After “accidentally” legalizing THC edibles and infused drinks during the 2022 legislative session, the 2023 Minnesota state legislature capped off a multi-year campaign to fully legalize recreational marijuana on Sunday, May 21st. Fully legalizing recreational cannabis is expected to make Minnesota one of the fastest growing markets in the United States growing from $40 million in medical cannabis sales in 2021 to a projected sales $1.5 billion in 2025.
Set to take effect on August 1st, 2023, under the new legislation adults over twenty-one years of age will be allowed to possess or transport up to 2 ounces of cannabis flower, 8 grams of concentrate, and 800 milligrams of edible product. Adults will also be allowed to possess up to two pounds of cannabis flower in a private residence and grow up to eight cannabis plants without needing a license.
Business Licensing
HF 100/SF73 establishes a seed-to-sale framework comprising sixteen licenses, ranging from growing to manufacturing and different retail locations managed through the newly established Minnesota Office of Cannabis Management.
In addition to licensing costs, Cities may impose an initial retail registration fee of $500 and a renewal registration fee of $1,000, or up to half the applicable initial license fee for each business, whichever is less.
Recreational Licenses
| License Type | Application Fee | Initial License Fee | Renewal Fee |
|---|---|---|---|
| Cannabis Microbusiness | $500 | – | $2,000 |
| Cannabis Mezzobusiness | $5,000 | $5,000 | $10,000 |
| Cannabis Cultivator | $10,000 | $20,000 | $30,000 |
| Cannabis Manufacturer | $10,000 | $10,000 | $20,000 |
| Cannabis Retailer | $2,500 | $2,500 | $5,000 |
| Cannabis Wholesaler | $5,000 | $5,000 | $10,000 |
| Cannabis Transporter | $250 | $500 | $1,000 |
| Cannabis Testing Facility | $10,000 | $10,000 | $20,000 |
| Cannabis Event Organizer | $750 | $750 | – |
| Cannabis Delivery Service | $250 | $500 | $1,000 |
Medical Licenses
| License Type | Application Fee | Initial License Fee | Renewal Fee |
|---|---|---|---|
| Medical Cannabis Cultivator | $250 | – | – |
| Medical Cannabis Processor | $250 | – | – |
| Medical Cannabis Retailer | $250 | – | – |
| Medical Cannabis Combination Business | $10,000 | $20,000 | $70,000 |
Hemp Licenses
| License Type | Application Fee | Initial License Fee | Renewal Fee |
|---|---|---|---|
| Lower-Potency Hemp Edible Manufacturer | $250 | $1,000 | $1,000 |
| Lower-Potency Hemp Edible Retailer | $250/Location | $250/Location | $250/Location |
Limits on the number of cannabis retailers
Legislation requires that local governments cannot limit the number of licensed cannabis retailers to fewer than one registration for every 12,500 residents. The exception is that if a county already has more than an active registered retailer for every 12,500 residents, a city or town within the county is not obligated to register further cannabis retailers.
GreenGrowth CPAs are the Optimal Choice for Your Cannabis Company
Choosing the right accounting firm is crucial for any cannabis company seeking financial stability and compliance in the ever-evolving cannabis industry. GreenGrowth CPAs has emerged as a leading player in providing specialized accounting services tailored to the unique needs of your cannabis businesses.
In an industry characterized by complex and evolving regulations, compliance is paramount for cannabis companies. GreenGrowth CPAs are well-versed in the intricate web of federal, state, and local cannabis regulations, ensuring that your company remains compliant and mitigates potential risks. Their meticulous approach to compliance helps safeguard your business from penalties, audits, and legal complications, providing peace of mind and allowing you to navigate the industry confidently.
The cannabis industry operates within a highly regulated environment, subject to a myriad of tax laws and regulations at both the state and federal levels. Taxation for cannabis businesses involves roadblocks, such as 280E tax code restrictions, which disallow deductions for expenses related to Schedule I substances, including cannabis. This limitation significantly impacts a company’s profitability and tax liability. At GreenGrowth CPAs, we specialize in helping Cannabis businesses navigate 280e deductions and maximize their profits.
Beyond federal compliance, Minnesota highlights how rapidly state and local tax requirements are evolving for the cannabis industry as it grows. These may include excise, sales, and special taxes specific to the cannabis industry. Understanding and complying with these regulations requires in-depth knowledge and expertise, making a tax accountant with experience in the cannabis industry invaluable.
Selecting an accounting firm specializing in the cannabis industry is crucial for the financial success and compliance of your cannabis company. By partnering with GreenGrowth CPAs, your cannabis business can enjoy peace of mind, knowing that your financial affairs are in the hands of trusted experts dedicated to your success.
