Marijuana group appeals court order upholding 24% wholesale tax, urges action by Jan. 1

OG article by Beth LeBlanc and Craig Mauger

December 23, 2025

The Michigan Cannabis Industry Association has filed an appeal challenging a Court of Claims ruling that upheld a newly enacted 24% wholesale tax on recreational marijuana transactions, effective January 1, 2026. The group contends the tax unlawfully amends the 2018 voter-approved Proposal 1, which legalized adult-use cannabis and imposed only a 10% retail excise tax while referencing potential "other taxes" but requiring supermajority legislative approval for significant changes.

Passed in October 2025 with simple majorities under a bipartisan agreement involving Governor Gretchen Whitmer, the wholesale levy is projected to raise about $420 million annually, primarily for road infrastructure. The association argues this circumvents voter intent to keep retail prices reasonable and suppress black markets. Court of Claims Judge Sima Patel denied a preliminary injunction, finding the tax permissible under the ballot language but noting unresolved questions about its alignment with original objectives.

Seeking expedited review from the Michigan Court of Appeals before implementation, the association warns of severe consequences including industry layoffs, reduced competitiveness, and resurgence of illicit sales. Last year's recreational market generated $3.2 billion in sales, underscoring economic stakes. The case highlights tensions between legislative fiscal priorities and voter-protected initiatives in regulated industries.