Michigan Bill Would Repeal 24% Wholesale Cannabis Tax
- A bill introduced in Michigan aims to repeal the 24% wholesale tax on cannabis products that started on January 1.
- State Sen. Jonathan Lindsey opposes the tax, citing concerns about government overreach, harm to businesses, job losses, and questionable revenue outcomes.
- The tax was initially expected to generate $420 million annually for road construction but is being legally challenged for allegedly bypassing required legislative approval processes.
- The repeal bill has bipartisan support and has been sent to the Senate Committee on Government Operations for consideration.
A bill introduced last week in Michigan seeks to repeal the 24% wholesale tax on cannabis products that went into effect January 1. State Sen. Jonathan Lindsey (R), the bill’s sponsor, said in a statement that he “opposed” the tax “because it represents an unnecessary growth of government.”
“Lansing’s budget does not need to grow larger; we simply need better discipline. This tax will also damage Michigan businesses and lead to widespread job losses across the state, which are already being reported. I also don’t believe that in the long term this mechanism will generate the expected revenue, especially if sales go down as a result of the increased taxes or if legal challenges against the tax prevail.” — Lindsey in a press release
Prior to the tax increase, there was no tax on wholesale cannabis transactions in Michigan. When lawmakers approved the tax, officials estimated it would raise $420 million in revenue annually for road construction and repairs. The tax is being challenged by the Michigan Cannabis Industry Association, which argues in its lawsuit that when voters approved the adult-use reforms in 2018, the proposal only included a 10% excise tax on retail sales, and that the lawmaker-approved hike was not passed lawfully because changes to voter-initiated laws require a three-fourths supermajority.
Lindsey added that his repeal legislation – which includes three Democrat and four Republican co-sponsors – “is about reining in the government’s constant attempt to get just a little bit more out of people.”
The bill was referred to the Senate Committee on Government Operations.