• A top Michigan cannabis industry group says they may sue if a bill to impose a 24% wholesale tax on marijuana is signed into law
• Industry officials say the vote violates a constitutional requirement to amend a petition initiative; legal experts question whether that’s true
• Passed last week in the Michigan House, the tax is part of an effort to raise road repair funds while averting a government shutdown Oct. 1

LANSING — Michigan’s top cannabis trade association is evaluating whether to sue the state over a new marijuana tax plan that is part of a larger road and budget deal state lawmakers could finalize Tuesday. 

State House lawmakers last week voted 78-21 to impose a 24% tax on the wholesale price of marijuana sold or transferred to a retail shop, beginning January 2026. 

The proposal, part of a broader agreement to avoid a state government shutdown, could generate an estimated $420 million a year for road and bridge repairs, according to the nonpartisan House Fiscal Agency.

But the Michigan Cannabis Industry Association is questioning whether the vote amounts to an illegal amendment to the recreational marijuana law voters approved in 2018. 

Under the Michigan Constitution, citizen initiatives can only be changed through three-fourths majority votes in the Legislature. The House fell five votes short of that 83-vote threshold last week. 

The cannabis association is consulting with attorneys, and if they feel strongly the new tax would amend the 2018 initiative, a lawsuit “would be our next step,” said Executive Director Robin Schneider. 

“Certainly, we don’t want to have to get there.”

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House Republicans maintain they’re on solid footing after consulting internally with their own legal counsel. Spokespeople for Gov. Gretchen Whitmer, who previously proposed a larger 32% wholesale tax on marijuana, did not respond to requests for comment. 

“It wouldn’t surprise me to see someone initiating litigation to challenge” the proposed tax, said Steve Liedel, a partner at the Lansing-based Dykema law firm who previously worked as legal counsel to then-Gov. Jennifer Granholm. 

Nonetheless “there’s precedent for the Legislature recently doing something like this,” said Liedel, pointing to a series of laws Whitmer signed in 2019 that legalized sports betting in Michigan without altering a voter-initiated gaming control law from 1996. 

The nearly three-decade old initiative initially established casinos and gave “authority” to the Michigan Gaming Control Board to regulate and control in-state casino gaming.

Then there’s the issue of “adopt-and-amend,” said Liedel, referring to a recent Michigan Supreme Court ruling which noted a Legislature could adopt and amend a citizen-led petition initiative — so long as those actions do not occur in the same legislative session.

Whether lawmakers are simply complying with legal guidance or looking for  “a backdoor attempt to get around the requirement” of a three-fourths majority vote is a matter of perspective, Liedel said. 

“Folks are free to argue anything before the court.” 

Jamie Lowell, a cannabis activist who helped write the 2018 initiative, blasted last week’s vote as “completely improper and misguided” in a post to Facebook on Monday. The law already includes a 10% excise tax on retail marijuana sales, in addition to the state’s 6% sales tax. 

“As one of the authors of the (2018 proposal) I can attest that a wholesale tax was intentionally left out,” he wrote.

The legislation is expected to go before the Michigan Senate on Tuesday. 

At least one no-vote is likely expected — Sen. Jeff Irwin, D-Ann Arbor, who told Bridge he believed that Michigan’s marijuana industry will take a major hit should a 24% wholesale tax take effect. 

“The secret sauce to having the legal market be successful and to drive the black market out is to have a reasonable licensing and taxation structure,” Irwin told Bridge during session Monday. 

“Well, adding a new cannabis tax into the mix now is going to tip that balance … it’s going to drive people out of the legal market.”

That concern was shared by Schneider, head of the state Cannabis Industry Association, who noted roughly 47,000 people either directly or indirectly work in Michigan’s cannabis industry.

If a wholesale tax is implemented, Schneider expressed concerns companies “are going to have to reduce their employee numbers” just to remain afloat.

“After the vote tomorrow, our association’s number one focus is going to be to go back to the districts and support new candidates for every single person that voted yes” on the tax policy, she warned.

The proposal won bipartisan support in the state House last week, however. 

Rep. Alabas Farhat, D-Dearborn, told reporters he doesn’t think marijuana companies are “doing as bad as they say they’re doing” based on the number of billboards he sees on Michigan highways. 

“We are heavily behind our peer states on where we ought to be on a wholesale tax,” he said, adding that Michiganders deserved to have “high quality roads that they can depend upon.”