MICHIGAN, USA — A Michigan marijuana dispensary owner is speaking out as the cannabis industry braces for a major new tax that some fear will hurt local businesses.

The state’s additional 24% wholesale marijuana tax is set to take effect January 1, on top of existing state taxes. Lawmakers said it’s about fixing roads, but some dispensaries believe it could drive customers to illegal markets.

“It’ll make buying cannabis from licensed shops in Michigan less, there’s less incentive to do so when the prices go up,” said Joshua Covert, CEO of Meds Café.

Michigan’s cannabis boom could soon hit a wall with the steep new 24% wholesale tax. He said the industry is already fighting back in court.

“Right now, there is a lawsuit pending at the Court of Claims that will hopefully, you know, at least stop or temporarily stop the tax, and we’re waiting to see what’s going on with that,” said Covert.

If the tax stands, Michigan’s marijuana will face some of its highest costs yet — stacked on top of the existing 10% excise and 6% sales tax.

”The primary argument, from what I understand, is that it circumvents the direct democracy. This was a voter initiative. We put it together as the people of the state of Michigan and they’re essentially circumventing that bill with with a new tax,” said Covert.

The Michigan Cannabis Industry Association—representing more than 400 businesses—filed a lawsuit against the tax, calling it unconstitutional.

The state said it’ll bring in $420 million for road funding. However, Covert said the tax, combined with the ongoing federal shutdown, could ripple through the market.

“Some processors and growers are anticipating a downturn and a less profitable 2026. I’ve seen some layoffs and people getting reduced hours,” said Covert.

Despite the uncertainty, he hopes customers continue to support licensed dispensaries.

“Our representatives should know on how their constituents feel about the tax, so it’s not too late to reach out to them,” said Covert. “I would ask people to continue supporting their local licensed dispensaries or provisioning sensors, and you know, ignore the maybe the price allure of going to the illicit market.”

The lawsuit is before Michigan’s Court of Claims — without an injunction, the 24% wholesale tax takes effect January 1st.