Judge Declines to Halt Michigan’s New 24% Wholesale Cannabis Tax

A Michigan judge this week denied a request to temporarily block the state’s newly approved 24% wholesale cannabis tax, clearing the way for it to take effect on Jan. 1, 2026.

Judge Sima G. Patel of the Michigan Court of Claims rejected preliminary injunction motions filed by Holistic Research Group, the Michigan Cannabis Industry Association (MCIA) and PF Manufacturing, according to reporting from ClickOnDetroit. The petitioners had argued that the tax would inflict immediate and irreversible harm on cannabis businesses already struggling in a volatile market.

Court Says Industry Failed to Show Harm Outweighs Public Benefit

In her ruling, Patel said the plaintiffs had not demonstrated that the alleged harm to their businesses outweighed the public interest in funding major infrastructure projects the tax is designed to support.

A scheduling conference has been set for Jan. 13, when the court will determine next steps in the case. Regardless of how the Court of Claims ultimately rules, legal experts expect the dispute to advance to Michigan’s appellate courts and potentially the state Supreme Court.

Cannabis Companies Argue Tax Violates State Law and Constitution

The plaintiffs contended that the wholesale tax violates both the Michigan Regulation and Taxation of Marihuana Act (MRTMA)—the voter-approved framework governing legal cannabis—and the state constitution’s Title-Object Clause, which requires that legislation address a single, clearly stated purpose.

Patel disagreed, ruling that the measure, known as the Comprehensive Road Funding Tax Act, does not amend the MRTMA. Instead, she determined it establishes a separate tax allowed under MRTMA’s provision permitting “all other taxes” not explicitly precluded by the law.

The court also rejected claims that the tax contradicts MRTMA’s intent to keep regulated cannabis prices competitive as a means of discouraging illicit market activity. Patel wrote that those arguments lacked evidence beyond prediction and speculation.

Industry Warns Higher Taxes Could Deepen Sales Declines

Cannabis industry leaders have warned for months that the proposed wholesale tax could send consumers back to the illicit market and crush businesses already facing sinking prices and narrowing margins.

Despite those warnings, the court said the potential economic fallout was too uncertain to justify halting implementation of the tax ahead of the full legal review.

New Tax Places Michigan Among Most Heavily Taxed Cannabis States

Once implemented, the 24% wholesale tax—combined with the existing 10% retail excise tax—will position Michigan among the most heavily taxed cannabis markets in the United States.

MCIA Executive Director Robin Schneider, who helped draft the MRTMA, said she worries the substantially higher tax burden could stunt the legal industry’s growth and limit consumer access to regulated products.

Michigan remains one of the nation’s largest cannabis markets, with licensed retailers reporting $3.2 billion in sales last year, second only to California. Industry analysts warn that adding new costs to an already-contracting market could have lasting consequences for both businesses and consumers as the legal battle moves forward.

For more information contact at info@cannabisriskmanager.com

OG source Download Article