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MEDICAL CANNABIS TAX TOPICS
JENNY STARRASSISTANT COMMISSIONER FOR BUSINESS TAXES
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.
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
Who We Serve
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
Contact
Minnesota Department of HealthOffice of Medical Cannabis651-201-5598
Minnesota Department of RevenueVisit 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.
