Michigan Governor Kicks Off Final Road Repair Season as Cannabis Tax Lawsuit Threatens Funding

Governor Launches $2 Billion Road Funding Initiative But Infrastructure Deal Relies on Challenged Marijuana Tax

DETROIT — Governor Gretchen Whitmer launched the final road repair season of her administration Wednesday, celebrating a nearly $2 billion annual road funding package that she calls a "big investment" long overdue. But a significant portion of that funding rests on a 24 percent wholesale tax on cannabis products that the state's marijuana industry is actively challenging in court as unconstitutional.

Whitmer, wearing a star-spangled red, white and blue helmet at a construction site on M-14, moved gravel and rolled out an orange barrel to kick off warm weather road construction. The demonstration marked the beginning of what she described as the "final road repair season" before her term ends in January 2027.

"This is a big investment that was long overdue," Whitmer said. "There's still going to be more work to do here, no question, but this will represent a significant improvement in the infrastructure we all rely on."

The governor said the road package "substantially fulfills" her signature campaign pledge to "fix the damn roads." While she did not achieve everything she initially sought—including a 45-cent per gallon increase in the gas tax—Whitmer pointed to the nearly $2 billion annual deal she signed last year as a "long-term funding source to fix roads and bridges."

"I'm talking about the nature of infrastructure – it's never done," Whitmer said. "You're always re-building and we've let it go for so long without a real infusion of sustainable dollars."

The road funding package includes eliminating the sales tax on fuel purchases and replacing it with a separate gasoline tax, ensuring all taxes collected at the pump go to roads. Some corporate tax revenue is also now used for road funding.

But the stability of that plan is in question because a significant portion relies on revenue from the new 24 percent wholesale tax on cannabis products. That tax is being challenged in two separate lawsuits filed by the state's recreational marijuana industry on the grounds that it violates a 2018 voter initiative.

The industry argues the tax violates Michigan law for two reasons: the Legislature did not adopt it with supermajorities required to amend voter-initiated laws, and the tax exceeds the sales tax rate set in the Michigan Constitution, which caps state sales tax at 6 percent.

Cannabis Industry Files Second Lawsuit Against Road Funding Tax

The second lawsuit was filed last month by marijuana grower Mitten Distro X LLC, retailer Refine Michigan Co., and the Michigan Cannabis Industry Association in the Michigan Court of Claims. The industry argues the taxing structure compounds existing levies on marijuana and inflates a state sales tax that voters set at a maximum of 6 percent during the 2018 legalization initiative.

"Established through an unconstitutional process and sets up a tax structure that is illegal," said Rose Tantraphol, spokesperson for the Michigan Cannabis Industry Association.

Tantraphol argued that the road funding compromise has "already triggered business closures and job losses" in the industry. She said undercutting one industry won't raise the revenue the state hopes to raise.

The wholesale tax was created in late 2025 to generate an estimated $420 million annually for roads. The tax increase will add to the existing 10 percent excise tax on retail sales, raising the total tax burden on consumers.

"We cannot balance state budgets on the backs of one industry," said former state Representative Matt Swanson, who is pledging to roll back the 24 percent wholesale excise tax. "Excessive taxation drives consumers back to the illicit market and shrinks the legal one."

Swanson, who is running for Michigan secretary of state, said road funding is a real problem in Michigan but the current approach singles out cannabis disproportionately. He wants a replacement tax that is not aimed at a single industry.

Road Funding Plan Faces Uncertainty

The road funding compromise was Whitmer's signature achievement from her final term. The package includes eliminating the sales tax on fuel purchases and replacing it with a separate gasoline tax, ensuring all taxes collected at the pump go to roads.

Some corporate tax revenue is also now used for roads. But if the cannabis wholesale tax is found to be unconstitutional, the state loses a significant revenue stream.

The first lawsuit contended that the Legislature's passage of the law in late 2025 lacked the supermajority in support required to amend a ballot proposal. Under Michigan law, voter-initiated laws require supermajorities of both houses of the Legislature to be amended.

Activists argue the 2018 ballot initiative legalizing recreational marijuana set a 10 percent excise tax at that time on retail sales. Adding a 24 percent wholesale tax on top of that creates a tax structure that exceeds the 6 percent sales tax cap Michigan voters approved in the 2018 measure.

The Michigan Legislature created the 24 percent wholesale tax last year to generate an estimated $420 million annually for roads. While the package also includes the gasoline tax reform and corporate tax contributions, the cannabis tax represents a vulnerable piece of the funding equation.

What This Means for Michigan Infrastructure

The road funding deal Whitmer signed last year was meant to address what she called the "broken" state of Michigan's roads and bridges. The package includes eliminating the sales tax on fuel purchases and replacing it with a separate gasoline tax, ensuring all taxes collected at the pump go to roads.

Some corporate tax revenue is also now used for roads. But the stability of that plan depends on the cannabis wholesale tax holding up in court.

If the tax is found unconstitutional, the state loses a significant revenue stream—$420 million annually—just as it begins to implement the new road construction season. That could force the state to either reduce road spending, find alternative revenue sources, or delay projects.

Whitmer said the package represents "a significant improvement in the infrastructure we all rely on" but acknowledged "there will be more work to do" in the future.

As the warm weather road repair season kicks off across Michigan, the fate of that work now partially depends on whether courts will uphold the cannabis tax that helps fund it.

Sources:

• https://www.wvpe.org/michigan-public-radio-network-news/2026-04-08/whitmer-kicks-off-her-final-road-repair-season
• https://www.michiganpublic.org/politics-government/2026-04-08/whitmer-kicks-off-her-final-road-repair-season
• https://eu.detroitnews.com/story/news/local/michigan/2026-04-04/marijuana-activists-protest-new-tax-war-on-drugs-at-ann-arbor-hash-bash-university-of-michigan-diag/89456826007/