LANSING, Mich. — The Michigan Cannabis Industry Association (MiCIA) filed a lawsuit Tuesday in an effort to block the new 24% wholesale tax on marijuana Gov. Gretchen Whitmer signed into law.

The new tax, set to begin Jan. 1, 2026, is part of this year’s state budget and is intended to generate revenue for road repairs

The tax increase will apply to sales between growers and dispensaries, and comes in addition to the excise tax of 10% and the 6% sales tax.

However, the MiCIA is challenging the law’s legality, calling it “unconstitutional in multiple respects” in a statement to News Channel 3.

In their lawsuit, the association claims legislatures acted unconstitutionally in the passage of the tax, specifically referencing Article 2 Section 9 of the Michigan Constitution, which requires a three-fourths vote to amend any law enacted by citizen initiative – as was the Michigan Regulation and Taxation of Marijuana Act, passed on the 2018 election ballot.

In addition to legality, the lawsuit calls into question potential long-term impacts.

Senator Jeff Irwin (D-MI) included a statement in the lawsuit, stating it was “a great day for illegal drug dealers and criminal gangs in Michigan,” adding that high taxes drive people out of the legal market.

The legislature’s fiscal agencies estimate the wholesale tax will generate $420 million in revenue to be allocated to road funding, according to the Associated Press.

However, opponents say that figure is skewed and fails to take into account a drop in sales due to price increases.

The association is asking the court to “strike the tax in its entirety.”

The state has just under one month to reply to the lawsuit.