New Minnesota law allows breweries to sell hemp THC-infused drinks on tap
MINNEAPOLIS — At Headflyer Brewing in northeast Minneapolis, there's something new on tap: hemp-derived, THC-infused drinks.
That's because a new law kicked in July 1 allowing taprooms to serve them this way. Before the change, customers could only buy cans. But if breweries display necessary information otherwise required on a label, they have the green light to sell it without a bottle.
Dan Schnabel, taproom manager at Headflyer Brewing, said his team moved quickly to offer one of their THC drinks on tap because they anticipated the new statute change, approved by the legislature this session.
"Having it on tap gives us so many different options for our consumers to taste it, to try it, to enjoy one while they're here on site," he said. "It's more approachable because not everybody necessarily wants to come in and purchase an entire can and drink an entire can."
It represents the latest change since lawmakers first legalized the THC edibles two years ago — so long as it's derived from hemp, marijuana's cannabis cousin and contains no more than 5 milligrams per serving and 50 milligrams per package. Last summer, liquor stores were allowed to start selling them and that's also when a 10% gross receipts sales tax on the products took effect, too.
The state raked in more than $11.5 million in revenue in the 11-month period from last July through May, the most recent month for which there is data available, according to the Minnesota Department of Revenue. The filing deadline for June is at the end of the month.
That's before a potential windfall from legal weed sales set to begin next year. The process to get the initial cannabis business licenses is already underway.
The new Office of Cannabis Management has a list of nearly 3,900 businesses selling the hemp-derived products as of mid-June. Businesses are now required to register with the state. But only 1,873 businesses paid that gross receipts tax, according to tax return info.
A spokesperson for the Department of Revenue said the discrepancy is due to certain businesses that are registered, but exempt from the tax, like wholesalers, businesses that have ceased operations, businesses that aren't making sales right now but could in the future, and businesses that sell the products but are not filing the taxes they should.
Schnabel said being able to make and sell the THC drinks has been good for business, especially when some customers are seeking an alternative to beer.
Interest has grown over time, he added, and Headflyer continues to increase its distribution of the drinks.
"We keep getting more and more accounts as people become more familiar with it — whether they're local chains, mom and pop shops or even national liquor stores are starting to carry our product," he said.
When legal marijuana sales start, those products will also face a 10% gross receipts tax. Minnesota could reach $1.5 billion in annual sales by the end of the decade, according to an analysis by Vicente LLP, a cannabis firm.
Andrew Livingston, director of economics and research at Vicente who's analyzed these markets, told WCCO in an interview last year that Minnesota's hemp edible market puts the state in a unique position heading into a new era of legalization.
"I think that's a way that Minnesota will advance faster than other states of a similar size nature because of the way that hemp program has kind of primed consumers for what will be a robust and interesting regulated marketplace," he said.
