Court to Allow Challenge to Michigan’s New 24% Cannabis Tax

Summary

A Michigan Court of Claims judge has ruled that the lawsuit challenging the state’s newly enacted 24% wholesale marijuana excise tax may proceed. The ruling, issued January 5, 2026, keeps alive a significant constitutional challenge brought by industry groups who argue that the tax violates the voter‑approved Michigan Regulation and Taxation of Marihuana Act (MRTMA). Although the case moves forward, the tax remains in effect.

Background

The 24% wholesale tax was enacted in 2025 as part of the Comprehensive Road Funding Tax Act (CRFTA)—a broad revenue package designed to support statewide transportation funding. The Legislature passed the measure through the standard budget process, and the Governor signed it into law. It was not a ballot initiative, nor did it require a supermajority vote under the Legislature’s interpretation of MRTMA.

Shortly after enactment, the Michigan Cannabis Industry Association (MCIA) and several licensed operators filed suit. Their central argument: MRTMA’s 10% excise tax was intended to be the exclusive tax on adult‑use cannabis, and any additional tax requires a three‑fourths legislative supermajority. They contend the new tax undermines MRTMA’s purpose of promoting a regulated, affordable market.

Judge Sima G. Patel previously dismissed two claims but allowed the core constitutional challenge to proceed, finding that the plaintiffs had sufficiently alleged that the tax may frustrate MRTMA’s voter‑approved objectives.

Opinions

Industry Perspective: MCIA and its members view the ruling as a meaningful step toward protecting voter intent. They argue that the tax is excessive, discriminatory, and likely to push consumers back toward the illicit market—precisely what MRTMA sought to prevent.

State’s Position: The Attorney General’s office maintains that MRTMA expressly permits additional taxes “in addition to all other taxes,” and that the Legislature acted within its authority. The state also argues that the tax is a lawful component of a broader revenue strategy and does not amend MRTMA’s core provisions.

Judicial Approach: Judge Patel’s ruling does not address the merits of the tax itself. Instead, it reflects a procedural determination that the plaintiffs’ remaining claim warrants factual development. The court will now examine whether the tax meaningfully interferes with MRTMA’s statutory purpose.

What’s at Stake

• Regulatory Integrity: Whether the Legislature can impose new cannabis taxes without a supermajority vote.

• Market Stability: A 24% wholesale tax may significantly increase retail prices, potentially affecting consumer behavior and business viability.

• Budget Projections: The state anticipates hundreds of millions in annual revenue from the tax; a successful challenge could disrupt transportation‑funding plans.

• Precedent for Voter‑Initiated Laws: The case may clarify how far lawmakers can go when legislating around voter‑approved initiatives.

In Closing

The Court of Claims’ decision ensures that Michigan’s cannabis‑tax litigation will continue into discovery and further judicial review. The outcome may reshape the balance between legislative authority and voter‑initiated protections in Michigan’s cannabis framework. A scheduling conference is set for January 13, and the case is expected to draw close attention from industry stakeholders, policymakers, and legal observers.

Komorn Law, founded in 1993, brings decades of seasoned experience to Michigan’s most complex criminal and regulatory matters, including the evolving cannabis framework from the MMMA to today’s MRTMA landscape. The firm represents clients facing controlled‑substance offenses, DUI and drug‑related driving charges, firearm violations, property crimes, resisting or obstructing, and the most serious allegations such as manslaughter and homicide. With a proven record in courts across Michigan and the federal system, Komorn Law delivers strategic, relentless advocacy when the stakes are highest. To work with a firm that truly refuses to back down, call  248-357-2550.