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Not everyone happy with the state’s new two-year budget which lawmakers finally wrapped up in a marathon special session this week.
The new budget lays out some new taxes and fees to fund state government, one of which includes some big tax hikes for marijuana sales. They’ll be going from 10% to 15% on gross retail receipts.
“I can guarantee the consumers don’t want this and the businesses don’t want this either.”
That is Steven Brown who owns “Nothing But Hemp.” Brown is worried that the taxes on marijuana will not only hurt his bottom line, but also lead to more activity on the black market.
“And as we’ve seen in California, the illicit market has really grown,” says Brown. “There’s a lot of illegal dispensaries everywhere. There’s underground selling, there’s underground, you know, delivery companies, and I think it’s gonna be a really tough road for dispensaries to operate with such high taxes.”
Brown says Minnesota will now have the highest taxes on marijuana in the country as regulators prepare to launch Minnesota’s legal cannabis market in the coming months. Those numbers are very difficult to quantify however.
The tax structure in each state is different and that makes state-by-state comparisons of rates or overall tax burden difficult. With federal prohibition still in effect, interstate commerce remains illegal, which creates siloed markets within each legalized state.
Those taxes and different burdens on retailers and buyers can make the illicit market more attractive. Brown says the new state tax of 15% will be added to city taxes in St Paul and Minneapolis. That will make it close to a 27% tax on the product overall.
“So, for example, a $40 product for the consumer will cost him $51. We are gonna be the most expensive market for hemp in the country,” says Brown.
Will Minnesota be the most expensive in the country? According to the Tax Foundation, Brown is close – it appears that Washington state is higher, and California and Colorado are about the same as Minnesota once the 15% rate begins.
“}]] The new budget lays out some big tax hikes for marijuana sales. They’ll be going from 10% to 15% on gross retail receipts and business owners say it’ll hurt their bottom line, and possibly push more consumers to the illicit market. Read More
