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House panel hears bill to repeal Minnesotatax on illegal drug sales stamps
Summary
A bill to repeal a rarely used statute that requires purchase of stamps for illegal controlled substances drew bipartisan attention in the House Tax Committee, where supporters said the tax generated little revenue and critics said prosecutors still sometimes use the law as an augmentation to criminal charges.
The Minnesota House Tax Committee on Jan. 24 heard testimony on House File 308, a bill that would repeal a state law requiring sellers of illegal controlled substances to purchase tax stamps from the Department of Revenue.
Representative Jess Hansen, the billsponsor, told the committee the statute has produced almost no revenue since it was enacted in 1986 and that prosecutors and the Department of Revenue rarely use it. "Cannabis taxes are now addressed in 295.81," Hansen said, and the current statute expects sellers of illegal drugs to visit the Department of Revenue to pay the stamp tax, a process she said is seldom followed in practice.
The bill would remove the state statute that requires those stamps. Hansen said county attorneys and the Department of Revenue had no official position last year, and that the department testified the statute was rarely used and produced no revenue in 2023.
Chair Greg Davids questioned the practical mechanics of the law, asking, "So what you're saying is illegal drug dealers are supposed to come to the Department of Revenue and pay a tax on their illegal drugs?" Hansen replied, "Correct, Chair Davids."
Rhianna Lee, legislative and coalitions director for Americans for Prosperity, testified in favor of repeal, calling the tax "impractical" and a "gotcha statute" that places unnecessary burdens on the criminal justice system. "It places an unnecessary burden on law enforcement agencies in the criminal justice system when they're tasked with enforcing something that essentially just does not happen," Lee said.
Committee chairs said they would lay the bill over for possible inclusion in an omnibus tax bill; no formal committee vote on final passage was recorded during the hearing. The Department of Revenue did not present formal opposition at the hearing.
The committee discussion noted that the tax currently generates little to no predictable revenue and that prosecutions under the statute typically arise only as an augmentation to other criminal charges. Supporters characterized the repeal as cleaning up an obsolete statute; opponents did not register formal organized opposition during the hearing.
