiCIA has warned that the tax could drive consumers back to the illicit market, which would be detrimental to the state's cannabis industry.
Let's get this case to the Court of Appeals so that we can start to right this wrong," said Tantraphol. The stakes are incredibly high, and it is imperative that the Court of Appeals intervenes now to protect Michigan's cannabis industry.
they're saying it'll drive people back underground, but honestly, who doesn't love a good underground operation? 
on a serious note tho, i feel bad for the businesses and jobs that are gonna get hurt by this 24% tax. guess we'll just have to wait and see what the court of appeals decides 
. But MiCIA says otherwise. They're worried this tax will push prices up so high that people will go back to buying from the black market 
. And let's be real, who wants to do that? The state is already struggling with road repairs and now they wanna add more stress to a business that's barely surviving 
. MiCIA says lawmakers changed the purpose of the law just before voting on it - thats not cool 
. We should hope the Court of Appeals agrees with them ASAP 
, because delaying this could be disastrous for Michigan's cannabis industry 
.
25% tax on wholesale is literally crippling the whole scene in MI!!! how can you push people back into the dark alleys for a few road repairs? prioritize the people over profits, Governor Gretchen Whitmer 
#TaxationIsNotEquity #ProtectTheVibe
like miCIA is totally right tho lol the 24% wholesale tax is straight up ridiculous!!! 
i mean, california already has high taxes and look how it affected them... michigan's cannabis industry cant afford that 
businesses will close and ppl will lose jobs... it's like, what are we even doing here?! 
i hope the court of appeals intervenes ASAP so miCIA can stop this tax from happening 
. If MiCIA is right that the tax is unconstitutional and will push prices up, it could be devastating for the industry already struggling financially 
. It's not just about the money, either - it's about jobs and communities that are counting on this industry to thrive.
. The stakes are indeed high, and I think it's crucial that the court intervenes ASAP to protect Michigan's cannabis industry.