Michigan Lawmakers Approve New 24% Wholesale Cannabis Tax

Michigan lawmakers have passed a budget proposal that includes adding a new
24% wholesale tax on the cannabis industry.

The House passed the proposal within hours of its unveiling last month,
78-21, and the Senate narrowly passed the proposal in a 19-17 vote on
Friday. Lawmakers were moving quickly to set the state budget to avoid a
government shutdown.

Under the budget, the new wholesale tax is expected to generate $420
million annually, which will primarily be used to fund road construction
and repairs.

But Michigan cannabis representatives say the tax will harm the industry
and put consumers at risk by pushing them toward the illicit marketplace.

“It’s like a gut punch to the industry. We’re already overtaxed from the
federal government, we were already taxed heavily from the state
government, and now to have a 24% increase, a lot of people are going to
figure out whether this industry is worthwhile.” — Al Williams, President
of the Detroit Cannabis Industry Association, via Local 4

Meanwhile, Gov. Gretchen Whitmer (D) told the local news station that the
24% tax rate “actually makes us commensurate with other states in our
region.”

“It is not out of line, and it’s not even close to the tobacco tax on
tobacco products or taxes on alcohol,” the governor said. It should be
noted, however, that alcohol and tobacco are not on the Schedule of
Controlled Substances, which means that alcohol and tobacco businesses are
permitted to deduct expenses like rent and marketing from their federal
taxes: meanwhile, state-legal cannabis businesses are not able to do so.