Minnesota Cannabis Tax Guide 2026: 15% Gross Receipts Tax, Sales Tax, Filing and 280E

By GreenGrowth CPAs Cannabis Team · Updated October 2026 · Minnesota Cannabis Tax

As of October 2026, the Minnesota cannabis tax is a 15% gross receipts tax on retail sales of taxable cannabis products under Minn. Stat. 295.81. It sits on top of the 6.875% state sales tax and any local general sales taxes. Cities and counties cannot add a cannabis-only tax. On the income side, Minnesota lets licensees subtract the expenses that federal IRC 280E disallows.

This guide replaces our earlier Minnesota tax posts, which used the old 10% rate.

Minnesota Cannabis Tax: At a Glance

• Rate: 15% gross receipts tax on taxable cannabis products, effective July 1, 2025.
• Stacking: Plus 6.875% state sales tax and local general sales taxes.
• Exempt: Medical cannabis sold to enrolled patients; Tribal sales on Tribal land.
• Filing: e-Services, due the 20th or February 5.
• Income tax: Minnesota decouples from 280E under Minn. Stat. 290.0132, subd. 29 and 290.0134, subd. 19.

What Is the Minnesota Cannabis Tax?

The Minnesota cannabis tax is the cannabis gross receipts tax in Minn. Stat. 295.81. It is imposed on the “taxable cannabis product retailer” at 15% of gross receipts from retail sales of taxable cannabis products. Gross receipts include delivery charges and packaging. They exclude separately stated taxes and unreimbursed seller discounts or coupons, so a store coupon lowers the tax base while a reimbursed manufacturer's coupon does not.

Since July 1, 2025, all of the revenue goes to the state general fund. The local cannabis aid account (Minn. Stat. 477A.32) was repealed, so cities and counties no longer get a share.

The July 1, 2025 Rate Change

The rate rose from 10% to 15% for sales after June 30, 2025, under 2025 Minn. Laws, 1st Spec. Sess., ch. 13, art. 3, sec. 3. The 2026 omnibus (Laws 2026, ch. 123) did not change it. If your POS or forecasts still use 10%, fix them.

The Full Minnesota Cannabis Tax Stack

Three layers apply to a typical adult-use sale. The Minnesota Department of Revenue (DOR) uses Bloomington as its example in its cannabis sales tax guide.

Illustration: on a $100.00 adult-use purchase in Bloomington, the taxes add $15.00 + $6.88 + $2.15 = $24.03, for $124.03 at the register. Local rates differ by city and county, so confirm each store's rate.

For how Minnesota compares with other states, see our cannabis tax rates by state.

What Is Taxable and What Is Not

The 15% tax covers “cannabis flower, cannabis product, cannabis solution product, hemp-derived consumer product, lower-potency hemp edible, and any substantially similar item.” Lower-potency hemp edibles expressly include THC products consumed as a beverage, so hemp-derived THC beverages owe the 15% tax. Delivery charges and card surcharges on taxable products are taxed too.

Watch bundles. If any item in a single-price bundle is subject to the cannabis tax, the whole price is taxed (section 295.81, subd. 2(b)). Price accessories separately.

Medical and Tribal Exemptions

Medical cannabis flower, medical cannabinoid products and medical cannabis paraphernalia bought by or for an enrolled registry patient are exempt from the gross receipts tax (section 295.81, subd. 4(b)). DOR also lists medical cannabis as exempt from sales tax. Flag registry sales in the POS.

Sales on Tribally regulated land by a Tribe-licensed cannabis business are exempt from the gross receipts tax (subd. 4(d)) and from sales tax (Minn. Stat. 297A.67, subd. 39).

Wholesale Purchases, Form ST3 and Use Tax on Samples

The cannabis tax applies only to retail sales. Retailers buy inventory free of sales tax by giving the vendor Form ST3 with the resale exemption. Transporter services between licensees, mandated testing services and third-party delivery billed to the seller are not taxable. Cultivators and manufacturers can claim production exemptions, such as grow lights and packaging, on ST3.

Two traps catch new stores. First, product pulled from inventory for free samples, display or mandated testing owes state use tax, the 15% cannabis tax and local use tax on its cost. Second, the Metrc seed-to-sale system is legally required, but its fees are still subject to sales tax. See our guide to Minnesota cannabis inventory management.

Who Owes the Tax

The tax falls on the taxable cannabis product retailer. That term covers cannabis retailers, microbusinesses, mezzobusinesses, medical cannabis combination businesses, lower-potency hemp edible retailers and remote or marketplace sellers. The retailer may, but is not required to, collect the tax from the buyer, as long as it is separately stated on the receipt.

