A Michigan judge declined Monday to halt the state’s new 24% wholesale tax on marijuana but kept alive an industry-backed lawsuit that argues the levy could drive cannabis buyers back underground, according to the Michigan Advance.
The judge denied the state’s request to rehear her earlier decision refusing to dismiss a lawsuit brought by the Michigan Cannabis Industry Association. The tax, which took effect Jan. 1, is on top of existing marijuana taxes and applies at the wholesale level — an added cost that industry advocates say will inevitably land on consumers and risks pushing sales back to the street corners, the news outlet reported.
The association argues that the Legislature overstepped by imposing the tax without voter approval, effectively rewriting the rules of the 2018 ballot initiative that legalized recreational marijuana in Michigan. More urgently, they warn, higher prices could hollow out the legal market itself.
In an earlier ruling, the judge declined to block the tax but allowed the case to proceed, finding unresolved factual questions about whether the tax undermines the purpose of the voter-approved law. On Monday she stood by that decision, rejecting the state’s claim that she had made a clear legal error.
“It is not certain on this record whether the 24% wholesale excise tax will impact prices to the extent purchasers will be driven to the illicit marijuana market,” the judge wrote, adding that further evidence is needed.
Industry representatives say the risk is obvious. With consumers already squeezed by inflation, they argue, higher dispensary prices could send buyers back to unlicensed sellers — reviving the very black market that legalization was meant to erase.
The association has also asked the Michigan Court of Appeals to take up the case, seeking a broader review as the legal fight over Michigan’s marijuana tax heats up.