Industry group files lawsuit to block Michigan’s new wholesale tax on weed

BY KYLE DAVIDSON, MICHIGAN ADVANCE

MICHIGAN—A cannabis industry trade association is challenging the state’s newly approved tax on the sale or transfer of wholesale marijuana, filing the complaint shortly after the policy was signed into law.

The suit, filed with the Michigan Court of Claims Tuesday, argues that the new law, and the steps leading up to its enactment, violates several sections of the Michigan Constitution, including requirements for amending the law that legalized marijuana in the state.

Voters in 2018 approved Proposal 1, creating the Michigan Regulation and Taxation of Marihuana Act, which legalized marijuana for recreational use by individuals 21 and older. The law also levies a 10% excise tax on the commercial sale of marijuana.

In its complaint, the Michigan Cannabis Industry Association argues this law is the exclusive means for imposing an excise tax on the sale of marijuana, and that in order to modify the voter-initiated statute, the matter would either need to be approved by voters or achieve a three-fourths vote in the Legislature.

The 24% tax was approved by the Michigan House in a 78-21 vote, with 11 members not voting, while the matter passed the Senate in a tight 19-17 vote with one member not voting and one seat vacant.

Because the 24% was enacted through a separate law, and did not achieve three-fourths support from the 138 member Legislature, the association argues the attempt to levy a new tax is invalid.

The association also argued the original title of the bill was misleading and that the policy underwent an unlawful change of purpose leading up to the final version approved by the Legislature, shifting from a policy creating a fund for road funding and revenue replacement without establishing any tax, to one imposing a 24% excise tax on marijuana wholesale prices.

The new law also violates the state constitution’s contracts clause, the group alleges.

The Michigan Cannabis Industry Association has requested a declaratory judgment deeming the new tax law invalid and unenforceable, alongside injunctive relief preventing the state government from enforcing the act.

In an email Wednesday morning, Department of Treasury spokesperson Ron Leix said the department had not been served the lawsuit and does not have any comment.

READ MORE: Michigan lawmakers bank on new marijuana tax to help fix state roads

This coverage was republished from Michigan Advance pursuant to a Creative Commons license.