Cannabis industry hopefuls and advocates rallied at the Minnesota State Capitol on Wednesday in protest of a proposed tax hike on retail sales before the legal market is even off the ground.
The 2023 law greenlighting recreational marijuana implemented a gross receipts tax of 10% on sales at licensed businesses. DFL Gov. Tim Walz and legislative leaders announced a budget deal last week that increases the rate to 15%. That's on top of the state sales tax rate of 6.875% and any local sales taxes. And it applies to low-dose, THC edibles derived from hemp, too.
The group of about two dozen people chanted "stop the tax, start the market" outside Gov. Tim Walz's office, as key lawmakers behind closed doors worked to finalize the remaining parts of the next two-year state budget that they didn't pass before Monday's end-of-session deadline.
Leili Fatehi with cannabis consulting firm Blunt Strategies said high taxes mean higher prices for consumers, which puts legal businesses at a disadvantage compared to the illicit market. "It feels like a real betrayal, both to the folks that have been very patiently waiting to enter the legal market, but also a really bad public policy decision," said Fatehi, noting the change would also eliminate revenue-sharing with local governments that will handle some of the enforcement of the law.
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