LANSING, Mich. (WILX) – Members of the Michigan Senate are pushing to repeal a 24% marijuana wholesale tax signed by the governor in October, drawing bipartisan support as cannabis businesses across the state report financial losses since the tax took effect.
The tax was established as a road funding revenue source, part of what the legislature called a “pot for potholes” deal when rounding out the state budget last year. It was estimated to generate roughly $420 million in new revenue annually.
Robin Schneider, executive director of the Michigan Cannabis Industry Association, said the tax has been damaging for businesses already operating on thin margins.
“Our businesses were already operating payroll to payroll,” Schneider said. “Now we’re seeing mass layoffs.”
Logan Braid, manager of The Cake House in Lansing, said cannabis shops were already carrying a heavy tax burden before the wholesale tax was added.
“We’re already very heavily taxed and it just didn’t feel very fair,” Braid said.
Republican Sen. Jonathan Lindsey is leading the repeal effort, saying the tax represents unnecessary growth in government.
“This is about reining in the government’s constant attempt to get just a little bit more out of people,” Lindsey said in a written statement. “Lansing must realize that growing government by taxing businesses into oblivion has never been, and will never be, a way to encourage a healthy Michigan economy.
Lindsey also said he doubts the $420 million revenue projection, citing increases in the cost of marijuana products and decreased patronage since the tax took effect.
Republican Rep. Joe Aragona said he’s not in favor of any tax increase but voted for the wholesale tax in an effort to compromise with colleagues on the other side of the aisle and finally end a months-long debate over road funding.
He said reversing the tax would be difficult given the state’s current budget shortfall.
“We’re a little over a billion dollars short in this budget,” Aragona said. “I think it’s gonna be hard for us to try and make some type of rollback, while also trying to come up with revenue.”
Aragona added there may be a better time in the future to revisit the tax after the revenue problem is resolved.
Braid said he believes cannabis businesses will rally together in support of the repeal effort.
“I hope we get the support we need to encourage them to keep fighting for this,” he told News 10.
The proposal to repeal the marijuana wholesale tax has been referred to the Senate Committee on Government Operations.
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