Fate of 24% wholesale tax on marijuana before Michigan judge

OG article by Summer Ballentine

November 26, 2025

A Michigan judge is poised to decide on halting a controversial 24% wholesale tax on marijuana, slated for January 1, 2026, as a lawsuit tests its constitutionality. Enacted last month by state lawmakers and signed by Gov. Gretchen Whitmer, the levy targets $420 million yearly for a $1.9 billion road repair initiative, layering atop the 10% excise tax from 2018's voter-approved recreational legalization.

The Michigan Cannabis Industry Association sued immediately, asserting the 2018 ballot measure exclusively dictates excise taxes, and the new impost erodes its goals of fostering a legal market while curbing black-market competition. Executives warn it will inflate prices, slashing sales 14% via elasticity, trigger layoffs, and strain slim margins in a maturing sector.

At the November 25 Detroit hearing, Judge Sima Patel grilled attorneys on the original law's tax exclusivity. The state countered that its wording allows supplementary levies for public needs. No injunction timeline was given, but a swift ruling is anticipated, potentially reshaping fiscal policy for Michigan's booming cannabis economy and influencing other states balancing revenue with industry viability.