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The Michigan Cannabis Industry Association has filed a lawsuit against the state of Michigan, challenging a new 24% wholesale tax on marijuana that is set to take effect on January 1, 2026. The tax, included in the Fiscal Year 2026 budget, is expected to generate approximately $420 million annually for road improvements, according to state officials.
The lawsuit, filed on Tuesday (October 7) in the Michigan Court of Claims, argues that the tax violates the constitutional requirements for amending voter-initiated laws. Michigan voters approved the legalization of recreational marijuana in 2018 through the Michigan Regulation and Taxation of Marihuana Act (MRTMA). The association contends that any changes to such laws require either voter approval or a three-fourths legislative vote, neither of which occurred in this case.
The new tax emerged from bipartisan budget negotiations and was signed into law by Governor Gretchen Whitmer. Initially, Whitmer proposed a 32% tax to raise $470 million for road repairs. The final 24% tax is part of the Comprehensive Road Funding Tax Act, which aims to improve Michigan's infrastructure.
The Michigan Cannabis Industry Association argues that the new tax constitutes an amendment to the MRTMA and should therefore be subject to the constitutional requirements for changing voter-approved statutes. The lawsuit also claims that the legislative process used to pass the tax violated the state's "change of purpose" clause.
Supporters of the tax, however, argue that it is a separate law and does not infringe on the rights established in the 2018 voter-passed language. State Senator Edward McBroom stated that the 2018 law allows for additional taxes beyond those initially imposed.
As the legal battle unfolds, the tax is scheduled to be implemented at the start of 2026, unless a court injunction is issued to block it.