The Minnesota Senate has passed legislation that increases the state’s marijuana tax by 50% while eliminating a key revenue-sharing provision with local governments, just months ahead of the official launch of recreational marijuana sales.
Passed in the final hours of a special session Tuesday morning, the legislation raises the marijuana excise tax from 10% to 15%. According to the Tax Foundation, this shift moves Minnesota from one of the lowest marijuana tax rates in the country to one of the highest.
The measure also repeals language requiring 20% of marijuana tax revenue to be distributed to cities and counties. These changes were included in a broader budget deal reached last month by Governor Tim Walz and legislative leaders as the state looks to offset a projected multibillion-dollar deficit in the coming years. A House fiscal analysis projects the changes will bring in over $200 million in new revenue over four years.
The bill now awaits Governor Walz’s signature.
State Representative Harry Niska, a Republican from Ramsey, defended the changes during a Monday press conference, stating the new rate is “comparable to what a lot of other states that have legalized cannabis have done.”
However, State Senator Lindsey Port, a Democrat from Burnsville and lead sponsor of the law that legalized marijuana in Minnesota, criticized the move. She said she’s “incredibly disappointed” in the tax hike, warning it could undermine the state’s efforts to move consumers away from the illicit market.
“With Minnesota’s legal market just starting, I fear the 50% increase in tax will encourage consumers to continue to buy from the illicit market where products are untested and sales to minors are far too common,” said Port. “This decision has the potential to harm the new legal businesses that are just starting to get up and running.”
