LANSING, Michigan — A Michigan Court of Claims judge is allowing a lawsuit to move forward that is challenging the state’s new wholesale tax on marijuana.
On Monday, Jan. 5, Judge Sim Patel denied the state’s request to reconsider a previous ruling from Dec. 8, 2025, where the state’s request to close the lawsuit was denied. That ruling allowed the state’s new 24% wholesale tax on marijuana to go into effect on Jan. 1, 2026, after it was passed by the Michigan Legislature as part of a budget negotiation aimed at increasing funding for roads.
The wholesale tax, known as the Comprehensive Road Funding Tax Act (CRFTA), is estimated to generate more than $400 million in revenue to help rebuild Michigan roads.
The Michigan Cannabis Industry Association (MiCIA) filed the lawsuit challenging the tax in November.
The Michigan Regulation and Taxation of Marihuana Act (MRTMA) was a voter-approved ballot measure legalizing marijuana, making it a constitutional amendment.
The lawsuit argues lawmakers lacked the three-fourths supermajority constitutionally needed to change voter-approved laws. It also alleges that the wholesale tax would cause irreparable harm to the industry, which the MiCIA says operates on thin margins, causing people to turn to the illicit market.
Judge Patel said the court still needs to determine if the new wholesale tax goes against the intent of the MRTMA as approved by Michiganders, and how the tax would impact prices and illicit market sales. He is allowing the parties to move forward and gather evidence in regards to those points.
“Whether the CRFTA violates this intent, however, involves questions of fact,” Patel wrote in his ruling. “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. Discovery is required to examine how the tax will impact the purposes of the MRTMA.”
The MiCIA is also waiting on an appeal of the Dec. 8, 2025 decision that allowed the new tax to go into effect on Jan. 1, 2026.
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