A Michigan Court of Claims judge heard arguments Tuesday on whether to pause a new state tax on marijuana before it takes effect on January 1.
The legal challenge was filed by the Michigan Cannabis Industry Association, which argues the Legislature violated the Michigan Constitution last month by enacting a new wholesale tax on cannabis without supermajority votes. The lawsuit says that’s an illegal amendment of the state's recreational marijuana initiative and thwarts the will of voters who approved the proposal, including a 10% retail tax, in 2018.
The industry claims the 24% wholesale tax will drive its customers to the illegal market, shut down legal businesses, and cost jobs in the nascent marijuana sector.
“What we are focused on is making sure that this unconstitutional wholesale tax does not take effect — period,” said Rose Tantraphol, spokesperson for the cannabis industry association, following the court hearing. “Cannabis companies would not be able to sustain this kind of tax and still remain in business. We’ve said for months now, ever since the Legislature used these Trojan horse tactics to ram this through in the middle of the night, that 47,000 jobs are on the line.”
The state’s lawyer argued the claims of major damage to the industry are speculative. But the state’s primary argument is the 24% wholesale tax does not touch the law created by the voter-approved initiative, but is instead a separate public act with a separate purpose, which is to raise hundreds of millions of dollars for roads.
Michigan Assistant Attorney General Wes Margeson told the court that the public would be the loser if the tax is blocked or delayed past the January 1 effective date.
“We have 10 million people traveling Michigan’s roads,” he said. “The whole state uses them, so stopping the collection and imposition of this tax harms the public far more than the plaintiffs.”
Court of Claims Judge Sima Patel said she expects to issue her decision soon, but did not say exactly when. Whatever she decides can be appealed, and the case will likely wind up at the Michigan Supreme Court.
