Michigan AG Says New Marijuana Wholesale Tax Is Constitutional, Setting Up Court Fight

The tax, which is part of the Comprehensive Road Funding Tax Act, adds a 25% excise tax on wholesale transfers and is designed to raise an estimated $420 million a year for road improvements. It is scheduled to take effect January 1, 2026. Industry groups, including the Michigan Cannabis Industry Association and PG Manufacturing, argue the new levy violates the 2018 voter-approved legalization law, which already includes a 10% excise tax and restricts lawmakers from making changes without a three-fourths legislative supermajority. They contend the new wholesale tax amounts to an amendment of that law and therefore requires a much higher threshold of support.

State attorneys counter that the wholesale tax stands on its own and does not alter the original legalization framework. They maintain that lawmakers were within their rights to adopt additional taxes that operate independently of the voter-approved measure. The lawsuits challenging the tax have been consolidated, and a hearing is slated for November 25 in Detroit.

Supporters say the new revenue stream is essential for long-term infrastructure repairs, while opponents warn it could raise prices, squeeze retailers and producers, and drive more activity into the unregulated market.

As the court date approaches, both sides acknowledge that the outcome could shape Michigan’s marijuana tax structure for years to come.