“Well, adding a new cannabis tax into the mix now is going to tip that balance… It’s going to drive people out of the legal market.”
By Jordyn Hermani, Bridge Michigan
Bridge Michigan is a nonpartisan and nonprofit news organisation that originally published this article. Subscribe to the Bridge Michigan free newsletter for regular Bridge Michigan news.
Michigan’s largest cannabis association has decided to consider suing the state in response to a new plan for marijuana taxes that was included as part of larger budgetary and road deals state lawmakers are expected Tuesday.
State House lawmakers voted last Thursday 78-21 for a tax of 24 percent on wholesale marijuana prices that are sold or transferred into retail stores, starting in January 2026.
This proposal could bring in an estimated $420million ayear for bridge and road repairs. The nonpartisan House Fiscal Agency estimates this.
Michigan Cannabis Industry Association has questioned whether or not the votes constitute an illegal amendment to recreational marijuana laws approved by voters in 2018.
In Michigan, citizens initiatives are only able to be altered by three-fourths of the votes cast in the Legislature. The House came up five votes short last week of the 83 vote threshold.
Robin Schneider, Executive Director of the Cannabis Association, said that the association consults with lawyers. If they believe strongly that the new tax will amend the 2018 initiative then a lawsuit would be the next step.
We don’t really want to go there.
House Republicans say they have a solid legal foundation after consulting their own internal counsel. Governor’s spokespeople declined to comment. Gretchen Whitmer’s (D), the former marijuana tax proponent who had proposed a 32 percent increase, refused to comment.
Steve Liedel said, “It would not surprise me if someone filed a lawsuit to contest” the tax proposal. Liedel was a former legal adviser to the then-Gov. Jennifer Granholm (D).
Liedel said that “there is precedent” for the Legislature to have done something similar in recent years. He cited a set of laws Whitmer passed in 2019, which legalized Michigan sports betting without changing a 1996 voter-approved gaming control act.
In the early 1990s, the Michigan Gaming Control Board was given “authority” by this initiative to control and regulate in-state gaming.
Then there’s the issue of “adopt-and-amend,” said Liedel, referring to a recent Michigan Supreme Court ruling which noted a Legislature could adopt and amend a citizen-led petition initiative—so long as those actions do not occur in the same legislative session.
Whether lawmakers are simply complying with legal guidance or looking for “a backdoor attempt to get around the requirement” of a three-fourths majority vote is a matter of perspective, Liedel said.
People are allowed to say anything in court.
Jamie Lowell, who was a key contributor to the initiative’s 2018 version, condemned last week’s vote in a Facebook post on Monday as being “completely inappropriate and misguided.” A 10 percent excise duty is already levied on all retail marijuana sales in addition to a 6 percent state-imposed sales tax.
The author of “The Book of Ur” is a member of the [2018 proposal] He wrote: “I can confirm that wholesale tax was deliberately left out.”
Michigan Senate expected to take up the bill on Tuesday
At least one no-vote is likely expected—Sen. Jeff Irwin (D-Ann Arbor), who told Bridge that he believes Michigan’s cannabis industry would be severely affected if a wholesale tax of 24 percent were to take effect.
Irwin, during Bridge’s session on Monday, said: “The key to success for the legal market as well as to eliminate the black markets is having a tax and licensing structure that works.”
“Well, adding a new cannabis tax into the mix now is going to tip that balance… It’s going to drive people out of the legal market.”
Schneider, executive director of Michigan Cannabis Industry Association and a member of Schneider’s team, expressed the same concern. Schneider noted that 47,000 Michigan cannabis workers work either directly, or indirectly, in Michigan.
Schneider has expressed concern that companies will “be forced to reduce the number of employees” in order to survive.
She warned that “after the vote tomorrow our association will be going back to districts to support new candidates” for each and every person who voted yes on the tax policies.
Last week, the proposal received bipartisan approval in the State House.
Alabas Farhat of Dearborn told reporters that the billboards along Michigan’s highways don’t show marijuana businesses “doing quite as poorly as they think they are”.
He said that Michiganders deserve “high-quality roads they can rely on.”
This article first appeared on Bridge Michigan and is republished here under a Creative Commons Attribution-NoDerivatives 4.0 International License.
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