New cannabis tax kicks in Saturday along with other new Minnesota laws
Adults buying cannabis gummies, seltzers and other retail products in Minnesota will pay a new 10 percent tax starting Saturday.
The first phase of a new state law creating a tax and regulation system for cannabis is set to take effect that day. It’s the first step for the sweeping adult use legalization package that will make Minnesota the 23rd state in the country to legalize cannabis for recreational use. Minnesotans will be able to grow their own in limited quantities beginning next month.
The marijuana law is just one of a host of new measures that take effect on July 1, as the new two-year state budget cycle begins.
Lawmakers last year opened the door legally to many hemp-derived edible products that contained THC but didn’t impose a state tax or oversight mechanism. As a result, new products flooded the market though the state had few mechanisms to test their potency.
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The legal marijuana bill’s authors, Rep. Zack Stephenson, DFL-Coon Rapids; and Sen. Lindsey Port, DFL-Savage, said the state needed to put in place additional oversight and management mechanisms to make sure cannabis products in the legal marketplace were safe. And that would require a designated tax on the products to fund those regulatory structures.
Eighty percent of proceeds are expected to cover state costs of regulation while the remaining 20 percent will spill down to local governments.
“We really worked in partnership with the cities and counties to make sure that they had the resources to appropriately monitor regulations,” Port told MPR News earlier this month. “The rest of it goes into the general fund to continue to build our state’s ability to provide the services that our residents need.”
Also beginning Saturday, money will flow from the state’s general fund to the new Office of Cannabis Management to get it up and running. This year that amount will be $21.6 million, followed by $17.9 million next year. The office will set cannabis industry standards, prohibit packaging that could be attractive to children and set personal use limits. It will eventually license marijuana dispensaries, but it’s expected to take up longer for dispensaries to open — around a year to 18 months, the law’s authors say. The state’s medical marijuana system will continue.
The money will also fund public health awareness campaigns, drug recognition evaluator training, startup funding for new cannabis retailers and producers, a state board tasked with expunging prior low-level marijuana charges, as well as research on cannabis and roadside testing to detect potential impairment.
Starting Aug. 1, adults 21 and older will be able to grow marijuana with some limits, as well as possess and use it without facing legal penalties.
After a historically active legislative session, a variety of other new policies are also set to take effect. Here’s a look at some of the other law changes on the way.
Boating registration fees to increase
Starting this weekend, Minnesotans who own boats will see registration fees increase between 56 and 151 percent, depending on the size and type of their watercraft. The fees are set to help fund natural resource and conservation programs.
DFL lawmakers who wrote a broader climate, environment and natural resources $2 billion budget bill said that the state needed to take in additional funds to address long-standing environmental issues, along with newer ones, such as so-called “forever chemicals,” or PFAS, and chronic wasting disease.
“This is the most significant environment and climate bill in Minnesota history, both in terms of its investment and its reforms,” Rep. Rick Hansen, DFL-South Saint Paul, said during a debate on the measure last month.
The cost of fishing licenses and state parks fees will not increase.
New restrictions on drug companies
Lawmakers put up $1.1 million to create a Prescription Drug Affordability Board, as well as a Prescription Drug Advisory Council, that are set to track prescription drug prices and flag surges in costs. They also barred “excessive price increases” for generic or off-patent drugs. Distributors that increase generic drug costs by 15 percent in a year or 40 percent in three years would face a penalty.
Supporters, including advocates who’d long urged drug price caps at the Capitol, said Minnesotans should be able to expect stable pricing for the drugs they need.
“This bill is so critical to tackling the problem of soaring prescription drug prices,” Rep. Zack Stephenson said during a debate on a broader commerce budget bill. “No one should have to choose between paying the mortgage and paying for their prescription drugs.”
Opponents, meanwhile, said the measures would have an unintended effect in disincentivizing research into new drugs and cause manufacturers to drive up prices.
Universal school meals
Starting Saturday, state law will also cover the cost of school meals for Minnesota students, no matter how much their families make. Minnesota is the fourth state to do so.
DFLers this year said the plan was a top priority after the pandemic, when the federal government temporarily funded school meals for all students. The program is expected to cost the state $400 million in the first two years.
Fortifying homes against extreme weather
The state is set to start work on a program that will eventually issue grants to homeowners that can be used to retrofit against extreme weather and climate events including tornadoes and windstorms.
“It’ll allow homeowners to gussy up their house while also lowering their insurance premiums, it’s a twofer,” said Sen. Matt Klein, DFL-Mendota Heights.
The move to fund the grants comes after Minnesotans have seen an increase in property insurance premiums and increase in frequency of severe weather events. Assistant Commissioner at the Department of Commerce Peter Brickwedde said the department will seek input from Minnesotans about eligible projects over the next two years and begin implementation after getting additional funding from the Legislature.
In the meantime, he said that Minnesotans who can afford to fortify their roofs would be eligible for insurance premium reductions under state law.
“So if you have the means, this is something that you can do independent of this grant program that we’re building and in doing so, you are mitigating your own risk and the insurance company’s risk, and we think that that value should be passed on to the consumer,” Brickwedde said.
Limits on no-knock warrants
A public safety and judiciary law taking effect this weekend will limit instances when a judge can issue no-knock search warrants, only granting the option when an occupant poses an immediate threat of death or injury to an officer serving a warrant if they announce their presence and the premises is unoccupied.
Prior to the change, judges would grant no-knock search warrants in situations where police could show that they were unable to detain a suspect or collect evidence under a knock-and-announce warrant.
The law’s supporters said the warrants could result in dangerous or fatal situations — like the deadly police shooting of Amir Locke last year in Minneapolis. Meanwhile, opponents said police officers should have more options available to them when entering risky situations.
New safety measures for health care workers
Lawmakers also approved a policy that requires Minnesota hospitals to set in place action plans to reduce instances of violence against health care workers. The change comes after nurses in the state reported a surge in violent incidents in recent years.
The law would also expand a loan forgiveness program to include direct care nurses at nonprofit hospitals and directs the state health department to report on why nurses have decided to leave the workforce.
Editor’s note: An earlier version of this story had an incorrect number for general fund spending on the Office of Cannabis Management.