A Michigan Court of Claims judge has declined to block a new wholesale tax on recreational marijuana from taking effect January 1.
Judge Sima Patel held Monday in a widely awaited ruling that a cannabis industry group has a weaker case compared to the state’s argument that the new tax does not change a word of the 2018 voter initiative that legalized recreational marijuana in the state — and that its purpose is to generate revenue for roads, not to regulate marijuana.
“The initial version of the road funding bill indicated that taxes would be imposed to fund the road fund, but did not identify the source of those taxes,” said Patel. “That purpose did not change.”
The Michigan Constitutional requires three-fourths supermajorities in both chambers of the Legislature to amend voter-approved initiatives. The cannabis tax passed as part of this year's state budget did not achieve that threshold.
The Michigan Cannabis Industry Association said the notion that the Legislature could adopt a new tax without changing the substance of the initiative rings hollow to marijuana businesses poised to go under if they’re saddled with an additional 24 percent wholesale tax on top of a retail tax.
“While we are deeply disappointed by this ruling, I can tell you this: This fight is far from over,” said Rose Tantraphol with the industry association. “We remain confident in the strength of our case that this move by the Legislature violated the will of the voters who approved the 2018 citizens ballot initiative.”
The next step for the industry is to file a challenge with the Michigan Court of Appeals. The case is expected to land eventually before the Michigan Supreme Court.
