Michigan marijuana company cites 24% tax as a reason for closing cultivation facility
(FOX 2) - A Michigan marijuana company cites a new 24% tax on wholesale cannabis purchases as one of the reasons it's closing its cultivation facility.
C3 Industries Inc. plans to close its Webberville facility in February. According to a Worker Adjustment and Retraining Notification (WARN) filed with the state, 62 workers will be impacted by this closure.
The company cited both the wholesale tax and oversupply as reasons for closing, saying that these factors "have rendered this facility economically unviable."
The backstory:
House Bill 4951 was introduced by the Michigan House of Representatives in September as a means to fund road construction and maintenance. It imposes a 24% wholesale tax on marijuana.
A fiscal analysis by the legislature estimated it would lead to $420 million in revenue for the state. The money is intended for local road construction, a segment of pavement that typically receives the least amount of state funding.
Cannabis industry sues Michigan over massive wholesale tax tied to road funding plan
The new tax is estimated to bring $420 million in revenue, which is destined to fund local road construction. But the 24% wholesale tax was imposed illegally, the industry argues.
It cleared the Michigan House with a 78-21 vote, before passing the Michigan Senate by a slim 19-17 vote.
Michigan already imposed a 10% excise tax on retail purchases for marijuana, in addition to the 6% sales tax. This new tax takes place when retailers purchase marijuana product.
Dig deeper:
The Michigan Cannabis Industry Association filed a lawsuit in the Michigan Court of Claims arguing the wholesale tax was illegal. The reasoning was because it amended a citizen's ballot initiative - and did so without enough support in the legislature.
However, a judge ruled the tax can remain in place. It goes into effect on Jan. 1, 2026.
The Source: This information is from a WARN document and previous reporting.