Whitmer wafts 32% tax on pot

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.”