Michigan Cannabis Group Urges Court to Block 24% Tax NOW
URGENT UPDATE: The Michigan Cannabis Industry Association (MiCIA) has just filed an emergency appeal to the Michigan Court of Appeals, demanding immediate action to block a controversial 24% wholesale tax on marijuana set to take effect on January 1, 2026. This legal challenge comes after a December 8 ruling from the Michigan Court of Claims declined to halt the tax amid ongoing litigation.
MiCIA claims the new tax is unconstitutional, arguing that it requires a three-quarters supermajority to amend voter-approved cannabis laws established in 2018. Spokesperson Rose Tantraphol emphasized, “We believe the Court of Claims made an error by not blocking this tax, which jeopardizes an industry that has been an economic engine for our state.”
The association’s lawsuit argues that any new or increased tax constitutes an amendment to the original ballot measure, which allowed for only a 10% excise tax and 6% sales tax on cannabis sales. MiCIA is represented by legal experts from Honigman LLP and Dykema and asserts that the legislation was pushed through using a “shell bill,” violating the Michigan Constitution.
As the cannabis market grapples with oversupply and declining prices, the tax could further exacerbate financial strains. In November, the average retail price of recreational cannabis plummeted to a record low of $59.79 per ounce, down from $512 when legal sales began in 2020. Industry leaders warn that the new tax could push prices closer to those in California, where high taxes have driven consumers back to the illicit market.
Tantraphol expressed that the wholesale tax’s impact is already being felt, with reports of closures and layoffs. “One business in Webberville has announced it will close, and another plans to shut down soon. Just last week, a company in the Upper Peninsula laid off 61 workers.”
“The stakes are incredibly high,” Tantraphol said. “Businesses will close and neighbors will lose jobs. This unconstitutional move by the Legislature jeopardizes all of that.”
MiCIA’s request for a swift appellate review aims to prevent further harm to an industry that has created 47,000 jobs and contributed $331 million annually to public priorities through existing taxes. The association warns that a delay in the appellate process could lead to a significant decrease in cannabis sales—by approximately 14%—as consumers are driven back to the illicit market.
In a stark contrast, while Michigan lawmakers approved the new tax, California Governor Gavin Newsom signed a bill to roll back a 25% tax increase on recreational cannabis, highlighting the urgent need for balanced taxation that supports legal markets.
The Court of Appeals is set to hear MiCIA’s appeal as the industry braces for the January deadline. As developments unfold, the future of Michigan’s cannabis market hangs in the balance, with potential repercussions for thousands of workers and consumers statewide.
