medical cannabis tax topics€¦ · a retailer selling supplies like a vaporizer must be registered...

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

Sign up for our email alerts

Yourname@email.com

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.