Michigan House Passes Budget Containing New 24% Wholesale Cannabis Tax

Michigan House lawmakers passed a bipartisan budget proposal that includes a new 24% tax on wholesale cannabis purchases to fund road repairs. Lawmakers passed the proposal quickly, hoping to avoid a government shutdown. Lawmakers in the Michigan House of Representatives last week passed a bill containing a new 24% tax on wholesale cannabis purchases to help fund road construction and repairs, Bridge Michigan reports.

Under HB 4951, or the Comprehensive Road Funding Tax Act, the new wholesale tax would apply to cannabis products that are “sold or otherwise transferred” to state-licensed retailers. The nonpartisan House Fiscal Agency estimated the tax would generate about $420 million per year, which would be dedicated to local roads and bridges.

The proposal passed the House with bipartisan support on Thursday, 78-21, within hours of its unveiling; 10 Republicans and 11 Democrats voted against the proposal. It will be considered next in the Senate.

Officials said the bill is part of a larger framework for a budget deal to avoid a government shutdown this week — and, shortly after the proposal passed the House, Gov. Gretchen Whitmer (D) and legislative leaders announced they had reached a deal that includes over $1.5 billion in annual road funding, the report said.

Whitmer in February proposed adding cannabis products to the state’s wholesale tax, which is applied at 32% to other smoking products like tobacco.

Robin Schneider, the director of the Michigan Cannabis Industry Association, said the tax hike would harm the industry and ultimately push consumers toward unregulated sources.

“Everyone knows that a large increase in cannabis taxes drives customers straight back to the illicit market. That means businesses are going to fail, jobs will be lost and less tax revenue will be collected.” — Schneider, via Bridge Michigan

Lawmakers have until Wednesday, October 1, to establish a state budget; otherwise, the government will shut down per the state Constitution.

Republican House Speaker Matt Hall said the budget framework is getting lawmakers on the right path, but there’s still “a lot of work to do here over the next few days to work out details.”