As reported by Crain's Detroit, Michigan's cannabis industry is escalating its legal battle over the 24% wholesale tax set to take effect on January 1. The Michigan Cannabis Industry Association (MICIA) filed an appeal Tuesday with the state appeals court, challenging a decision by Court of Claims Judge Sima Patel that denied the group's request to block the tax.
Rose Tantraphol, MICIA spokesperson, told Crain's the organization "stands by our belief that the Court of Claims did not make the right call" and called the case "an exceptionally strong case on the merits." The association argues the wholesale tax violates the 2018 voter-approved cannabis law, the Michigan Regulation and Taxation of Marihuana Act (MRTMA), and "we will not back down from fighting for the will of the people in court," she said.
The tax, passed by lawmakers in late October to fund road repairs, is already causing ripples across the state's cannabis market. Ann Arbor-based C3 Industries is shutting its 35,000-square-foot grow facility in Webberville, cutting 62 jobs, according to a state Worker Adjustment and Retraining Notification. CEO Ankur Rungta told Crain's that the business "cannot operate the Michigan production facility profitably with the new wholesale tax."
Marquette-based Higher Love, which runs ten dispensaries along with growing and processing operations, announced it will lay off nearly 30% of its workforce, citing the tax as the reason, though the exact number of affected employees is unclear.
The MICIA's legal challenge hinges on the argument that the Legislature lacked the supermajority required to amend voter-passed law and may have sidestepped the rules by tacking the tax onto a road-funding bill without public hearings. Judge Patel disagreed that the tax violated the law but left the door open for further review, noting that courts must consider whether the 24% wholesale tax undermines the intent of MRTMA's original 10% retail excise tax, aimed at keeping legal marijuana affordable and curbing the illicit market.
With the new tax set to hit in days, MICIA is asking the Court of Appeals for an expedited ruling to halt the wholesale levy before it takes effect.
