LANSING, Mich. (Michigan News Source) — Lawmakers want Michigan drivers to dodge potholes with pot money. The state House voted September 25 to slap a new 24% wholesale tax on marijuana, projected to raise $420 million a year for local road repairs and bridge fixes.

The proposal, part of a larger budget framework to avert a government shutdown this week, sailed through the House in a 78–21 vote with bipartisan support. Ten Republicans and 11 Democrats opposed it.

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House Speaker Matt Hall (R-Richland Township) said Republicans negotiated Gov. Gretchen Whitmer down from her original ask of a 32% tax.

Still, industry leaders warn even the lower rate could drive customers back to the black market and put smaller dispensaries out of business. “Everyone knows that a large increase in cannabis taxes drives customers straight back to the illicit market,” Robin Schneider of the Michigan Cannabis Industry Association said.

Michigan already taxes recreational sales at 16% (a 10% excise tax plus the state’s 6% sales tax). The new levy, if enacted, would nearly double the overall rate on wholesale sales beginning in January.

Supporters argue the trade-off is worth it. “We are heavily behind our peer states on where we ought to be on a wholesale tax,” Rep. Alabas Farhat (D-Dearborn) said. 

The Senate, controlled by Democrats, will now take up the measure as part of the final budget deal, with lawmakers facing an Oct. 1 deadline.