A Michigan Court of Claims judge on Monday refused to block a new 24% wholesale excise tax on cannabis, meaning the levy remains on schedule to take effect Jan. 1, 2026. Here is a summary update, prepared with help from our MOTM AI resources. Links provided for your own further reading on the subject.
The tax, part of the state’s 2025–26 budget aimed at funding road and bridge repairs, will be added to the existing 10% retail excise tax and 6% sales tax already imposed on Michigan marijuana sales.
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The lawsuit, led by the Michigan Cannabis Industry Association (MiCIA) and other industry groups, contended the tax was an unconstitutional amendment to the 2018 voter-approved Michigan Regulation and Taxation of Marihuana Act and required a three-fourths legislative vote. Judge Sima Patel ruled the plaintiffs had not demonstrated they were likely to succeed on the merits, declining to issue a preliminary injunction. However, the case is expected to proceed, and an evidentiary hearing is scheduled in January.
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What this means locally
For dispensaries in Southwest Michigan — from Benton Harbor and Niles to New Buffalo — the ruling brings a period of uncertainty. While the tax won’t officially kick in until next year, shop owners already face planning for higher costs. Most are expected to pass much of the 24% wholesale cost on to consumers, likely raising prices and squeezing margins. That’s a particular concern for smaller, independent operations that rely on local business and seasonal visitors.
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Tourist-driven towns like New Buffalo may see price-sensitive visitors cut back or seek lower-cost alternatives, while Berrien and Cass County shops could face pressure just to maintain their customer base without slashing staff or inventory. Industry analysts warn that higher taxes nationwide have pushed consumers back to the illicit market, a risk many independent Michigan retailers fear could erode legal sales.
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The legal battle isn’t over, and depending on later court findings, the tax could still be altered or overturned. But for now, retailers should assume they’ll need to adapt their business plans around a Jan. 1, 2026 start date.
