Whether a medical marijuana facility fits the statutory definition of “marihuana establishment” for deduction of expenses (MCL 333.27953(l)); The Michigan Regulation & Taxation of Marihuana Act (MRTMA); MCL 333.27962; Medical Marihuana Facilities Licensing Act (MMFLA); Michigan Medical Marihuana Act (MMMA)

In this dispute over a tax deduction, the court held “that the Court of Claims correctly viewed the MRTMA in the context of the entire legislative scheme, including the MMMA and MMFLA, and correctly denied plaintiff’s motion for summary disposition under MCR 2.116(C)(10) and granted defendant’s motion for partial summary disposition under” 2.116(I)(5). Plaintiff argued that the Court of Claims erred by concluding that § 12 of the MRTMA, “which allows ‘marihuana establishments’ to deduct from net income ‘all the ordinary and necessary expenses paid or incurred during the taxable year in carrying out a trade or business,’ does not apply to medical marijuana provisioning centers licensed under the” MMFLA. The central issue was “whether plaintiff’s medical marijuana facility fits the statutory definition of ‘marihuana establishment’ under MCL 333.27953(l), and thus may deduct its ordinary and necessary business expenses from its net income.” Plaintiff asserted “that if the Legislature had intended for the MRTMA’s tax deduction provision to apply only to recreational facilities licensed under the MRTMA, then it could have limited the catch-all phrase at the end of the provision to that effect.” Plaintiff further argued the Legislature “obviously knew when to limit the scope of the MRTMA’s provisions to adult-use facilities, and it deliberately chose not to when defining the term ‘marihuana establishment.’” The court was not persuaded. “First, because the MRTMA was enacted through initiative, at issue is the intent of the electors, not the Legislature, and the electors’ clearly expressed intent was that the MRTMA be concerned with adults’ general (i.e., nonmedical) use of marijuana. Second, as the Court of Claims concluded, it is equally plausible that the drafters of the MRTMA could have expressly included medical marijuana facilities or provisioning centers within the definition of ‘marihuana establishment.’ [They] knew how to address medical marijuana in other sections of the MRTMA.” Plaintiff also contended “there would be no need to specifically exempt medical marijuana facilities from the excise tax if they were clearly not included as ‘marihuana establishments’ in the first instance, therefore rendering the exemption surplusage.” The court held that viewing “the exemption of medical marijuana facilities from the excise tax in the context of the MRTMA as a whole, and mindful of our ‘duty of judicial restraint’ when interpreting initiatives,” it declined “to interpret the MRTMA’s definition of ‘marihuana establishment’ as encompassing medical marijuana facilities.” Affirmed.