The governor of Minnesota unveiled a budget proposal on Tuesday that includes funding for various state agencies to implement marijuana legalization and projections for cannabis revenue as lawmakers work to advance reform.
Gov. Tim Walz (D) released his budget request for the 2024-2025 biennium, just hours before a House committee was scheduled to hold a hearing on a legalization bill that’s moved through several panels in recent weeks.
During a press briefing, Lt. Gov. Peggy Flanagan (D) said that “it is past time to safely legalize adult cannabis use” and that “prohibition doesn’t work.”
“Legalizing adult-use cannabis is about our economic future. It’s about expanding our economy and creating jobs across the state. It’s about health, allowing us to regulate the industry and to ensure that products are safe and educating the public about the facts of cannabis use. It’s about public safety, allowing law enforcement to focus on violent crime and expunging the records of people who are convicted of non-violent offenses involving cannabis to give them a second chance. It’s about recognizing the way that we have been doing things isn’t working, and we can change.”
Within the first year of implementation, the governor’s office is projecting that the state would generate $6 million in revenue from a new 15 percent gross receipts tax on marijuana sales. That increases to $26.5 million in 2025, $62 million in 2026 and $100 million by 2027.
The state’s existing sales tax is estimated to additionally bring in an additional $30.8 million from cannabis sales in 2027.
A separate new 15 percent gross receipts tax would also be imposed on THC edibles that were legalized under a bill that Walz signed last year.
The budget proposal calls for the establishment of a Cannabis Management Office (CMO) to oversee an eventual regulated marijuana market.
“The Governor recommends funding for the safe and responsible legalization of cannabis for adults in Minnesota,” the budget document says. “This recommendation also includes funding for grants to assist individuals entering the legal cannabis market, provides for expungement of non-violent offenses involving cannabis, and implements taxes on adult-use cannabis.”
“Prohibiting the use of cannabis in Minnesota has not worked. Despite the current prohibition, marijuana is widely consumed across Minnesota,” it continues. “Regulating cannabis for use by adults will replace the abundant illicit market with a tightly regulated system with controls similar to those currently accepted for the sale of alcohol.”
The budget proposes to allocate millions of dollars to a variety of state agencies that would have a hand in implementing legalization. For example, it says $822,000 should go to the Department of Agriculture for Fiscal Years 2024-2025 for “food safety and pesticide enforcement lab testing and rulemaking related to changes in cannabis laws.”
In addition to CMO, the governor is seeking funding to create a Cannabis Expungement Board—$921,000 for the next fiscal year and $844,000 in 2025.
The broader legalization proposal that Walz is pushing “provides for automatic sealing of dismissals, exonerations, convictions, or stayed sentences of petty misdemeanor and misdemeanor marijuana offenses by the Bureau of Criminal Apprehension, which will provide notice of the expungement to local law enforcement agencies as well as the Judicial Branch for compliance purposes.”
Both the OCM and expungement board are also proposed as part of the legalization legislation that lawmakers have been considering.
The expungement board would support that effort by reviewing “other cannabis convictions to consider eligibility for expungement or resentencing,” Walz’s budget says.
“This proposal seeks to begin to address the inequities the current system of marijuana prohibition has created, beginning with the expungement of nonviolent marijuana offenses,” it says. “A Division of Social Equity at the Office of Cannabis Management will work to further promote the consideration of equity and inclusion in the development and implementation of cannabis regulatory systems.”
“The proposal additionally requires the prioritization of social equity applicants in cannabis license selection along with the cannabis grower and industry training and navigation grant programs,” it continues.
A substance misuse treatment advisory board would receive five percent of marijuana tax revenue to support public health programs.
The governor included funding for implementing legalization in his last executive budget request, but lawmakers were unable to enact the policy change.
This budget development comes amid committee action on a legalization bill that was introduced in both chambers earlier this month.
On the House side, the legislation has moved through several committees so far, and Senate committee is scheduled to consider its companion version on Wednesday.
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With majorities in both the House and Senate and control over the governorship this session, Democratic-Farmer-Labor party officials are confident that legalization will be enacted sooner than later.
The legislation is an iteration of the 2021 House-passed bill from former Majority Leader Ryan Winkler (D), who now serves as campaign chairman of the advocacy coalition MN is Ready. That group announced last month that it would be lobbying for the measure while leading a grassroots effort to build support for reform.
Walz, for his part, has called on supporters to join lawmakers and the administration in their push legalize marijuana this session, and he circulated an email blast this month that encourages people to sign a petition backing the reform.
Following their election win in November, Democrats internally agreed to discuss the issue in short order.
House Speaker Melissa Hortman (D) said recently that she expected cannabis reform to be included in the governor’s budget request, though she reiterated that the reform “will take a long time” to move through the legislature.
Walz and Hortman have differing opinions about how quickly the issue can advance this session, however, with Walz recently saying it would be done “by May” and the speaker indicating it could take until next year.
Winkler told Marijuana Moment earlier this month that he agrees with the governor, saying “it is likely that [passing legalization] will be done by May.”
“The reason is that the legislature adjourns until next year at the end of May, and so if they don’t do it in that timeline, it’ll take another full year—and I don’t think anything will be improved or bettered by waiting,” he said. “So it’s in everyone’s interest to get this bill passed.”
Two polls released in September found that the majority of Minnesota residents support adult-use marijuana legalization—and one survey showed that even more Minnesotans approve of the state’s move to legalize THC-infused edibles that was enacted earlier this year.
A survey conducted by officials with the House at the annual State Fair that was released in September also found majority support for legalization. That legislature-run poll found that 61 percent of Minnesotans back legalizing cannabis for adult use.
Photo courtesy of Brian Shamblen.
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