Michigan Court to Hear Arguments on Controversial Marijuana Tax
In Detroit, a Michigan Court of Claims judge is set to listen to arguments on Tuesday regarding a new tax on marijuana that has sparked controversy over its constitutionality.
The 24% wholesale tax on cannabis was a crucial component of a budget deal recently approved by the Legislature and signed by Governor Gretchen Whitmer. However, the recreational marijuana industry has filed a lawsuit, claiming that the tax violates the state Constitution as a voter-approved ballot initiative had already imposed a retail tax on cannabis.
Rose Tantraphol, spokesperson for the Michigan Cannabis Industry Association, stated, “This was an unconstitutional move. End of sentence. Full stop.” She emphasized that the addition of a wholesale tax on marijuana without supermajority votes goes against the state’s constitution.
The lawsuit argues that the new tax could potentially harm the growth of the legal recreational marijuana industry by forcing many cannabis retailers out of business. With thin profit margins, these businesses may struggle to absorb the 24% tax.
On the other hand, the State Budget Office has refrained from commenting on the ongoing litigation but has asserted in written briefs that the purpose of the wholesale tax is to generate funds for road improvements rather than regulating marijuana.
The case’s outcome may hinge on the technicality of whether the wholesale tax is distinct enough from the existing retail tax. Both parties involved in the lawsuit have requested an immediate ruling in their favor as the tax is scheduled to go into effect on January 1.
Court of Claims Judge Sima Patel is expected to expedite the case to the Michigan Supreme Court if necessary, with the cannabis industry also urging for a pause on the tax implementation until the legal process is completed.
