Michigan state lawmakers swiftly passed a marijuana tax hike to fund road construction, an effort that saw bipartisan support despite pushback from industry representatives. The approved measure, known as the Comprehensive Road Funding Tax Act, will levy a 24% tax on wholesale cannabis purchases, starting at the beginning of next year. The tax aims to generate a hefty $420 million per year, with the majority allocated to a new Neighborhood Road Fund dedicated to local road and bridge construction costs, FOX 2 Detroit reported.
The fiscal analysis conducted by the state suggests that only $3 million of the revenue will be used to implement the taxation plan, a move designed to directly bolster the state's sorely needed road infrastructure. This plan is arriving on the heels of an initial 10% excise tax instituted back in 2019 when Michigan voters greenlit marijuana for recreational adult use. That tax was shared amongst schools, road development, and local governments with cannabis businesses, as per The Detroit News.
The urgency in passing this tax measure comes in tandem with broader state budget discussions with Michigan leaders, including Gov. Gretchen Whitmer, eager to avoid a government shutdown. As a result, business tax cuts face delays, and a disconnection from federal tax law changes that previously benefited businesses is occurring, as further explained by The Detroit News. Robin Schneider, executive director of the Michigan Cannabis Industry Association, harshly criticized the tax increase, suggesting it would drive consumers to the illicit market and force business closures, leading to potential job losses.
The sizable tax hike has riled up industry insiders who warn it could wreak havoc on an industry already grappling with an oversupply and diminishing prices. Steve Linder, a cannabis industry consultant, expressed his discontent by stating, "The Michigan cannabis industry is facing collapse. Fix the damn road funding formula,” as The Detroit News reported. Despite concerns, the legislation was still able to gather broad support across party lines. It will now head to the Democrat-led state Senate for approval before potentially becoming law.
