Michigan’s newly approved marijuana tax has quickly become one of the most talked-about elements of Governor Gretchen Whitmer’s $80 billion state budget. The 24% wholesale marijuana tax, passed after months of political gridlock, is designed to generate $420 million in annual revenue to fund road repairs and infrastructure projects. However, the new marijuana tax is already facing legal challenges that could determine its future.
Governor Whitmer signed the budget after contentious negotiations between Democrats and Republicans. While both sides claimed victories with Republicans celebrating government cuts and Democrats highlighting boosts to education the 24% marijuana tax stood out as the most controversial new funding measure.
Budget Director Jen Flood described the negotiations as among the toughest in Whitmer’s tenure. She said the marijuana tax was a compromise, lower than initial proposals but still significant enough to fill Michigan’s road funding gap. The new levy applies to cannabis wholesalers before retail sales occur, distinguishing it from the existing 10% excise marijuana tax voters approved in 2018.
Critics argue that lawmakers violated Michigan’s constitution, which requires a three-fourths legislative vote to amend a voter-approved initiative.
Because the new marijuana tax changes the economic structure of the 2018 Michigan Regulation and Taxation of Marijuana Act, opponents say it effectively alters that law without proper procedure.
The Michigan cannabis industry has already filed a lawsuit seeking to overturn the marijuana tax, calling it unconstitutional and harmful to legal businesses. Industry leaders warn that a 24% wholesale rate could drive consumers back to the black market, undermining the purpose of legalization. Legal experts like retired constitutional attorney Robert Lebrandt agree this is a strong argument noting that excessive marijuana tax rates could unintentionally revive illegal sales.
State officials, however, maintain that the marijuana tax is legal because it does not directly modify the retail tax created by voters. They argue the legislature has inherent authority to impose new taxes at different levels of the supply chain.
As the court battle unfolds, Michigan residents are watching closely. The outcome will not only determine whether the new marijuana tax stands but could also set a precedent for how far lawmakers can go in modifying voter-approved measures. For now, Michigan’s marijuana tax debate reflects the ongoing tension between revenue generation, constitutional limits, and the future of the state’s cannabis industry.