Frequently Asked Questions
Can a wholesaler reimburse itself the incidence of the tax from the retailer?
Yes, the wholesaler is permitted to recoup the tax due on a transaction by collecting it from the retailer, but the wholesaler remains legally liable for both the payment and remittance of the tax even if it does not collect the tax from the retailer. This is like Michigan’s general sales tax, which is imposed upon sellers of tangible personal property. Sellers are legally liable for paying and remitting the sales tax even though they typically recoup the cost of the tax by passing it through to their customers.
The statute states retail licensees under MRTMA that operate “seed-to-sale” businesses (e.g., microbusinesses) will be taxed “at the rate of 24% of the wholesale price on the aggregate amount or quantity of marihuana that is cultivated or processed for retail sale by that marihuana retail licensee”. At what point in the production process does the “seed-to-sale” retail licensee apply the tax?
For retail licensees under MRTMA that cultivate, process, and package their own product for retail sale, as well as sell marihuana products at retail (“seed-to-sale” businesses), the new wholesale tax will be applied at the point that marihuana product is packaged for retail sale.
Microbusinesses: is the entity itself liable for the tax and will it be self-assessed (like use tax on purchases) based on the average wholesale price? Can the cost of the tax be passed on to the consumer - there is nowhere to apply the tax on an invoice to the customer.
Yes, the microbusiness itself will be liable for the tax, and it is imposed at the point that the microbusiness packages marihuana product for retail sale. The cost of the wholesale tax can be passed on to the individual purchaser, if the microbusiness chooses to do so. Note that the wholesale tax is part of the taxable sales price for the Marihuana Retailers Excise Tax and Michigan sales tax purposes, even if it is separately stated on the receipt given to the retail customer. See MCL 205.51(1)(d)(ii).
