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by Remington Hernandez|StatewidePoliticalReporter
LANSING, Mich. — The Michigan Cannabis Industry Association (MiCIA) is appealing a court ruling that allowed the state's wholesale tax to take effect Jan. 1.
The tax was instituted as part of the state budget, meant to provide funding for road projects.
The Dec. 8 decision by the Michigan Court of Claims came in the lawsuit the industry filed against the State of Michigan Oct. 7. MiCIA wants to see the 24% wholesale tax struck down, arguing it violates the Michigan Constitution.
“We stand by our belief that the Court of Claims did not make the right call," MiCIA spokesperson Rose Tantraphol said. “Our filing requests that the Court of Appeals take up our lawsuit, which we continue to believe is an exceptionally strong case on the merits."
MiCIA also contends the tax violates the will of Michigan voters, who approved the 2018 ballot initiative that expanded cannabis legalization to include recreational use, and only allowed for a sales tax.
The industry is asking the Court of Appeals to take up its appeal immediately and rule as soon as possible.
Tantraphol said that it’s important that the appeal be moved to the Court of Appeals and expedited because waiting for a trial to take place would cause "unnecessary" delay.
The industry worries the tax could force them to raise prices and that customers will start to turn to the black market due to the additional cost.
“The stakes are incredibly high,” Tantraphol said. “The Michigan cannabis industry has been an economic engine for our state since voters legalized marijuana in 2018. Our industry has created 47,000 new jobs, pumped $331 million annually to schools, roads, and other public priorities through the 10% excise tax we collect, and generated $188 million in annual sales taxes. This unconstitutional move by the Legislature jeopardizes all of that."
MiCIA claimed the tax is already having an impact, even though it has yet to go into effect. They pointed to the recent closure of marijuana operations and layoffs in others.
“Businesses will close and neighbors will lose jobs,” Tantraphol said. “Cannabis businesses operate on thin margins, so allowing the 24% wholesale tax to go into effect will mean a lower volume of sales."
Mike DiLaura is Chief Corporate Officer at cannabis company House of Dank, and also sits on the industry association board. He doubts the tax will bring in the money lawmakers expect.
And while the state treasury has released fact sheets on the tax, DiLaura says the industry still has a lot of questions about implementation.
"Not only are we dealing with this tax in an uncertain, highly regulated industry, we're doing so totally flying blind heading into January," he said. "Yet we're still going to be responsible for the tax at the end of the year. Frankly, it is just disgusting and another example of just bad government."
The industry is pushing lawmakers to repeal the tax, but until then, they'll keep fighting it in court.
"That will allow us to kind of reconvene as an industry, and then if later on down the road, this tax is ultimately found to be legal, it will provide treasury with enough time to provide us with the proper guidance," DiLaura said. "So we're not all kind of swimming upstream, if you are trying to figure out how to pay this tax."
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