A Michigan Court of Claims judge has ruled that a new 24% wholesale tax on marijuana can take effect, denying a request for a preliminary injunction sought by cannabis industry advocates. The tax, part of a comprehensive 2025-26 budget deal passed in October, is intended to generate revenue for state road repairs through 2030.
In an opinion issued Monday, Judge Sima Patel rejected arguments from the plaintiffs in Holistic Research Group Inc./Michigan Cannabis Industry v. Michigan Department of Treasury. The industry groups had contended that the tax was unconstitutional, arguing it violated the state Constitution's title-object clause by altering the voter-approved legalization law without proper procedure. They claimed the Michigan Regulation and Taxation of Marijuana Act was the sole statutory mechanism for taxing cannabis.
Judge Patel found that the advocates failed to demonstrate a clear constitutional violation or prove they would suffer irreparable harm. She noted that the original legalization initiative allowed for "all other taxes" in addition to the specific 10% retail excise tax it established. "The phrase 'all other' is broad and expansive," Patel wrote, concluding that the legislature had imposed a new, separate tax rather than amending existing ones, which is permissible.
While the injunction was denied, allowing the tax to proceed, Judge Patel did not dismiss the case entirely. She allowed it to move forward to determine if the new tax interferes with the intent of the voter-initiated law regarding marijuana consumption and sales. Patel stated that a "genuine issue of fact remained" on this point, requiring further evidence and discovery to resolve whether the new tax undermines the purposes of the original act.
