HOPKINS, Minn. — Minnesota’s recreational pot products just got more expensive and the retail market hasn’t even launched yet.
As part of a last-minute budget deal this week, lawmakers agreed to raise the tax from 10% to 15%, making it one of the highest rates in the country.
“It’s a difficult business to make it in even without an additional tax, so I think a lot of entrepreneurs are worried that they can succeed,” said cannabis law attorney Jason Tarasek.
Minnesota just awarded some of its first licenses to retailers last week, who now worry, when their business opens, the tax increase will force people to keep turning to the black market, where product is cheaper.
“It’s going to hurt the community, the market, being the customer, because if we have to raise our prices and that goes directly to the consumer,” said Glen Brown, who opened Gro’s Smoke Shop in Hopkins in 2024.
The state made recreational pot legal two years ago. Hurdles and legal challenges have stalled the retail market that’s expected to finally be running this summer.
It will still take months to grow, test and package product to sustain the supply chain, according to Tarasek.
“We have a nascent industry, it’s not well organized, nobody is making money yet and it’s difficult to lobby around that,” said Tarasek.
The move is part of a larger omnibus tax bill that lawmakers say adds another $76 million in revenue in the next two years. It comes at a time when the state is facing a deficit of nearly $6 billion by 2028.
“I recognize the state needs to come up with revenue from somewhere, right, and this was probably the lowest hanging fruit,” said Tarasek.
Brown, though, is ready to take on the test.
“It’s an uphill battle that we’re ready for,” said Brown.
Washington, Illinois and California all have tax rates higher than Minnesota – all of which also have a sales tax.
KARE 11 asked Governor Walz about signing this bill and his spokesperson wrote in a statement, “This proposal was a result of a bipartisan compromise with legislators to pass a balanced state budget that protects investments in kids, schools, seniors, and public safety. The governor intends to honor the compromise and sign this legislation.”
