Want to ensure your taxes are fully optimized base on your unique tax scenario? Fill out this survey to receive break-down analysis and recommendations uniquely tailored to your priorities. Get Started

Understanding the Implications of Michigan's New Cannabis Tax Lawsuit

Michigan finds itself at the forefront of a significant cannabis tax dispute, as it introduces a contentious 24% wholesale tax on marijuana, now challenged on constitutional grounds. The lawsuit's unfolding captures national interest regarding its implications on cannabis pricing and potential impacts on voter-approved laws and tax initiatives across the U.S.

Regardless of your proximity to Michigan or personal involvement with cannabis, this case could set important precedents. It may guide how other states structure, adjust, and defend cannabis-related taxes, potentially shaping the legal landscape for this growing industry. Here's the crucial information Americans should be aware of.

Michigan's Tax Proposal Explained

Within the framework of its 2025–2026 fiscal plans, Michigan officials have sanctioned a 24% wholesale tax on cannabis, intended as a financial reservoir for infrastructure enhancement. This levy hits earlier stages of the cannabis supply chain, before products reach consumers at dispensaries.

Michigan currently imposes two other taxes:

  • 10% excise tax on retail cannabis sales, established by voters in 2018

  • 6% state sales tax. This prospective wholesale tax could elevate Michigan to a state with one of the most intensive layered cannabis tax regimes nationwide.

Image 3

Lawsuit in Response to New Tax

The Michigan Cannabis Industry Association (MCIA) is contesting the tax as unconstitutional. Their argument hinges on a pivotal element:

The 2018 voter-sanctioned marijuana law requires a supermajority for amendments.

Under the Michigan Regulation and Taxation of Marihuana Act (MRTMA), established through voter support, any legislative discrepancy demands a three-fourths supermajority.

State legislators bypassed this by introducing the wholesale tax through a mere simple majority vote.

MCIA representative Rose Tantraphol highlighted the critical stakes reported by Michigan Advance:

“As the leading trade body for cannabis, we're fighting in court to uphold the decision of Michigan voters.” (Source: Michigan Advance)

Advocacy groups warn that this tax increase could inflate expenses, strain smaller enterprises, and drive consumers toward non-regulated markets — a phenomenon observed in high-tax states like California.

Counterarguments from State Officials

Michigan’s government asserts the tax's legality on the basis that:

Speak to a Tax Expert
Speak to an expert today on how we can help your business
Get Started

  • The wholesale tax is a new measure, distinct from the 2018-approved cannabis statute

  • The legislature possesses the prerogative to enact taxes fulfilling budgetary necessities

  • Its goal centers on road infrastructure funding, not altering cannabis-related legislation

Image 2

Should the judiciary uphold the legality, the tax could be inaugurated on January 1, 2026.

Potential Consumer Impacts

Americans, irrespective of location, should be astute observers, as states often replicate each others’ systems for taxing cannabis. If the tax withstands the challenge:

  • Wholesale cannabis prices are anticipated to surge

  • Retail costs might escalate as businesses recoup additional taxes

  • Consumer behavior could shift, with some turning toward less expensive illicit markets

  • Smaller cannabis operators may encounter increased economic pressure, sparking consolidation

Conversely, if nullified, Michigan’s existing tax regime — which remains comparatively economical— would persist.

Broader National Significance

Though Michigan hosts this lawsuit, its ramifications resonate at the national level.

1. It scrutinizes voter-approved law boundaries

If legislatures can implement taxes absent supermajority agreement, the effectiveness of ballot measures across states could be profoundly affected.

2. Potential influence on cannabis tax frameworks in other states

States confronting infrastructure shortfalls might mimic Michigan’s efforts if successful.

3. Ongoing national dialogue on varied cannabis tax landscapes

States like Oregon and Michigan maintain modest tax lift costs, bolstering the competitive edge of legal products. By contrast, states like California, grapple with high taxation leading to thriving illicit trade.

Michigan’s litigation may set precedents for other states navigating tax alterations.

What Lies Ahead?

A Michigan Court of Claims judge has engaged with initial arguments, with a decision anticipated imminently. This lawsuit may escalate to the Michigan Supreme Court.

Image 1

No matter the judgment, the implications extend beyond Michigan’s cannabis landscape, potentially reshaping how states address voter-endorsed statutes, burgeoning industries, and tax authorities.

Speak to a Tax Expert
Speak to an expert today on how we can help your business
Get Started
Share this article...

Sign up for our newsletter.

Each month, we will send you a roundup of our latest blog content covering the tax and accounting tips & insights you need to know.

I confirm this is a service inquiry and not an advertising message or solicitation. By clicking “Submit”, I acknowledge and agree to the creation of an account and to the and .

We care about the protection of your data.