Trade Association Sues Over Michigan’s New Cannabis Wholesale Tax

A cannabis industry trade association in Michigan is suing the state over
the newly approved wholesale cannabis tax, Michigan Advance reports. In the
complaint, the Michigan Cannabis Industry Association argues that the tax
violates the voter-approved adult cannabis use legalization law and that
the 2018 law – which only imposed a 10% excise tax on retail sales – can
only be modified by voters or a supermajority vote by lawmakers.

The law was approved earlier this month by a 78-21 vote in the House, with
11 members not voting, and a 19-17 vote in the Senate.

The group also contends that the tax violates the state Constitution’s
contracts clause.

The law imposes a 24% wholesale tax on cannabis products, which is expected
to generate $420 million annually for the state, and be used primarily for
road construction and repairs. In the complaint, the trade
association contends that lawmakers “jammed” the proposal through both
chambers “without a single committee hearing to discuss the substance of
the bill” by disguising its provisions behind an original title that only
mentioned creating a fund for road funding and revenue replacement,
not establishing a new tax.

Following the passage of the bill, Al Williams, president of the Detroit
Cannabis Industry Association, called the tax “a gut punch to the
industry.”

Gov. Gretchen Whitmer (D) contended that the tax is “not out of line,” and
“not even close to the tobacco tax on tobacco products or taxes on
alcohol.”

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