Gov. Gretchen Whitmer wants Michigan to slap a 32% wholesale tax on marijuana, suggesting that this general fund revenue could be used for her long-deferred plan to fix the state's roads.

The second-term governor, who promised to "fix the damn roads" in both of her election campaigns, says the tax would raise $470 million.

Whitmer also wants to hike the corporate income tax, promising that this would raise another $1.6 billion and that the increase in revenue would finally enable the state to fund road repairs. The governor said the state could also cut an unspecified $500 million in spending from other areas.

But a prominent Detroit law firm is pushing back against the governor's basis for requesting the new pot tax.

The governor claims that the state’s thriving cannabis industry benefits from a tax loophole.

“After voters legalized marijuana, the industry has grown exponentially thanks in part to Michigan’s industry-friendly taxes, the fourth-lowest in the nation,” the governor’s office said in a statement. “The industry, which recorded billions in sales in 2024, uses Michigan roads to transport marijuana multiple times throughout the process, including to grow operations, testing labs, distribution hubs, and finally retail stores.”

Dykema Gossett PLLC, a Detroit firm that supported the Michigan Medical Marihuana Act, disputed the governor's claim that there is a loophole exempting cannabis from a wholesale tax on smoking products.

“What the Mi Road Ahead Plan references is Michigan’s Tobacco Products Tax Act (‘TPTA’), which was enacted in 1993 — 25 years before marijuana was ever legalized,” wrote Dykema attorneys Lance Boldrey and John Fraser in a Feb. 11 post. “The TPTA does not contain a ‘loophole’ for marijuana products; it addresses an entirely different product and industry.”

The marijuana industry already pays a 10% excise tax and a 6% sales tax, but the governor has implied that marijuana should be taxed a third time, via the Tobacco Products Tax Act.

“Quite simply, the Mi Roads Plan proposes levying a new 32% wholesale tax on the marijuana industry,” the Dykema attorneys wrote.

House Speaker Matt Hall, R-Richland Township, said Michigan should find the funding for roads in its $83.5 billion budget instead of raising taxes. Over two years, Michigan lawmakers squandered a $9 billion surplus, Hall said. Projected state spending has increased by 47% since 2018.

“Michigan families expect results,” Hall said in a Feb. 10 press release. “That’s why our plan focuses on real solutions, including prioritizing funding roads over funding corporate earmarks, making the most out of our current budget instead of raising new taxes, and fixing local roads first. Roads and infrastructure are essential, and we must get this right.”

Michigan is one step closer to ending secret, taxpayer-funded deals protected by gag orders after the state House on Feb. 25 approved two bills that aim to ban lawmakers from signing nondisclosure agreements related to taxpayer-funded projects.

Michigan Capitol Confidential reported in August 2022 that the state was ranked last nationwide for government transparency.

House Bill 4052, introduced by Rep. Steve Carra, R-Three Rivers, passed the House with 80 representatives in support and 28 opposed. House Bill 4053, introduced by Rep. Dylan Wegela, D-Garden City, also passed, with a vote of 91 in support and 28 opposed. All Republicans voted yes.

“Corporate elitists who want special taxpayer-funded handouts oppose this legislation,” said Carra in an email to CapCon.

“I’d like to see this get signed into law to ensure transparency and openness from public officials."

Wegela told CapCon in an email that it is vital to hold lawmakers accountable for spending taxpayer money.

“Over the last several years, we have seen the increasing use of NDAs around projects that give millions of public tax dollars to multi-million and billion-dollar corporations,” said Wegela.

Legislators have, over the years, signed secret agreements to give taxpayer dollars to companies without public knowledge. The nondisclosure agreements were usually brokered with the Michigan Economic Development Corporation acting as the middleman.

The issue gained traction when David Sole, a Detroit activist, sued the MEDC, which brokered an agreement between General Motors and the Legislature to provide $3.8 billion in taxpayer funding to the company under cover of a nondisclosure agreement.

The Legislature created a $5,000 fine for lawmakers who violate agreements like the one between GM and select legislators.

The state Supreme Court asked the Mackinac Center Legal Foundation to file an a amicus brief on the lawsuit.

CapCon reported in July 2022 that the Michigan Supreme Court sided with Sole. The court ordered the company to divulge that the state agreed to pay $3.8 billion in tax credits over the agreement, which ends in 2030.

If enacted into law, the bills will help Michiganders monitor subsidy deals and hold lawmakers accountable for entering into bad deals, said Steve Delie, an expert on government transparency at the Mackinac Center for Public Policy.

“For years, Michiganders have been left in the dark about how the Legislature spends taxpayer dollars to support private industry,” Delie wrote in an email to CapCon.

A recent study by the Mackinac Center found that only one of every 11 jobs promised by Michigan politicians when announcing subsidy deals actually gets created.