It’s still uncertain when adult-use marijuana sales will begin in Minnesota, but when they do, customers will pay some of the highest cannabis taxes in the United States.
That’s because the state Senate this week approved a bill to increase the “special sales tax” applied to cannabis purchases from 10% to 15%, according to The Minnesota Star Tribune.
That’s on top of the state’s 6.875% sales tax.
When combined, Minnesota’s marijuana tax is now the fourth-highest in the country, according to the Tax Foundation.
The tax increase still must be signed into law by Gov. Tim Walz.
Walz, who did not immediately comment to the Star Tribune, has vetoed only one bill since he took office in 2019, according to the League of Minnesota Cities.
Critics say raising the marijuana tax before the adult-use market’s launch will encourage buyers to seek cheaper alternatives, either from hemp-derived THC channels or from the illicit market.
“This decision has the potential to harm the new legal businesses that are just starting to get up and running,” state Sen. Lindsey Port, the Democratic-Farm Labor (DFL) Party sponsor of the state’s 2023 legalization law, told the Star Tribune.
The tax increase comes shortly after the state’s Office of Cannabis Management (OCM) mistakenly informed 249 winners of a recent lottery awarding business licenses that their applications were not successful.
That snafu follows an earlier computer outage that threw the license-application system offline during a key period in March.
That issue led the OCM to extend the application deadline.
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