Democrats see the light on taxes, but only for marijuana

Even in the face of a record-breaking budget surplus, Democrats continue to treat Minnesota businesses with contempt. The 2023 legislature will create new taxes, raise others and pile on job-crushing regulations and mandates. But there’s one industry immune to Democrat hostility this year: marijuana.  

Democrats like marijuana, so they’ve crafted a very friendly tax structure for the fledgling industry. Miraculously, they suddenly realized if you tax something too much, it can harm sales and hurt the industry. Up to this point, wisdom like this has been lost on the DFL.

For marijuana, HF 100 puts in place a tax of 8% of gross receipts from retail sales in Minnesota of taxable cannabis products. The tax revenue will be earmarked for very specific purposes such as running the new bureaucracy and funding the additional substance abuse treatment they admit will be necessary once pot is legal.

But here’s the kicker: once those costs have been covered, the marijuana tax will be lowered so as not to create a surplus. In other words, once we get enough revenue from the tax to cover the budget, it will be blinked off. Brilliant!

From HF 100:

Subd. 3. Tax rate adjustment. (a) Beginning in March 2027, in each odd-numbered year, the commissioner of management and budget shall use the February forecast of general fund revenues and expenditures reflecting the most recently completed fiscal year to determine that the conditions in paragraph (b) are met.

(b) Revenues raised by the tax imposed under this section combined with the tax imposed under chapter 297A on taxable cannabis products exceed the projected expenditures related to the ongoing regulation of cannabis for the upcoming biennium.

(c) The commissioner of management and budget shall report its determination to the commissioner no later than March 15 in the same odd-numbered year.

(d) The commissioner shall adjust the tax rate so that the revenues described in paragraph (a) equal or most closely exceed the expenditures in paragraph (b).

For a business they like, Democrats put in place a tax mechanism to only collect what is needed to fund the government purpose. For everything else in government, they have no problem overtaxing us and redistributing the surplus to groups, causes and people they like.

This unique tax structure for marijuana is reminiscent of the Taxpayer’s Bill of Rights (TABOR) movement of the 1990s. Colorado passed a Taxpayer’s Bill of Rights constitutional amendment in 1992 that caps governmental growth each year to population increases and the rate of inflation. Any money collected over the cap has to be refunded.

The Colorado legislature is debating this month how to return a $2.7 billion budget surplus. If Democrats cared about Minnesota taxpayers as much as their beloved new pot industry, we could be talking about getting some of our $19 billion surplus back as well.