How to File: e-Services Return, Frequencies and Due Dates

The 15% cannabis tax, state sales tax and local sales taxes all go on the Sales and Use Tax return filed in DOR's e-Services, using the cannabis tax line. You must be registered for Sales and Use Tax before your first sale. The filing cycle follows sales tax (section 295.81, subd. 9).

Source: DOR, Sales and Use Tax for Cannabis Retailers handout (October 2025).

Electronic payment is generally required. A business that cannot get banking can request a cash-payment waiver on Form CW1 under Minn. Stat. 289A.33.

Penalties and the Cannabis Delinquency Posting

• Late filing: 5% penalty.
• Late payment: 5% for 1 to 30 days, 10% for 31 to 60 days, 15% after 60 days, plus interest.
• Cannabis posting: If a retailer owes sales, withholding, corporate, S corporation or partnership minimum fees, DOR sends an intent letter with a 10-day notice. Unpaid retailers are then posted to the tax delinquency list, and wholesalers may not deliver product to them (Minn. Stat. 270C.726).
• Sales suppression software: Using a “zapper” to hide sales is a felony punishable by up to 5 years and a $10,000 fine.

Is There a Local Cannabis Tax in Minnesota?

No. Minn. Stat. 295.82 says a political subdivision “is prohibited from imposing a tax solely on the sale of taxable cannabis products.” Only general local sales taxes apply. The “3% local cannabis tax” sometimes quoted for Minnesota cities is an Illinois rule: Illinois municipalities may impose a cannabis retailers' occupation tax of up to 3%.

Local governments do collect a retail registration fee under Minn. Stat. 342.22. That is a fee, not a tax. For a retailer it works out to $500 at registration and $1,000 at renewal. Our Minnesota cannabis license guide covers local registration and zoning certification.

Minnesota Income Tax: The 280E Subtraction

Federal IRC 280E denies deductions to businesses trafficking in Schedule I or II substances, which still includes adult-use cannabis. Minnesota does not follow it. A license holder may subtract expenses “related to the business of cannabis or hemp and not allowed for federal income tax purposes under section 280E.” See our IRC 280E cannabis tax guide for how the federal rule works.

Sources: Minn. Stat. 290.0132; DOR cannabis income tax subtraction.

The subtraction applies to taxable years beginning after December 31, 2022 for licensed cannabis and hemp businesses. Medical cannabis manufacturers had an earlier subtraction for 2019 to 2022. DOR also states that there are no Minnesota cost of goods sold additions for cannabis businesses.

Federal 280E, Medical Schedule III and Mixed Minnesota Operators

State-licensed medical marijuana moved to Schedule III effective April 28, 2026 (order signed April 23, 2026, 91 Fed. Reg. 22714). Adult-use marijuana remains Schedule I, so 280E still applies to adult-use activity. A DEA hearing on broader rescheduling ran June 29 to July 15, 2026, and as of October 2026 there is no final rule.

Our analysis, not official guidance: for a Minnesota operator with both medical and adult-use sales, such as a medical cannabis combination business, federal 280E should now reach only the adult-use side, so expenses must be split. As of October 2026 the IRS has issued no allocation guidance, and no agency has confirmed whether Minnesota's medical licenses and endorsements qualify or whether DEA registration is required in practice.

The Minnesota result changes less. The state subtraction covers whatever 280E disallows, so if the federal disallowance shrinks, the Minnesota subtraction shrinks with it, and Minnesota taxable income stays about the same. The allocation still matters for your federal bill and for audit support. Read our guides to 280E expense allocation between medical and adult-use and the 2026 Schedule III order. The stakes rise on January 1, 2027, when combination licenses become macrobusiness licenses with medical endorsements.

Worked Example: Federal vs. Minnesota Taxable Income

The example below is illustrative only. It assumes an adult-use dispensary taxed as a C corporation, with no medical sales, no other Minnesota modifications and the 21% federal corporate rate.

Illustrative round numbers only. Without 280E, federal tax would be $84,000 (21% of $400,000). Minnesota franchise tax applies to the $400,000. Actual results depend on your facts.

Minnesota taxes something close to economic profit; the IRS taxes gross profit. That is why Section 471 COGS work still matters. Our dispensary accounting services build it into the monthly close.

Minnesota Cannabis Tax Compliance Checklist

• Register for Sales and Use Tax before your first sale.
• Set each store's POS to 15% plus the correct state and local sales tax; separately state the 15%.
• Price accessories separately and review every bundle.
• Flag medical registry and Tribal exempt sales.
• Use Form ST3 for resale and production exemptions; accrue use tax on samples.
• File by the 20th or February 5; request a CW1 cash waiver if unbanked.
• Claim the 280E subtraction on the right form.
• Track medical and adult-use revenue and costs separately from April 28, 2026.

See also our Minnesota cannabis market data for 2026 and cost to open a dispensary in Minnesota.

Key Takeaways

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