Legal Battle Over Michigan’s New Cannabis Tax Continues
The Michigan Court of Appeals has decided against an expedited review of a legal challenge mounted by the cannabis industry concerning a new wholesale tax on recreational marijuana. This decision ensures that the case will be heard first in the state Court of Claims, potentially delaying a final resolution. The appellate court’s succinct order stated, “The application for leave to appeal is DENIED for failure to persuade the Court of the need for immediate appellate review,” without further explanation.
In a related decision, the court also rejected the state’s request to dismiss the case altogether. This outcome was welcomed by Rose Tantraphol, a representative of the Michigan Cannabis Industry Association, who praised the ruling, emphasizing that the new tax could potentially contravene the state constitution and the 2018 voter-approved initiative that legalized and regulated recreational marijuana.
“The stakes are really high in this case,” Tantraphol remarked to Michigan Public Radio. “This tax threatens 47,000 Michigan jobs and risks driving consumers back to the illicit market, and that would undermine everything voters intended.”
Implemented by the state legislature and signed into law by Governor Gretchen Whitmer, the wholesale tax is anticipated to generate $420 million, earmarked for road improvements. The cannabis industry contends that the 24% tax is unconstitutional, arguing that it modifies the existing retail tax and regulations established by the voter initiative, which can only be altered by a supermajority in the Legislature.
The state’s defense asserts that the statute establishing the new cannabis tax is valid as a road funding measure and does not amend the original initiative’s wording.
The Michigan Treasury, which is named as the defendant in the lawsuit, has refrained from commenting on ongoing litigation. Although the tax became effective on January 1, businesses will remit payments quarterly, meaning that immediate tax liabilities are not yet an issue. A Treasury spokesperson indicated that details regarding billing and payments are still being finalized.
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