Yes, this is actually on the books in Michigan:
It shall be unlawful for any person to display or permit to be displayed on his or her motor vehicle any emblem or insignia of any organization, association, fraternity, lodge, club or order, unless the owner of such motor vehicle be a member of the organization, association, fraternity, lodge, club or order, the emblem or insignia of which is so displayed: Provided, That the provisions of this act shall not apply to the owner or owners of any motor vehicles upon which such emblem or insignia is displayed solely for the purposes of participation in any public parade, or at any public fair, exhibit, or carnival.
So, maybe it has been declared unconstitutional, and repealed by the House. But it’s still on the books, though not for long. You can read a lot more about the history of this law here.