Sales Tax on Cannabanoid Containing Products in Minnesota

Accounting & Taxes
1

As of July 1, 2023, Minnesota has introduced a new regulation regarding the sale of edible cannabinoid products. While currently legal to sell, these products will be subject to the newly implemented 10% Cannabis Tax. This means that in addition to the Cannabis Tax, edible cannabinoid products will also be subject to the standard 6.875% state general rate sales tax, as well as any applicable local sales taxes based on the location of the transaction.

We are selling compliant hemp-derived products as allowed here https://help.shopify.com/en/manual/compliance/legal/hemp

All of my research for capturing this tax points to the tax overrides feature. It’s my understanding that using a tax override would replace the existing tax. As stated above, the 10% tax should be in addition to normal sales tax. Both taxes need to be collected. How can I setup a tax override that accommodates both the sales tax as well as the cannabis tax?

In addition to this, is it possible to display a new line-item on the checkout screen that shows the cannabis tax along with the other tax line items?

Example

  • Subtotal $1.00
  • Sales Tax $0.06
  • MN Cannabis Tax: $0.10
  • Total $1.16
2

We are having this exact same issue. And I will add Shopify support has been extremely unhelpful. Has anyone found a solution? We are thinking we might have to move off Shopify…

3

Hi @Geoffrey_Sass ,

Thanks for reaching out to the Community! I’d be happy to provide some assistance with this request, to ensure it gets resolved.

If you haven’t done so already, you can try to place those products into a manual collection and label it MN Cannabis Tax. Once completed, you can then create the tax override for that collection to have that fee applied at checkout. To learn more, please feel free to check out our guide that goes into depth about Tax overrides and exemptions.

Let us know what you think and if you have any questions.