As Michigan gears up for a new taxation policy on cannabis, a legal battle brews over its potential implications. The Michigan Court of Claims recently entertained arguments concerning the state’s impending wholesale tax on marijuana, set to be implemented on January 1.
The Michigan Cannabis Industry Association has taken legal action, asserting that the Michigan Legislature breached constitutional protocols by passing the wholesale tax without the necessary supermajority vote. According to the lawsuit, this move unlawfully alters the state’s recreational marijuana initiative, initially ratified by voters in 2018, which included a 10% retail tax.
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Rick Pluta
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Michigan Public Radio Network
Industry representatives warn that the 24% wholesale tax could significantly impact the legal marijuana market, potentially shifting consumers towards illegal alternatives, leading to business closures, and resulting in job losses.
“What we are focused on is making sure that this unconstitutional wholesale tax does not take effect — period,” stated Rose Tantraphol, spokesperson for the association, post-hearing. She emphasized that “Cannabis companies would not be able to sustain this kind of tax and still remain in business,” adding that “47,000 jobs are on the line.”
Conversely, state attorneys contested these dire predictions, suggesting they are speculative. The state’s main defense posits that the new tax does not interfere with the voter-sanctioned law, but is rather a distinct public act intended to generate substantial funds for state infrastructure, particularly roads.
Michigan Assistant Attorney General Wes Margeson argued that halting the tax would disadvantage the public, stating, “We have 10 million people traveling Michigan’s roads. The whole state uses them, so stopping the collection and imposition of this tax harms the public far more than the plaintiffs.”
Judge Sima Patel of the Court of Claims indicated she would soon deliver a decision, though no specific timeline was provided. The outcome is expected to be contested, potentially advancing to the Michigan Supreme Court.
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