Michigan Cannabis Industry Association Urges Appeals Court to Block New Wholesale Tax Amid Financial Strain Concerns
The Michigan Cannabis Industry Association (MiCIA) has petitioned the Michigan Court of Appeals to intervene in a dispute over a new 24% wholesale tax on marijuana, arguing that it is unconstitutional and could further destabilize an already struggling industry.
In November, the average retail price of recreational flower dropped to a record low of $59.79 per ounce, down from $512 when legal sales began in 2020. Total sales also began falling for the first time this year, with industry leaders warning that the new tax could push prices close to those in California, where high taxes have driven consumers back underground.
"We stand by our belief that the Court of Claims did not make the right call when it issued an opinion that declined to block the Michigan Legislature's unconstitutional 24% wholesale tax on cannabis from going into effect on New Year's Day," said Rose Tantraphol, a spokesperson for MiCIA. "Our filing requests that the Court of Appeals take up our lawsuit, which we continue to believe is an exceptionally strong case on the merits."
The new tax was approved by lawmakers and Governor Gretchen Whitmer, who supports it as a way to fund long-promised road repairs. However, industry leaders argue that it will only serve to further strangle an already struggling market.
"The stakes are incredibly high," Tantraphol said. "The Michigan cannabis industry has been an economic engine for our state since voters legalized marijuana in 2018. Our industry has created 47,000 new jobs, pumped $331 million annually to schools, roads, and other public priorities through the 10% excise tax we collect, and generated $188 million in annual sales taxes. This unconstitutional move by the Legislature jeopardizes all of that."
MiCIA argues that lawmakers need a three-quarters supermajority to change voter-approved cannabis laws under the Michigan Constitution. The association sued in early October, seeking to eradicate the tax entirely and alleging lawmakers pushed it through using a "shell bill," changing the measure's purpose late in the legislative process in violation of the Michigan Constitution.
The Court of Claims rejected two of MiCIA's constitutional arguments related to change of purpose and amendment by reference but left a third issue unresolved. A hearing on that remaining issue is scheduled for January 13.
Because the case has not been fully resolved at the trial court level, MiCIA filed an application for leave to appeal, asking the Court of Appeals to intervene now.
Industry leaders warn that delaying an appellate review would cause unnecessary harm to an industry already under financial strain. "Businesses will close and neighbors will lose jobs," Tantraphol said. "The state's own Senate Fiscal Agency predicts that due to market elasticity, total sales will decrease by about 14%."
MiCIA also warns that the tax could drive consumers back to the illicit market. "The last thing the state should be doing is pushing Michiganders who are already feeling stretched financially into the illicit market," Tantraphol said. "Let's get this case to the Court of Appeals so that we can start to right this wrong."
The Michigan Cannabis Industry Association (MiCIA) has petitioned the Michigan Court of Appeals to intervene in a dispute over a new 24% wholesale tax on marijuana, arguing that it is unconstitutional and could further destabilize an already struggling industry.
In November, the average retail price of recreational flower dropped to a record low of $59.79 per ounce, down from $512 when legal sales began in 2020. Total sales also began falling for the first time this year, with industry leaders warning that the new tax could push prices close to those in California, where high taxes have driven consumers back underground.
"We stand by our belief that the Court of Claims did not make the right call when it issued an opinion that declined to block the Michigan Legislature's unconstitutional 24% wholesale tax on cannabis from going into effect on New Year's Day," said Rose Tantraphol, a spokesperson for MiCIA. "Our filing requests that the Court of Appeals take up our lawsuit, which we continue to believe is an exceptionally strong case on the merits."
The new tax was approved by lawmakers and Governor Gretchen Whitmer, who supports it as a way to fund long-promised road repairs. However, industry leaders argue that it will only serve to further strangle an already struggling market.
"The stakes are incredibly high," Tantraphol said. "The Michigan cannabis industry has been an economic engine for our state since voters legalized marijuana in 2018. Our industry has created 47,000 new jobs, pumped $331 million annually to schools, roads, and other public priorities through the 10% excise tax we collect, and generated $188 million in annual sales taxes. This unconstitutional move by the Legislature jeopardizes all of that."
MiCIA argues that lawmakers need a three-quarters supermajority to change voter-approved cannabis laws under the Michigan Constitution. The association sued in early October, seeking to eradicate the tax entirely and alleging lawmakers pushed it through using a "shell bill," changing the measure's purpose late in the legislative process in violation of the Michigan Constitution.
The Court of Claims rejected two of MiCIA's constitutional arguments related to change of purpose and amendment by reference but left a third issue unresolved. A hearing on that remaining issue is scheduled for January 13.
Because the case has not been fully resolved at the trial court level, MiCIA filed an application for leave to appeal, asking the Court of Appeals to intervene now.
Industry leaders warn that delaying an appellate review would cause unnecessary harm to an industry already under financial strain. "Businesses will close and neighbors will lose jobs," Tantraphol said. "The state's own Senate Fiscal Agency predicts that due to market elasticity, total sales will decrease by about 14%."
MiCIA also warns that the tax could drive consumers back to the illicit market. "The last thing the state should be doing is pushing Michiganders who are already feeling stretched financially into the illicit market," Tantraphol said. "Let's get this case to the Court of Appeals so that we can start to right this wrong."
The government needs to chill out with these new taxes, fam 
. I mean, I get it, they wanna fix the roads and stuff, but come on, 24% wholesale tax? That's just gonna crush our little cannabis industry 
. We're already struggling, and you're talking about adding even more pressure? It's like, what's next, taxing air or something? 
And yeah, I can see why they'd wanna fund road repairs, but is it really worth killing the whole industry? It seems to me that this tax is just gonna push all the legit growers back into the shadows, and we're all losers for it 
.
they're saying it could push prices up to what they have in California which is crazy! $59.79 per ounce is already a record low and total sales are falling for the first time... that's just not good at all 
I feel bad for all the people who work in the industry, like 47k new jobs were created last year and now it could all be taken away 
what if they can't pay their bills? 
. On one hand, I feel for the industry and all the jobs and revenue they've generated... but at the same time, I think the state needs to fund those road repairs and it's not fair to the majority of Michiganders who aren't in the industry 
I mean, some people might be like "good riddance" to those sketchy dealers anyway... but what about all the legit businesses that rely on this industry for survival? It's like, how can you justify taking away their livelihoods without providing a better alternative? 
MiCIA is right to be all upset about this, I mean, 47,000 jobs lost? $331 million less for schools and roads? that's like, whoa 
24% wholesale tax on marijuana? 
Total sales are also plummeting, and industry leaders are warning us that prices could hit those in California soon... like, not good vibes 
Industry leaders are warning us that without an appeal, businesses will close and neighbors will lose jobs 
The state's own Senate Fiscal Agency predicts a 14% decrease in total sales - yikes! 
Let's hope MiCIA gets their case heard soon... this industry needs some TLC 
. That's not only bad for businesses but also for the state's economy 
. But if they just keep strangling it with more taxes and regulations, all that progress will go up in smoke 
.
, before it's too late 
.