Sixteen states, along with the District of Columbia, have legalized the use of adult or recreational marijuana. Unlike many states, including its neighbor South Dakota, where voters decided the issue themselves, Minnesota does not have an initiative and referendum process that requires Minnesota lawmakers to propose a constitutional amendment or pass new law. Accordingly, advocates in Minnesota state Senator Ann Rest found a standard bearer who introduced SF 39 in 2019, a bill that Minnesota would have accepted into this growing consortium had it not died on the Senate committee. On February 2, 2021, Minnesota House Majority Leader Ryan Winkler took up the matter and introduced HF 600. Similar in many ways to the late SF 39, the HF 600 would provide a framework for the legal use of recreational marijuana in Minnesota. After Minnesota went through the House’s Trade and Financial Policy Committee on February 18, 2021 with a split vote of 10-7 parties, it appears that Minnesota will consider the legal use of recreational marijuana for the second time in two years.
The drive to legalize marijuana in Minnesota follows what many observers believe is the failure of the state’s highly restrictive medical marijuana program, which has required several legislative changes since it went into effect in 2015. Minnesota’s legislation was the most restrictive of its kind in Minnesota the nation, allowing application to a very limited number of nine conditions (mostly extremely rare or life-threatening conditions in which the patient was faced with end-of-life circumstances) and only to those patients who did have received a referral from a Minnesota-licensed physician who has been certified by the state medical association. Additionally, Minnesota has only licensed two manufacturers and pharmacy operators (Leaigible Labs and Minnesota’s Vireo Health) (in contrast, Ohio started its medical marijuana program with 24 cultivator licenses and 60 pharmacy licenses, with no cultivator also having to be in the business of retail edition) . To make matters worse, Minnesota Medical Marijuana Act prohibits a patient from purchasing products from other medical marijuana programs in other states or sources and includes a general ban on edible products.
Critics claim that the program serves few people and is unaffordable for most. In fact, after nearly six years of operation, only 30,739 are currently active on the state registry (in contrast, the Ohio medical marijuana program reports 148,861 active patients after only two years of surgery and 104,253 active patients in New Jersey over the same period as Minnesota). With legalization in Minnesota, an adult resident could now (a) own up to 1.5 ounces of marijuana in public and up to 10 pounds in a private household, (b) own concentrates and marijuana-derived products, subject to different quantity restrictions, and ( c) grow up to eight marijuana plants in a private household.
The bill provides for licensing and regulation of the cultivation, processing, transport and sale of recreational marijuana in direct sales or wholesale. It provides for the issuing of a limited number of operating permits as part of an application process in which “applicants for social justice” and certain “craft” or “micro-businesses” are prioritized by minimizing the barriers to entry into the industry. A social justice applicant is defined as (a) a military service veteran who has lost honorary status as a result of a marijuana-related crime, or (b) a Minnesota resident who has lived in an area for the past five years; where the last United States lived. Census data shows that either (i) the poverty rate in the area was 20 percent or more, or (ii) the median family income did not exceed 80 percent of the median income in the area.
In addition to licensing and legalization, the bill also aims to eliminate inequalities by offering marijuana entrepreneurs grants for engagement and support and providing new options for clearing criminal records for those convicted of marijuana possession crimes. In this case, the deletion of criminal records in the event of convictions for offenses would take place automatically without the convicted person having to apply to the court for relief. The bill authorizes the creation of a special criminal expulsion review board to review marijuana possession cases.
Licensed operators would be eligible for business expense deductions at the state level, which is currently prohibited at the federal level under Section 280E of the Internal Revenue Code. The ability of a licensed operator in Minnesota to deduct from income-qualifying business expenses otherwise prohibited under federal tax law is a major improvement over current practice and should help young operators weather the startup’s challenge. In addition, the bill would generate revenue for the state through a 10 percent tax on gross retail sales and a 10 percent tax on marijuana that is used or stored but not otherwise retailed unless by a retailer or a micro-business is sourced that has paid the tax. The real appeal of the tax revenue generated by the bill could be justified as Colorado now reports generating taxes of $ 1.6 billion on total sales of nearly $ 10 billion since 2014. Colorado levies a 2.9 percent sales tax on both medical and recreational marijuana sales and a 15 percent excise tax on retail marijuana, suggesting that Minnesota’s taxation could be similarly profitable for the state if all things are equal .
You can find a copy of the HF 600 here.