Minnesota is gearing up to launch its adult-use cannabis market, but before the first legal sale is made, lawmakers are proposing a significant tax hike. The proposed budget agreement would increase the gross receipts tax on cannabis sales from 10% to 15%, on top of the existing state sales tax of 6.975% and any applicable local taxes. This change would also extend to hemp-derived THC edibles, such as beverages sold at liquor stores and other non-cannabis retailers .
This move positions Minnesota’s cannabis taxes higher than neighboring states with legal adult-use marijuana. For instance, Michigan imposes a 10% excise tax plus a 6% sales tax, while Illinois has a tiered system taxing products with less than 35% THC at 10% and those with higher concentrations at 25% . Some cannabis advocates express concern that the increased tax burden could make legal cannabis products too expensive, potentially driving consumers back to the illicit market. State Senator Lindsey Port, a key figure in the marijuana legalization effort, voiced her frustration, stating that the cannabis market was not intended to be a solution for the state’s budget issues and that using it as such may not yield successful results .
As Minnesota prepares for the official launch of its adult-use cannabis market, stakeholders are closely watching how these proposed tax changes will impact both the industry and consumers.
