Legalization of Cannabis and Revenue Opportunities

The 2018 election, brought about significant changes in the Minnesota political landscape. The Governorship remains in DFL hands, the State House has a strong DFL majority after two terms of Republican rule and the eight Congressional seats are still a five-to-three DFL/Republican mix, but they have changed to where the DFL represents all of the seats with ties to the Metro/Suburban area and also retained one rural seat, with a long-term incumbent in Rep Collin Peterson (DFL-MN07) set to Chair the House Agriculture Committee. Republicans retain the barest of majorities in the state Senate with one vote, which makes Minnesota the only state in the nation with a divided legislature. Peterson has been an advocate for Hemp production in the Farm Bill and would likely be interested in seeing another cash crop produced here in Minnesota.

As people prepare to come to St Paul, people are beginning to discuss the opportunities the composition of this new configuration creates. One of the first issues addressed by Governor-elect Tim Walz (DFL-MN) and Speaker-designate Melissa Hortman (DFL-36B, Brooklyn Park) is the legalization of cannabis/marijuana for recreational use. The stage is set for Minnesota to pass this issue by legislation and not a referendum.

Since there will be two new major parties, both with the topic of legalization in their names (Grassroots-Legalize Cannabis and Legalize Cannabis Now) there is a mounting force to contend with this issue. Since Walz has pushed for marijuana use for Veterans with PTSD at the federal level and on the campaign trail for governor has stated his support for legalization. Additionally, the endorsement of Congressman Keith Ellison (DFL-MN05) for Attorney General by his opponent Noah Johnson (Grassroots-Legalize Cannabis) late in the campaign may have buttressed Ellison’s election.

The greatest benefit to legalization, which may even appeal to conservative Republicans in the State Senate is the amount of new revenue this crop has the potential to bring into state coffers and the variety of inputs it can make.

Minnesota is probably best allied with Colorado when looking at the financials because these two states are quite similar in population. Current, census predictions place Minnesota at 5.577 million and Colorado at 5.607 million. In 2017, Colorado generated $247,368,473 and the amount for 2018 (Jan-Oct) is $223,300,334.

Colorado has a 10% excise tax and a 15% sales tax, while other states have different levels of collection. We have assembled is listing of the different collection methods for the eight states which have legalized recreational marijuana. Now granted Minnesota has shown itself to levy a high tax amount of “sin taxes,” and we expect cannabis/marijuana would fit neatly into this category. The state of Washington has made this linkage because the regulatory body that oversees this new green product is the Liquor and Cannabis Board.

The question over where the money goes will be an interesting discussion. Walz has already said publically, Colorado pumped $100 million into education. We think the natural tie is to health care and revenues from cannabis/marijuana should be targeted to fully funding Minnesota Care and allow for a universal buy-in for every person in the state based on a sliding fee scale. This funding resource coupled with the Health care Providers tax and $.01/ounce tax on high fructose corn syrup beverages will provide the resources necessary to pay for prevention programs and treatment of all health care concerns. This might be a well-financed route to single payer health care and could remove obstacles from out of the way for free-market purists.