The Michigan Court of Appeals says it won’t bypass the state Court of Claims to hear a challenge by the cannabis industry to the new wholesale tax on recreational marijuana.
A bypass of the lower court would speed up the legal process in a case where timing matters. But the questions are so new, higher courts may want a thorough airing of the arguments before considering specific issues on appeal. The three-judge panel gave no signal of its thinking in a terse order that said, “The application for leave to appeal is DENIED for failure to persuade the Court of the need for immediate appellate review.”
The court also turned down a request by the state to dismiss the case.
Rose Tantraphol of the Michigan Cannabis Industry Association said that portion of the decision cheered the group trying to fend off the tax, arguing it violates the state constitution and the 2018 voter-approved initiative that created a legal, regulated recreational marijuana industry.
“The stakes are really high in this case,” she told Michigan Public Radio. “This tax threatens 47,000 Michigan jobs and risks driving consumers back to the illicit market, and that would undermine everything voters intended.”
The tax was adopted by the Legislature and signed by Governor Gretchen Whitmer to raise $420 million as part of a road funding deal. The cannabis industry lawsuit argues the 24% wholesale tax is unconstitutional because it is tacked onto the existing retail tax and regulations enacted by the initiative, which can only be changed by supermajority votes of the Legislature.
The state argues the statute that created the new cannabis tax is legal because it is a road funding law that does not touch the language of the initiative.
The Michigan Treasury, which is the named defendant in the case, would not comment on active litigation. Although the law took effect January 1, businesses will pay the tax quarterly, so no one faces an immediate liability. A Treasury spokesperson said details on billing and payments are still being finalized.
