Minnesota missing out on up to $46M in revenue by not taxing newly legal THC edibles

According to a study by the University of Minnesota-Duluth, Minnesota might be losing out on up to $46 million in untaxed sales of recently legalized edible cannabis products.

The state legalized edible cannabis products in July, but the law that made them possible contained few restrictions and no taxes obligations. According to a study conducted by UMD’s Bureau of Business and Economic Research, a 10% tax would allow the state to bring in anywhere from $40 million to as much as $46 million in income the following year.

The research came to the conclusion that “if Minnesota were to enact a cannabis tax, the state would have a new stream of money that could be utilized to benefit the state and its inhabitants.” Maybe the legislature will take this chance into account in future parliamentary sessions.

The Edina Democrat who sponsored the legal cannabis legislation in the 2022 legislative session, Rep. Heather Edelson, told reporters in July that cities and counties would be largely responsible for the regulation of newly legal cannabis products, but that she would support additional legislation for taxes and regulation.

The UMD research based its estimate on an increase in legal cannabis tax revenues from other states, such as Colorado, Michigan, and Oregon, which legalized recreational marijuana in the last ten years.

According to the report, since Minnesota only allowed edible cannabis products, it would not generate as much income as states like Colorado and Michigan, which have completely legalized recreational marijuana. However, it finally came to the conclusion that despite its limited legality, the state is still losing out on tens of millions in revenue.

In 2018, Michigan, a state with a population of roughly 10 million, legalized cannabis for recreational use. According to the report, it levies a 10% sales tax and brought in $210 million the previous year. Previous measures to legalize cannabis in Minnesota, a state with a population of around 5.6 million, proposed for a 10% sales tax. According to the report, Minnesota could fairly expect to receive half of what Michigan did in its first year after fully legalizing recreational marijuana if it taxed legal edibles under the present legislation. Minnesota’s smaller population and narrower legalization would result in fewer revenues.

When psychoactive THC-containing edibles were made legal in Minnesota earlier this summer, many people—including some of the politicians who voted in favor—were taken aback. A significant health care measure that DFL Gov. Tim Walz signed into law included new legislation that made edible and drinkable cannabis legal.

Tetrahydrocannabinol, often known as THC, is the psychoactive ingredient that causes users to feel “high,” and under the new rule, anybody in Minnesota who is 21 or older can purchase edible goods containing it. Consumable goods must be made from hemp, which is restricted under federal law to having a THC content of less than 0.3%, and may now be sold in the state if they have less than 5 mg of THC per serving and 50 mg per package. Any cannabis that has more than that is classified as marijuana, which is still prohibited throughout the country.

Minnesota has previously legalized delta-8, an unregulated kind of hemp-derived THC, as a result of a 2017 federal law gap. The more powerful delta-9 THC is now permitted in Minnesota as long as it is produced from hemp, according to a crucial provision of the state’s new legislation that governs hemp products. Additionally, the legislation established regulations for delta-8 THC products.

Meanwhile, with no direction on how to govern cannabis items that were made legal in the state in July, many Minnesota communities have begun to develop their own regulations, with some even attempting to outright prohibit the goods.

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