Back in May, I wrote about the proposed hike in Minnesota’s cannabis tax from 10% to 15%. That wasn’t all:
Another change which has been less noted is the proposal to eliminate revenue-sharing with the local governments tasked with enforcing the laws governing the weed market. At present, the state’s general fund takes 80% of the revenues from the tax and cities and counties get the rest. Senate fiscal analysts claim that this “would result in $64.6 million of revenue for the general fund.”
This came to pass with the repeal of the Local Government Cannabis Aid Program. The result is that Minnesota’s local governments now have to find the money to deal with the consequences of the legalization measure passed by the state government in 2023.
“With many cities still in the planning stages of bringing in cannabis retailers, it’s unclear how significant the financial burden will be,” the Grand Forks Herald notes:
East Grand Forks City Administrator Reid Huttunen said once the first cannabis store opens in the city, the police department will be responsible for conducting compliance checks to ensure stores are operating within the law, including by requiring customers to supply proper identification to confirm they are of legal age before they’re allowed to make a purchase.
“That’s going to add additional time and resources for our city to do that,” Huttunen said. “I think that was the intention of the local cannabis aid — to help offset that additional cost that the cities or local governments will see and then, in a perfect scenario, generate some additional revenues for cities, too.”
[Huttunen] said some of the appeal in legalizing cannabis in the first place was because of the belief that it would bring additional revenue into local communities.
Rep. Steve Gander (R) told the Herald that: “Cities have been tasked with everything from drafting zoning maps and hosting public hearings, to enforcing local ordinances — all of which come with real costs.”
Gander called the issue a textbook example of an unfunded mandate, and said the state cannot in good faith impose responsibilities on cities without providing the resources to carry out those responsibilities.
I noted in February that one way Governor Walz planned to balance the state government’s books is to punt the financing of certain locally delivered government goods and services onto local governments. This is what we are seeing here, and local governments really only have one source of revenue with which to meet these costs: Your property taxes are going up.
