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US: Cannabis trade group sues Michigan over new 24% wholesale tax Steve Neavling Metro Times Wednesday 08 Oct 2025 The Michigan Cannabis Industry Association (MCIA) filed the complaint Tuesday in the Michigan Court of Claims, just hours after Gov. Gretchen Whitmer signed the tax into law as part of the new state budget. The Senate approved the measure 19-17 last week after it passed the House 78-21. The lawsuit argues lawmakers lacked the three-quarters supermajority required 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, the MCIA contends, amounts to an amendment of that ballot measure and therefore needs a supermajority vote. The lawsuit argues that lawmakers violated the constitutional protections that voters included in the 2018 ballot initiative that legalized recreational marijuana. The complaint adds that the new wholesale tax amounts to an additional excise tax under a different name. “Legislative authority over marihuana excise taxes is exclusive to MRTMA; no other statute may intrude upon or duplicate the marihuana excise tax,” the lawsuit states. “Thus, additional excise taxes require a direct amendment to MRTMA itself.” Under the new law, the 24% tax will be levied on all marijuana sold or transferred to retailers beginning Jan. 1. The Whitmer administration projects it will raise roughly $420 million a year to fund road repairs. Cannabis businesses say the tax will drive up prices, fuel the illicit market, and force more licensed operators out of business. “This is going to be a nail in the coffin, especially for mom and pops,” said Tom Farrell, owner of the Refinery dispensaries in New Buffalo and Kalamazoo and Growing Pains, a cultivator. “The industry is in turmoil right now.” At Farrell’s Kalamazoo location, sales have dropped 70% in the past 18 months. “It has been horrendous,” he said. “We had to lay off employees.” The MCIA’s lawsuit also accuses lawmakers of misleading the public by inserting the tax into a road-funding bill at the last minute. In addition the complaint alleges the measure unconstitutionally interferes with existing contracts between cannabis suppliers and retailers by taxing discounts and rebates that are already part of negotiated agreements. State leaders, including Whitmer and House Speaker Matt Hall, maintain that the tax is legal because it does not alter the existing excise tax structure approved by voters. Cannabis business owners and advocates strongly disagree. They argue the new tax undermines the intent of the 2018 legalization measure, which was designed to keep taxes low enough to compete with the unregulated market. “It’s a slap in the face to the cannabis industry and voters,” said Nick Hannawa, partner and chief legal counsel of Puff Cannabis, which operates 11 dispensaries. “It’s totally unfair to a struggling industry. We are already taxed more harshly than any other industry in the country.” Michigan’s cannabis market has already been reeling from oversupply, falling prices, and shrinking profit margins. In August, the average retail price of recreational flower dropped to a record low of $61.79 an ounce, which is down from $512 when legal sales began in 2020. Industry leaders warn that adding a 24% wholesale tax will push Michigan’s legal cannabis prices close to those in California, where high taxes eroded parts of the legal market and drove consumers back underground. In the same week the Michigan House approved the wholesale tax, California Gov. Gavin Newsom signed a bill to roll back a 25% tax increase on recreational cannabis. He approved the measure because the state’s high tax rates have forced thousands of legal businesses to shut down and drove residents to the unregulated market. The MCIA is seeking a preliminary injunction to block enforcement of the tax while the case moves forward. Meanwhile, lawmakers have not touched the state’s 4% liquor tax… https://www.metrotimes.com/weed-2/cannabis-trade-group-sues-michigan-over-new-24-wholesale-tax/
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