Michigan Judge Allows Lawsuit Challenging New Marijuana Tax To Proceed

*“The court recognizes the serious questions about whether this
discriminatory tax violates the intent of the cannabis legalization that
Michigan voters approved in 2018.”*

*By Kyle Davidson, Michigan Advance*

Court of Claims Judge Sima G. Patel on Monday denied the state of
Michigan’s request to rehear a motion to toss a lawsuit filed by cannabis
industry advocates against the 24 percent wholesale tax on marijuana which
took effect on January 1.

In October the Michigan Cannabis Industry Association filed a lawsuit
against the state, arguing that the Legislature’s decision to create a 24
percent tax on wholesale marijuana violates the state constitution by
modifying the 2018 law established when Michigan voters approved a ballot
proposal legalizing recreational marijuana.

Industry advocates have also warned that the tax would bring irreparable
harm to Michigan’s marijuana industry, forcing small retailers out of
business and pushing buyers into the black market.

In her early December ruling, Patel largely rebuffed arguments from
industry advocates, denying the association’s request to block the
wholesale tax from taking effect alongside its request to have the case
resolved without a full trial.

However she did permit the case to move to trial, raising questions on
whether the Legislature’s decision to create the tax violates the intent of
the initiated law, partially denying a similar request from the state to
resolve the matter without moving to trial.

While the state filed a motion to have their request reconsidered, Patel
denied it on Monday, determining that there had been no palpable error in
her previous ruling and reemphasizing that questions of fact remained
around the new tax violates the purpose of the 2018 law.

“It is not certain on this record whether the 24 percent wholesale excise
tax will impact prices to the extent purchasers will be driven to the
illicit marijuana market,” Patel wrote. “Discovery is required to examine
how the tax will impact the purposes of the [voter initiated law.]”

Rose Tantraphol, the Michigan Cannabis Industry Association’s spokesperson,
called Monday’s decision a win for voters and the industry.

“In issuing this order, the court recognizes the serious questions about
whether this discriminatory tax violates the intent of the cannabis
legalization that Michigan voters approved in 2018,” Tantraphol said.
“We’re looking forward to making our case that this tax will push
Michiganders, who are already feeling stretched financially, into the
illicit market.”

In a separate filing, the association has asked the Michigan Court of
Appeals to hear the case, arguing it would allow them to pursue the full
range of arguments they made in their initial lawsuit.

*This story was first published by Michigan Advance.*

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