MEDIC AL C ANNABIS TAX TOPICS
J E N N Y S TA R R
A S S I S TA N T C O M M I S S I O N E R F O R B U S I N E S S TA X E S
AUGUST 8, 2014
Agenda
 Agency overview
 Medical cannabis tax information
 Starting a business
 Learn more
 Questions
AGENCY OVERVIEW
What we do
 Manage the state’s revenue system
 Administer state tax laws
 Manage 28 different taxes
 Collect over $16.5 billion annually to fund education,
local government aid, property tax relief, social
service programs, highways, economic development
incentives and grants for businesses, and other state
programs and operations.
Who We Serve
3.7 million
individual income taxpayers
165,000
withholding taxpayers
786,000
property tax refunds claimants
284,000
businesses that collected and remit sales tax
204,000
corporations, s-corporations and partnerships
48,000
fiduciary income taxpayers
1,700
estate taxpayers
7,800
hospitals and healthcare providers
5,800
hazardous waste generators and solid waste management services
3,300
local units of government
8,000
professional tax preparers
Our Operations
• Provide forms and instructions to over 4 million taxpayers
• Answer over 678,000 phone calls
• Respond to over 41,000 e-mail inquiries
• Serve 2 million visitors to our website (17 million page views)
• Process over 9.2 million filing and payment transactions
• Conduct over 120,000 audits and assess approximately $400 million
MEDICAL CANNABIS
TAX INFORMATION
Sales Tax – Information for Customers
Generally
 Customers pay sales tax on most purchases
 Certain items are exempt from sales tax
Does sales tax apply?
 Medical Cannabis - NO
 Vaporizing device for medical cannabis – YES
Sales Tax – Information for Retailers
Generally
 Retailers collect sales tax and remit to the state
 Retailers register for a sales tax identification
number on our website before collecting and
remitting sales tax
Retailers selling medical cannabis supplies
 A retailer selling supplies like a vaporizer must be
registered to collect and remit sales tax
Sales Tax – Information for Businesses
Generally
 Businesses pay sales tax on most purchases
 Certain items are exempt from sales tax
Do exemptions apply for medical cannabis manufacturers? – YES
 Agricultural Production
 Farm Machinery and Equipment
 Industrial Production
 Capital Equipment
Medical Cannabis Manufacturers
 Must give completed Sales Tax Form ST3 to the retailer when
purchasing items exempt from sales tax
 File a claim for refund for Capital Equipment
Tobacco Tax
Generally
 Paid by distributors of tobacco products in Minnesota
Medical Cannabis
 Tobacco tax does NOT apply - medical cannabis is
not a tobacco based product
Marijuana & Controlled Substances Tax
Generally
 Paid by purchasing stamps from the Department of
Revenue (aka marijuana stamp)
Medical Cannabis
 Marijuana and controlled substance taxes do not apply
 Buying stamps is not required
MinnesotaCare Provider, Hospital, and Surgical
Center Taxes
Generally
 The tax applies to payments received for providing
patient services like medical and diagnostic services
 Health care providers pay the tax
Medical Cannabis
 The tax applies to patient services related to diagnosing
and certifying a patient to buy medical cannabis
 The tax does not apply to medical cannabis itself
MinnesotaCare Wholesale Drug Distributor and
Legend Drug Use Taxes
Generally
 Imposed on legend drug sales or purchases
Medical Cannabis
 The tax does not apply to medical cannabis
Individual Income Taxes
Federal Rules – Medical Cannabis
 Some medical expenses are deductible
 Cannot deduct cost of medical cannabis
 Cannot use pre-tax medical expense accounts to
pay for the purchase of medical cannabis
Business Income Taxes
Federal Rules – Medical Cannabis
 Cost of goods sold may be deducted
 Ordinary and necessary business expenses may not
be deducted on a business tax return
More Information
 IRS publications 535
 IRS publication 334, Chapter 6
Property Tax
Generally
 Taxes assessed at the county, city, school district
and special taxing district levels
 County Assessors determine property valuation and
classification
Medical Cannabis
 Class 3 commercial and industrial property – the
same classification as businesses
STARTING A BUSINESS
Great resources on our website
Upcoming classes
 Sales and Use Tax
 St. Paul
 Oct. 7 and Oct. 23
 More locations and dates available
 Employment Taxes and Employer Responsibilities
 Wyoming
 Oct. 22
 Minnesota Partnership and S Corporation Basics
 St. Paul
 Aug. 21 and Sept. 23
LEARN MORE
Visit our website
Sign up for our email alerts
[email protected]
Contact
Minnesota Department of Health
Office of Medical Cannabis
651-201-5598
Minnesota Department of Revenue
Visit our website and click “contact us” for a complete list of
contacts by tax type
QUESTIONS?
THANK YOU!
Legal statement
The materials used and distributed were created for training purposes
in connection with a presentation given by the Minnesota Department
of Revenue.
The information was based on the laws and administrative rules in
effect at the time of the presentation. Nothing in the presentation binds
or obligates the Department of Revenue to a particular position nor
does it supersede, alter, or otherwise change any tax law,
administrative rule, court decision, or revenue notice.