Michigan Marijuana group sues to block new tax central to road funding deal

OG Article By Simon D. Schuster, Bridge Michigan

October 13 2025

Originally published by Bridge Michigan, a nonprofit news organization. Sign up for their free newsletter here.

New Tax Sparks Lawsuit

Michigan’s cannabis industry sued the state hours after a 24% wholesale tax on cannabis was signed into law.The Michigan Cannabis Industry Association claims the tax is unconstitutional.It argues the tax improperly alters the 2018 voter-approved legalization measure.

Tax Aims to Fund Roads

The tax is part of a bipartisan $81 billion state budget.It targets cannabis products before they reach dispensary shelves.Fiscal analysts predict it could raise $420 million annually for Michigan’s roads.

Legal Battle Unfolds

The association seeks to block the tax in the Court of Claims.Lawyers argue lawmakers bypassed the voter-approved law.Amending such laws requires a three-fourths legislative majority.The tax passed the Senate 19-17 and the House 78-21, falling short.

Legislative Workaround Questioned

The new law, named the Comprehensive Road Funding Tax Act, avoids directly amending the legalization statute.Industry attorneys call this a tactic to sidestep constitutional rules.They insist additional cannabis taxes need voter approval or a supermajority.

Historical Precedent

In 2019, Michigan lawmakers legalized sports betting without altering a 1996 voter-initiated gaming law.This precedent supports the state’s approach, but the cannabis industry disagrees.

Tax Details and Timeline

The tax takes effect January 1.It applies to cannabis businesses, not consumers, who already pay a 10% retail excise tax.Part of the retail tax funds roads.

Industry Pushback

Cannabis advocates warn the tax could drive consumers to the black market.Unregulated products lack contamination testing.The tax faced strong legislative resistance, with Gov. Gretchen Whitmer lobbying holdouts.

Market Struggles

Since legalization in 2020, Michigan’s cannabis industry has grown to $3.2 billion in 2024 sales.Monthly sales near $300 million.No caps exist on production or licenses, leading to oversupply and low prices.The market may be nearing saturation, threatening industry stability.

Whitmer’s Perspective

Whitmer initially proposed a 32% wholesale tax.In 2019, she joked that funding roads solely through cannabis would require each resident to spend $2,500 annually.“At that level, no one is going to care about the damn roads,” she said.

Reporter Jordyn Hermani contributed. Republished under a Creative Commons Attribution-NoDerivatives 4.0 International License.