Thanks Martin,
I noted in my original post that this has been enabled but I think I wasn’t very clear about it. I have edited the note now to say “Cubase 11 and Cubase 12 both have the microphone permission granted in System Preferences > Security and Privacy > Microphone.”
It could be that even though both Cubase 11 and Cubase 12 show that the permissions are set in the OS, maybe they aren’t actually in some config somewhere.
Searching the interwebs before posting here I found this cryptic solution, which I did not try yet. And then this super detailed solution, which seems to match mostly what my situation is, but seems pretty heavy handed. I know that the problem in that solution is that Cubase doesn’t show up at all, but if my theory that there is some additional bug in the privacy checkboxes being checked but some config file being out of whack is true then my gut says that forcing a re-evaluation of the permission without the old Cubase 11 version to reference might fix it.
I can imagine that manually testing an update path from 11 to 12 with an OS update in the middle will be lightly tested because of the setup time and execution costs.