By Nick Smith
Gongwer News Service
A cannabis industry group has sued the State of Michigan over a newly passed wholesale tax on cannabis products as part of a long-term road funding deal, arguing the Legislature and executive branch violated the state Constitution.
In a lawsuit, filed Tuesday afternoon in the Court of Claims, the Michigan Cannabis Industry Association contends that the Legislature violated the Constitution by passing a law that amends a voter-initiated law without the necessary three-fourths vote required in both chambers.
The bill, HB 4951 , now Public Act 23 of 2025, was signed Tuesday by Governor Gretchen Whitmer moments before the suit was filed.
The suit is against the Michigan Department of Treasury and Treasurer Rachael Eubanks in her capacity as state treasurer.
As passed, PA 23 enacts a 24% wholesale tax on cannabis products in Michigan, a move that was staunchly opposed by industry when it began moving through the Legislature late
last month. The tax will be collected beginning January 1, 2026.
Member of the House voted 78-21 for the bill on September 25, five votes shy of a three-quarters majority. The Senate early last Friday morning passed the tax 19-17.
In its suit, the group states that the Michigan Regulation and Taxation of Marihuana Act passed by voters in 2018 is the exclusive vehicle for imposing excise taxes on all sales and transfers of marijuana.
"Section 13 of MRTMA provides that "in addition to all other taxes, an excise tax is imposed on each marihuana establishment and on each person who sells marihuana[.]"" the suit states. "The import of this language is clear: while other taxes may generally apply to marihuana, such as the sales tax, MRTMA is the exclusive mechanism for imposing excise taxes.
Legislative authority over marihuana excises taxes is exclusive to MRTMA; no other statute may intrude upon or duplicate the marihuana excise tax. Thus, additional excise taxes require a direct amendment to MRTMA itself."
The Comprehensive Road Funding Tax Act created under PA 23 of 2025 by the Legislature without the three-quarters majorities in both chambers is in violation of Article 2, Section 9 of the Michigan Constitution, the lawsuit states.
It was pointed out that many of the definitions and parts of language in the new act were lifted directly from the 2018 voter-initiated law, meaning that Treasury must rely on the 2018 law to implement and enforce the newly passed law.
"Any ambiguity as to which transaction, products, or entities are subject to CRFTA's excise tax can only be resolved by reference to MRTMA," the suit states. "It is impossible to construe CRFTA independently without reference to MRTMA. CRFTA is therefore fundamentally dependent on MRTMA."
The lawsuit also alleges that the new law violates Article 4, Section 24 of the Constitution, which states that no laws can contain more than one subject, nor can a bill be altered by the Legislature to change its original purpose as determined by its content and not alone by its title.
Further, the new law unlawfully amends the 2018 tax law by reference, the suit adds.
The suit seeks a declaratory judgment that PA 23 of 2025 is invalid and unenforceable. The group also seeks an order that the defendants comply with the court's order and judgement as well as provide for any other relief the court deems proper.
Gongwer News Service
A cannabis industry group has sued the State of Michigan over a newly passed wholesale tax on cannabis products as part of a long-term road funding deal, arguing the Legislature and executive branch violated the state Constitution.
In a lawsuit, filed Tuesday afternoon in the Court of Claims, the Michigan Cannabis Industry Association contends that the Legislature violated the Constitution by passing a law that amends a voter-initiated law without the necessary three-fourths vote required in both chambers.
The bill, HB 4951 , now Public Act 23 of 2025, was signed Tuesday by Governor Gretchen Whitmer moments before the suit was filed.
The suit is against the Michigan Department of Treasury and Treasurer Rachael Eubanks in her capacity as state treasurer.
As passed, PA 23 enacts a 24% wholesale tax on cannabis products in Michigan, a move that was staunchly opposed by industry when it began moving through the Legislature late
last month. The tax will be collected beginning January 1, 2026.
Member of the House voted 78-21 for the bill on September 25, five votes shy of a three-quarters majority. The Senate early last Friday morning passed the tax 19-17.
In its suit, the group states that the Michigan Regulation and Taxation of Marihuana Act passed by voters in 2018 is the exclusive vehicle for imposing excise taxes on all sales and transfers of marijuana.
"Section 13 of MRTMA provides that "in addition to all other taxes, an excise tax is imposed on each marihuana establishment and on each person who sells marihuana[.]"" the suit states. "The import of this language is clear: while other taxes may generally apply to marihuana, such as the sales tax, MRTMA is the exclusive mechanism for imposing excise taxes.
Legislative authority over marihuana excises taxes is exclusive to MRTMA; no other statute may intrude upon or duplicate the marihuana excise tax. Thus, additional excise taxes require a direct amendment to MRTMA itself."
The Comprehensive Road Funding Tax Act created under PA 23 of 2025 by the Legislature without the three-quarters majorities in both chambers is in violation of Article 2, Section 9 of the Michigan Constitution, the lawsuit states.
It was pointed out that many of the definitions and parts of language in the new act were lifted directly from the 2018 voter-initiated law, meaning that Treasury must rely on the 2018 law to implement and enforce the newly passed law.
"Any ambiguity as to which transaction, products, or entities are subject to CRFTA's excise tax can only be resolved by reference to MRTMA," the suit states. "It is impossible to construe CRFTA independently without reference to MRTMA. CRFTA is therefore fundamentally dependent on MRTMA."
The lawsuit also alleges that the new law violates Article 4, Section 24 of the Constitution, which states that no laws can contain more than one subject, nor can a bill be altered by the Legislature to change its original purpose as determined by its content and not alone by its title.
Further, the new law unlawfully amends the 2018 tax law by reference, the suit adds.
The suit seeks a declaratory judgment that PA 23 of 2025 is invalid and unenforceable. The group also seeks an order that the defendants comply with the court's order and judgement as well as provide for any other relief the court deems proper.
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