As of July 1, 2024, taprooms in the northeast region of Minneapolis had began serving hemp-derived, THC-infused beverages. Before the new regulation came into effect, customers were only allowed to buy cans of such types of beverages. Now, breweries can sell the beverages without a bottle if the necessary information that is typically on a label has been displayed.
Dan Schnabel, Headflyer Brewing taproom manager, revealed that offering THC beverages on tap afforded the company different options for consumers to try, taste and enjoy while on site. This option, he argued, was more approachable, particularly since not every person wanted to buy and drink a whole can.
This stride by businesses in the city represents the latest change since legislators made THC edibles legal two years ago. Last summer, liquor stores were given permission to start selling hemp-derived THC edibles. It was during this time that a 10% sales tax on gross receipts from the products also took effect.
In the period from July 2023 to May 2024, the state of Minnesota brought in more than $11.5 million in revenue. This is expected to increase significantly as legal marijuana sales commence in 2025. The process to award initial marijuana business licenses has already commenced, with all businesses being required to register with the state.
According to latest tax return information, only 1,873 businesses paid the above tax. This is barely one-half of the almost 3,900 businesses that are selling hemp-derived products, as per the new Office of Cannabis Management. A Department of Revenue spokesperson revealed the inconsistency in tax payment was because of businesses that had closed shop, those that were registered but exempt from the gross sales tax, those that were selling the products but not filing taxes properly, and those that weren’t making any sales now but could in the future.
Schnabel also revealed that the ability to make and sell THC beverages had positively affected their business, particularly as more customers sought alternatives to beer. He also added that interest had grown over time, with Headflyer seeing an increase in its beverage distribution as more mom-and-pop shops, local chains and national liquor stores began carrying the company’s product.
When legal cannabis sales commence in the state, these products will also be subject to a 10% gross receipts tax.
An analysis by Vicente LLP projects that Minnesota could hit $1.5 billion in annual sales by 2030. It is also expected that Minnesota will grow faster than other states because of how its hemp program has primed consumers for their regulated marketplace.
This anticipated market expansion could create business opportunities for a number of companies that specialize in making products that are useful in the hemp and marijuana industries.
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