In a first-of-its-kind decision, the Cass County Circuit Court has ruled in favor of HRP Cassopolis, LLC, a Michigan-based cannabis business, in their dispute with the LaGrange Township assessor. A potential milestone for the cannabis industry, this ruling sheds light on the legal classification of cannabis cultivation and its eligibility for agricultural tax-related benefits. Dykema attorneys Carl Rashid, Jr. and Mark Magyar were proud to deliver this victory for HRP.

While HRP primarily focuses on growing and harvesting cannabis on one of the two parcels it owns at 980 E. State Street in Cassopolis (with a small retail space), the township assessor classified both parcels as “Commercial” under the General Property Tax Act (GPTA), denying HRP certain school mill tax exemptions. Seeking a reclassification to Agricultural under the GPTA, HRP’s request was initially rejected by the assessor and the Board of Review.

After HRP took the case to the Michigan State Tax Commission (STC) to challenge the classification, the STC upheld the assessor’s decision, arguing that growing cannabis did not qualify as an “agricultural operation” under the GPTA, which defines agricultural operations as the cultivation of agricultural, horticultural, or floricultural commodities.

Subsequently, HRP appealed the STC’s ruling to the Cass County Circuit Court, which recently rendered its opinion on the matter. In a victory for HRP and the cannabis industry as a whole, the Court concluded that the STC’s decision was “not authorized by law” and ordered the reclassification of HRP’s property as Agricultural Real, aligning with HRP’s original request.

The Court’s ruling emphasizes the importance of interpreting the statute as written, without the need for further judicial construction. According to the Court, cannabis cultivation undeniably falls within the definition of an agricultural operation as outlined in MCL 211.34c(2)(a) of the GPTA. The decision not only recognizes the validity of cannabis cultivation as an agricultural endeavor but also reaffirms the need to uphold the clear and unambiguous language of the statute.

This ruling could carry implications for cannabis operators in Michigan and beyond, and is legally consistent with our prior analysis that cannabis growers and processors have an opportunity to claim an exemption from sales and use tax under agricultural and industrial processing exemptions.

The court’s decision underscores the ongoing legal complexity of property matters in the cannabis market. Dykema’s Property Tax Appeals group can navigate the challenges in this dynamic space to help cannabis businesses achieve their goals.

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Photo of Mark Magyar Mark Magyar

At both the trial and appellate levels, Mark Magyar combines a thorough analysis of the facts and law with determined advocacy and personal commitment to obtaining favorable outcomes in a wide range of commercial and business disputes. Mark’s focus on the issues and…

At both the trial and appellate levels, Mark Magyar combines a thorough analysis of the facts and law with determined advocacy and personal commitment to obtaining favorable outcomes in a wide range of commercial and business disputes. Mark’s focus on the issues and arguments that matter while dispensing with those that distract or delay facilitates efficient resolutions that save his clients time, money, and disruption.

Photo of Carl Rashid, Jr. Carl Rashid, Jr.

Carl Rashid is a leader among Michigan’s property tax lawyers. He has represented public and private interests in assessment appeals, valuation disputes, and tax and economic incentives involving industrial, office, medical and assisted living, and multitenant retail properties.