Study: Minnesota missing out on millions in tax revenue by not taxing THC products

The MN Star Tribune reports

Analysis shows Minnesota could be reaping between $5 million and $46 million annually under current THC edible law.

Minnesota is missing out on up to $46 million in revenue by not having a special tax on legal THC products, according to a University of Minnesota Duluth study.

Looking at states that have legalized recreational marijuana, the university’s Bureau of Business and Economic Research found Minnesota will miss a minimum of $5 million and “possibly closer” to $46 million in revenue in 2023.

“The bill that legalized edibles in Minnesota does not have much in place for the state to reap these benefits,” the study said. “The question is, why was the tax not considered?”

Most of the 18 states with recreational marijuana levy an excise tax — similar to alcohol and tobacco products — or taxes based on weight or potency. There are no such provisions for Minnesota’s THC edibles and drinks, which became legal July 1.

The products are subject to regular sales tax and could be providing a boost to state coffers in that way. But the Department of Revenue said it cannot separate sales of THC products from sales taxes it collects from businesses, so it’s unknown how much cannabis-related revenue is being generated.

To be clear, Minnesota has not legalized recreational marijuana. The legal edibles must be derived from hemp, which is legally distinct from marijuana by containing less that 0.3% delta-9 THC.

THC from either variety of cannabis will still cause a high, however.


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