Michigan Marijuana Industry Files Lawsuit Against Newly Enacted Tax Increase

*The Michigan Cannabis Industry Association argues the tax hike would
either need to be approved by voters or achieve a three-fourths vote in the
Legislature.*

*By Kyle Davidson, Michigan Advance*

A cannabis industry trade association is challenging the state’s newly
approved tax on the sale or transfer of wholesale marijuana, filing the
complaint shortly after the policy was signed into law.

The suit, filed with the Michigan Court of Claims Tuesday, argues that the
new law, and the steps leading up to its enactment, violate several
sections of the Michigan Constitution, including requirements for amending
the law that legalized marijuana in the state.

Voters in 2018 approved Proposal 1, creating the Michigan Regulation and
Taxation of Marihuana Act, which legalized marijuana for recreational use
by individuals 21 and older. The law also levies a 10 percent excise tax on
the commercial sale of marijuana.

In its complaint, the Michigan Cannabis Industry Association argues this
law is the exclusive means for imposing an excise tax on the sale of
marijuana, and that in order to modify the voter-initiated statute, the
matter would either need to be approved by voters or achieve a
three-fourths vote in the Legislature.

The 24 percent tax was approved by the Michigan House in a 78-21 vote, with
11 members not voting, while the matter passed the Senate in a tight 19-17
vote with one member not voting and one seat vacant.

Because the 24 percent was enacted through a separate law, and did not
achieve three-fourths support from the 138 member Legislature, the
association argues the attempt to levy a new tax is invalid.

The association also argued the original title of the bill was misleading
and that the policy underwent an unlawful change of purpose leading up to
the final version approved by the Legislature, shifting from a policy
creating a fund for road funding and revenue replacement without
establishing any tax, to one imposing a 24 percent excise tax on marijuana
wholesale prices.

The new law also violates the state Constitution’s contracts clause, the
group alleges.

The Michigan Cannabis Industry Association has requested a declaratory
judgment deeming the new tax law invalid and unenforceable, alongside
injunctive relief preventing the state government from enforcing the act.

In an email Wednesday morning, Department of Treasury spokesperson Ron Leix
said the department had not been served the lawsuit and does not have any
comment.

*This story was first published by Michigan Advance.*

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