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Michigan Treasury: Patients Must Pay 6% Tax on Products Bought from Caregivers

Last week Michigan’s Department of Treasury quietly released an administrative bulletin imposing a 6 percent tax on medical cannabis transfers between a licensed caregiver and their patients. The so-called use tax would not be paid by the supplier, rather it is the responsibility of the patient. The tax “for the use and consumption of this property” must be reported on Michigan Individual Income Tax Returns, the directive states.

The notice points out that while state’s General Sales Tax Act and the Use Tax Act exempt traditional medications from state taxes, the exemption does not apply to medical cannabis “because at the time of the sale they are not dispensed pursuant to a prescription.” The tax rules also exempt foods and beverages “consumed for their taste or nutritional value” but those rules do not apply to medical edibles because “they are consumed for their medicinal value rather than for their taste or nutrition.”

The document, dated Jan. 18, also lays out the tax responsibilities for licensed dispensaries under Michigan’s more comprehensive medical cannabis program rules, signed into law by Gov. Rick Snyder in 2016. Dispensaries will pay a 3 percent tax on gross retail receipts, plus a 6 percent tax on sales. The notice indicates that the Treasury will accept tax payments in cash.

In a Facebook post this morning, Michigan NORML confirmed the existence of the new tax and offered the following advice for patients in Michigan:

We have identified several problems with the new policy and we plan to fight this policy all the way through the Michigan Supreme Court if that’s what it takes to overturn this ill-conceived policy reversal. Until this gets straightened out, we are urging patients and caregivers to be extra careful during transactions. Even if this policy somehow remains in effect, it is not retroactive and will not apply to your 2017 taxes. Please be patient and we will continue to keep you informed as new developments become available. — Michigan NORML, on Facebook

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