Last verified: March 2026
Minnesota's Cannabis Tax Structure
Minnesota's cannabis tax system applies three layers of taxation to recreational purchases, resulting in an effective total rate of approximately 22–30% depending on location. Medical cannabis patients are fully exempt from all cannabis taxes — one of the most significant patient benefits in any state.
The cannabis gross receipts tax was increased from 10% to 15% in May 2025 as part of the Chapter 31 amendments, marking a notable policy shift that increased state revenue while also raising prices for recreational consumers.
Tax Breakdown
| Tax Component | Rate | Applies To |
|---|---|---|
| Cannabis gross receipts tax | 15% | Recreational retail sales |
| State sales tax | 6.875% | Recreational retail sales |
| Local cannabis excise tax | Up to 3% | Where adopted by city/county |
| Local sales tax (varies) | Varies | Existing local rates |
| Effective total rate | ~22–30% | Depending on location |
| Medical cannabis | 0% (exempt) | All medical purchases |
Cannabis Gross Receipts Tax (15%)
The cannabis gross receipts tax is a dedicated cannabis-specific tax applied to all recreational retail sales. Originally set at 10% by HF 100 in 2023, the rate was increased to 15% in May 2025 through the Chapter 31 amendments.
This tax is collected by retailers at the point of sale and remitted to the Minnesota Department of Revenue. It applies only to recreational cannabis purchases — medical cannabis is fully exempt.
A tax is imposed on the gross receipts from the retail sale of cannabis flower, cannabis products, and certain hemp-derived consumer products.
Minnesota Statutes §295.81 — Cannabis Gross Receipts Tax
State Sales Tax (6.875%)
Minnesota's standard 6.875% state sales tax applies to all recreational cannabis purchases, the same rate applied to most taxable goods in the state. Combined with the 15% cannabis gross receipts tax, the baseline state tax burden on recreational cannabis is 21.875% before any local taxes.
Medical cannabis is exempt from state sales tax.
Local Cannabis Excise Tax (Up to 3%)
Cities and counties may impose a local cannabis excise tax of up to 3% on retail sales within their jurisdiction. This is in addition to any existing local sales taxes that already apply to retail goods. The combination of the local cannabis excise and existing local sales taxes can push the total effective rate to 30% or higher in some locations.
Not all municipalities have adopted the local cannabis excise tax. The rate varies by jurisdiction, meaning the actual tax consumers pay depends on where they buy.
Medical Cannabis: Fully Exempt
Medical cannabis patients in Minnesota are fully exempt from the 15% cannabis gross receipts tax, the 6.875% state sales tax, and the local cannabis excise tax. For a patient spending $300/month, this exemption saves roughly $66–$90 per month (or $800–$1,080 per year) compared to recreational prices. Enrollment in the medical program is free ($0 fee) and available via telehealth.
Revenue Numbers
| Combined Cannabis Sales (to date) | $122.5 million |
|---|---|
| Projected Market Size (annual) | $430 million |
| Projected Revenue (2028–29 biennium) | $135.8 million |
With retail sales only launching in September 2025 and the market still ramping up, revenue figures are expected to grow significantly as more licenses are issued, more dispensaries open, and consumer purchasing shifts from the illicit market and the unregulated hemp-derived THC market to licensed retailers.
Revenue Allocation
Minnesota's approach to cannabis revenue allocation has already changed once. The original HF 100 framework directed 20% of revenue to Local Government Cannabis Aid, providing direct financial support to cities and counties hosting cannabis businesses.
However, that allocation was repealed on January 2, 2026. Cannabis tax revenue now flows to the General Fund, where it is allocated through the standard legislative appropriations process alongside all other state revenue.
The cannabis gross receipts tax was originally set at 10% by HF 100 in May 2023. It was increased to 15% in May 2025 through the Chapter 31 amendments — a 50% increase in the cannabis-specific tax rate within two years of legalization. The increase was part of a broader package that also adjusted revenue allocation and provided enforcement tools for the OCM.
How Minnesota Compares
Minnesota's effective cannabis tax rate of 22–30% places it in the middle of the pack nationally. For comparison:
- Washington: 37% excise + sales tax (~47% effective)
- Illinois: 6.25–25% + sales tax + local (up to ~40%)
- Colorado: 15% excise + 15% retail + 2.9% sales (~33%)
- Minnesota: 15% cannabis + 6.875% sales + up to 3% local (~22–30%)
- Michigan: 10% excise + 6% sales (16%)
- Oregon: 17% state + up to 3% local (17–20%)
Official Sources
- Minnesota Department of Revenue — Cannabis Tax
- Office of Cannabis Management
- Minnesota Statutes Chapter 342
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