How Does Minnesota’s Cannabis Market Compare to California
As cannabis operators consider entry or expansion in Minnesota's cannabis market, understanding how state tax policy impacts your bottom line is critical. Let’s see how it stacks up against another major legal market: California.
Minnesota keeps things simple:
Flat 15% excise tax on cannabis
No added sales tax or local cannabis taxes
Cannabis and hemp are taxed identically
280E doesn’t apply at the state level—business expenses can be deducted
California is more complex:
15% retail excise tax, plus 7.25% sales tax
Local taxes can range from 1% to 15%, depending on the city
State tax law still conforms to 280E, limiting deductions
Frequent local ballot initiatives change tax rules regularly
Although both states levy a 15% cannabis excise tax, Minnesota’s exclusion of sales and local taxes, coupled with its revised approach to IRC 280E, fosters a more stable and predictable business environment. Conversely, California’s intricate and layered system may result in substantially higher cumulative tax burdens and increased administrative challenges, illustrating the diverse regulatory philosophies influencing cannabis policy across the United States.
AB Fin CPA is here to help you evaluate if Minnesota’s cannabis market is the right fit for your next move — and ensure you stay compliant every step of the way.
