The state is defending Michigan’s new marijuana tax in court filings, arguing it is constitutional and it does not conflict with a voter-approved law that legalized recreational cannabis.
The response filings this week in the Michigan Court of Claims are in answer to a lawsuit filed by a cannabis industry group against the new 24% wholesale tax on marijuana that will take effect with the new year. That is on top of the existing retail marijuana tax that is part of the voter-approved initiative that legalized recreational marijuana in Michigan.
The Michigan Cannabis Industry Association lawsuit argues the new tax is unconstitutional because it was not adopted by the Legislature with the three-fourths supermajorities required to amend a voter-initiated law.
But the state argues the new wholesale tax is distinct from the initiative’s retail tax, and therefore does not act as an amendment to the marijuana law.
“Rather, the Legislature enacted a law that works in concert with the legal framework for regulating marijuana, which exists in several separate, but intertwined, laws,” said the state’s brief.
A key element of the state’s argument is that the primary purpose of the new wholesale tax is to raise revenue for roads and not to regulate the marijuana industry, although critics of the tax also argue the tax will force prices higher, tamp down legal sales and force some businesses to close, thus reducing revenue as marijuana buyers turn to the black market.
The state also disputed claims that the Legislature unconstitutionally changed the purpose of an existing bill to enact the tax.
The wholesale marijuana tax makes up an estimated $420 million of a $2 billion plan for state and local roads.
The Michigan Cannabis Industry Association’s attorneys had no response to the state’s filing, but a spokesperson said the group will argue for a court-ordered injunction to halt the tax in a hearing scheduled for later this month.
