New Marijuana Tax Faces Legal Challenge in Michigan
A recent judicial decision has determined that a new wholesale tax on recreational marijuana in Michigan will proceed as planned, taking effect January 1. This decision came after a Michigan Court of Claims judge ruled against a request to halt the tax’s implementation.
In her ruling, Judge Sima Patel stated that the cannabis industry group’s case was not as compelling as the state’s position. The state argued that the tax does not alter the 2018 voter-approved initiative legalizing marijuana but aims to allocate funds for road improvements.
“The initial version of the road funding bill indicated that taxes would be imposed to fund the road fund, but did not identify the source of those taxes,” explained Patel. “That purpose did not change.”
According to the Michigan Constitution, any amendments to voter-approved initiatives require a three-fourths majority in both legislative chambers. However, the cannabis tax was included in the state budget without meeting this requirement.
The Michigan Cannabis Industry Association expressed disappointment, arguing that imposing a new tax without altering the initiative is detrimental to marijuana businesses that are already struggling. They are concerned about the additional 24 percent wholesale tax that will be imposed alongside existing retail taxes.
“While we are deeply disappointed by this ruling, I can tell you this: This fight is far from over,” stated Rose Tantraphol, representing the industry group. “We remain confident in the strength of our case that this move by the Legislature violated the will of the voters who approved the 2018 citizens ballot initiative.”
The industry plans to escalate the matter by filing an appeal with the Michigan Court of Appeals, with expectations that it may eventually be reviewed by the Michigan Supreme Court.
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