A Michigan court has refused to pause the state’s newly approved 24% tax on wholesale marijuana, clearing the way for the levy to begin on January 1, 2026. The decision, issued by Court of Claims Judge Sima Patel, was closely watched by marijuana companies and policymakers who have debated for months whether the Legislature overstepped its authority when it added the tax to this year’s budget.
Patel sided with state officials who argued that the new charge does not alter the substance of the 2018 ballot measure that opened Michigan’s recreational cannabis market. State lawyers maintained that the voter-backed law remains intact and that the tax is simply a tool to raise money for infrastructure projects, particularly road improvements.
Patel noted that early drafts of the road funding measure already envisioned higher tax collections to support transportation, even though they did not spell out where those dollars would come from. According to the judge, the underlying purpose of the legislation stayed consistent.
Under the state’s Constitution, any revision to a voter-approved statute requires a three-quarters vote in both legislative chambers. The wholesale tax did not meet that bar, which became a central argument for the Michigan Cannabis Industry Association (MCIA).
The group contended that creating a new levy without overwhelming legislative support effectively changes the framework voters endorsed six years ago. Business owners have warned that layering a sizable wholesale tax on top of the existing retail excise tax could push some companies to the brink.
Industry representatives also cautioned that higher prices might push buyers back toward unlicensed sellers, undermining efforts to build a stable and regulated marketplace. The court said these predictions were too uncertain to justify blocking the policy.
MCIA spokesperson Rose Tantraphol said the organization intends to keep pressing its case, insisting that lawmakers ignored the intent of the electorate when they approved the budget provision.
A scheduling conference is planned for January 13 to determine how the case will proceed. The next formal step for the industry group is an appeal to the state’s Court of Appeals. Regardless of how that panel rules, both sides expect the issue to reach the state Supreme Court.
The wholesale levy, combined with the state’s existing 10% retail cannabis excise tax, will place Michigan among the states with the highest marijuana tax rates in the country.
Marijuana sales in Michigan are already showing signs of decline. Legal retailers reported $3.2 billion in revenue in 2024, making Michigan the second-largest marijuana market in the nation after California.
Companies like Cresco Labs Inc. (CSE: CL) (OTCQX: CRLBF) with operations in Michigan will be hoping that the legal process yields an outcome that doesn’t impose an exorbitant tax burden on licensed marijuana companies in the state.
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