LANSING, Mich. (Michigan News Source) — A major tax change for Michigan’s marijuana market is now tied up in court. The industry wants a freeze on the state’s new 24% wholesale tax, set to begin Jan. 1, and Court of Claims Judge Sima Patel spent Nov. 25 hearing arguments on whether to pause it.

Lawmakers approved the tax in early October as part of a deal to boost road funding by an estimated $420 million a year. But cannabis businesses say the added cost—on top of the 10% excise tax voters approved in 2018—will push prices higher, cut sales, and drive customers back to the black market.

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“Cannabis companies already operate on thin margins,” association spokesperson Rose Tantraphol said, citing projections that sales could fall 14%.

The industry lawsuit argues lawmakers can’t rewrite the voter-initiated law without voter approval or a three-fourths legislative vote. Attorney Kevin Blair told Patel that legislators “deliberately undermined” the 2018 proposal by rushing the tax through at 3 a.m.

State attorneys counter the original ballot language allows additional taxation, noting it imposed a 10% excise tax “in addition to all other taxes.”

Patel ended the hearing by noting that a decision on the industry’s request for a freeze will arrive soon.