diff --git a/base_layer/wallet/src/output_manager_service/storage/sqlite_db/output_sql.rs b/base_layer/wallet/src/output_manager_service/storage/sqlite_db/output_sql.rs
index 5d81f7358f..42f89de5f9 100644
--- a/base_layer/wallet/src/output_manager_service/storage/sqlite_db/output_sql.rs
+++ b/base_layer/wallet/src/output_manager_service/storage/sqlite_db/output_sql.rs
@@ -123,6 +123,9 @@ impl OutputSql {
         tip_height: i64,
         conn: &SqliteConnection,
     ) -> Result<Vec<OutputSql>, OutputManagerStorageError> {
+        let no_flags = i32::from(OutputFlags::empty().bits());
+        let coinbase_flag = i32::from(OutputFlags::COINBASE_OUTPUT.bits());
+
         if strategy == UTXOSelectionStrategy::Default {
             // lets get the max value for all utxos
             let max: Vec<i64> = outputs::table
@@ -131,6 +134,7 @@ impl OutputSql {
                 .filter(outputs::maturity.le(tip_height))
                 .filter(outputs::features_unique_id.is_null())
                 .filter(outputs::features_parent_public_key.is_null())
+                .filter(outputs::flags.eq(no_flags).or(outputs::flags.eq(coinbase_flag)))
                 .order(outputs::value.desc())
                 .select(outputs::value)
                 .limit(1)
@@ -151,6 +155,7 @@ impl OutputSql {
             .filter(outputs::maturity.le(tip_height))
             .filter(outputs::features_unique_id.is_null())
             .filter(outputs::features_parent_public_key.is_null())
+            .filter(outputs::flags.eq(no_flags).or(outputs::flags.eq(coinbase_flag)))
             .order_by(outputs::spending_priority.desc());
         match strategy {
             UTXOSelectionStrategy::Smallest => {
diff --git a/integration_tests/features/WalletCli.feature b/integration_tests/features/WalletCli.feature
index 069bbee8e2..0df343c01a 100644
--- a/integration_tests/features/WalletCli.feature
+++ b/integration_tests/features/WalletCli.feature
@@ -171,7 +171,10 @@ Feature: Wallet CLI
         And I have mining node MINE connected to base node BASE and wallet WALLET
         And mining node MINE mines 4 blocks
         Then I wait for wallet WALLET to have at least 1000000 uT
-        And I publish a contract constitution from file "fixtures/contract_constitution.json" on wallet WALLET via command line
+        And I publish a contract definition from file "fixtures/contract_definition.json" on wallet WALLET via command line
         And mining node MINE mines 8 blocks
         Then wallet WALLET has at least 1 transactions that are all TRANSACTION_STATUS_MINED_CONFIRMED and not cancelled
+        And I publish a contract constitution from file "fixtures/contract_constitution.json" on wallet WALLET via command line
+        And mining node MINE mines 8 blocks
+        Then wallet WALLET has at least 2 transactions that are all TRANSACTION_STATUS_MINED_CONFIRMED and not cancelled
         Then WALLET is connected to BASE
\ No newline at end of file