Massive new Michigan cannabis tax to take effect Jan. 1 after court hearing

A Michigan judge this week denied a request to halt the state’s newly implemented 24% wholesale cannabis tax, scheduled to take effect on Jan. 1, 2026.

The Michigan Court of Claims, led by Judge Sima G. Patel, rejected motions for a preliminary injunction filed by Holistic Research Group, the Michigan Cannabis Industry Association (MCIA) and PF Manufacturing, according to ClickOnDetroit.

The court said the plaintiffs had not that the harm to their businesses outweighed the public benefit of funding critical to infrastructure projects.

A scheduling conference is set for Jan. 13 to determine the next steps in the case, which is expected to be appealed to Michigan’s high courts no matter what the outcome.

The plaintiffs argued that the tax violated the Michigan Regulation and Taxation of Marihuana Act (MRTMA), a voter-approved initiative, and the state constitution’s Title-Object Clause, which mandates that laws address a single, clearly stated purpose.

Patel ruled that the Comprehensive Road Funding Tax Act did not amend the MRTMA but instead imposed a separate tax, consistent with the marijuana legislation’s allowance for “all other taxes.”

The court also dismissed claims that the tax conflicted with the MRTMA’s intent to keep cannabis prices competitive to deter illicit market activity.

While industry leaders warned that the tax could drive consumers back to unregulated markets and strain businesses already operating on thin margins, the court deemed those concerns speculative.

The 24% wholesale tax, combined with the existing 10% retail excise tax, positions Michigan among the states with the highest cannabis tax rates in the nation.

MCIA Executive Director Robin Schneider, who helped draft the MRTMA, said she is concerned that the elevated tax burden could undermine the regulated market’s growth and accessibility.

Cannabis sales are already plunging in Michigan, where legal retailers reported $3.2 billion in revenue last year – the second-biggest market in the nation behind only California.