How to Buy or Sell a Cannabis License in Minnesota’s Adult-Use Market: M&A Guide (2025)

By Jason Tarasek, Charles Alovisetti, Jack Crain

Jul 18, 2025

More than two years after Minnesota Governor Tim Walz signed legislation legalizing adult-use cannabis, and eleven years after the establishment of the state’s medical cannabis program, adult-use cannabis businesses are finally ready to start opening their doors later this summer. 

Following a series of delays, the Minnesota Office of Cannabis Management (OCM) has started issuing licenses authorizing the cultivation, manufacturing, and sale of cannabis and cannabis products in the North Star State. The OCM has also released updated guidelines on business and ownership control changes for preliminarily approved applicants and active license holders.

Minnesota’s Adult-Use Cannabis Market Overview

Late last month, the OCM issued the first-ever adult-use cannabis license to a microbusiness that intends to grow marijuana outdoors in northern Minnesota. Over the last few weeks, dozens of prospective business owners have received "preliminary approvals,” which may soon convert into full licenses. Applicants received such preliminary approvals either by seeking an unlimited license type, such as a microbusiness, or by winning a lottery for a limited license type, such as cultivation, manufacturing, retail, or mezzobusiness. 

Minnesota prohibits vertical integration except for two license types: the microbusiness and the mezzobusiness. Both allow a license holder to grow, manufacture, and sell adult-use cannabis. The primary distinctions between the two are the canopy size (5,000 square feet vs. 15,000 square feet) and the number of dispensaries (one vs. three).

Market Activity

Unsurprisingly, the M&A market for all license types has been highly active over the last few weeks. Because microbusiness licenses are uncapped, sales prices remain relatively modest. Conversely, capped license sales, particularly mezzobusiness and retail, often range between $200,000 to $1,000,000. 

Minnesota is an attractive market for cannabis entrepreneurs for two primary reasons: 

1. Unlike most states with an existing medical cannabis program, Minnesota is not allowing its two existing medical cannabis manufacturers to automatically convert to adult-use, meaning they do not receive a head start.

2. Minnesota is surrounded by prohibition states such as North Dakota, South Dakota, Iowa, and Wisconsin. While most have small medical cannabis programs, Wisconsin has no legalized cannabis program at all. Over the years, Wisconsinites have traveled to Michigan and Illinois to purchase adult-use cannabis products. Observers now anticipate that those consumers will soon travel across the Mississippi River to buy from Minnesota retailers.

Adding to the mix, ten of Minnesota's Tribal Nations are in active discussions with the state to finalize agreements that would allow them to open cannabis businesses off tribal land. Although the terms of these "compacts" vary from tribe to tribe, observers expect Tribal Nations will begin opening dispensaries across the state. Some Tribal Nations may also partner with private-sector businesses as they expand their footprint and serve the broader state market.

Social Equity Licensing Program

Minnesota’s adult-use cannabis program includes two categories of license applicants:

1.      General applicants

2.      Social Equity Applicants (SEAs).

SEAs must meet specific eligibility criteria and are required to participate in a social equity verification process, currently open until July 21. These applicants are subject to additional rules and regulations, including changing business ownership and control restrictions.

New Guidance from the OCM on Ownership Changes

According to recent OCM guidance, regulatory processes for changes of ownership differ depending on whether a cannabis business is a preliminarily approved applicant (pre-licensure) or an active license holder (final licensure).

Local Approvals

Both preliminarily approved applicants and active license holders should be aware of additional rules, restrictions, and zoning regulations at the local level. These local rules can significantly impact M&A structures and are not addressed in the OCM’s guidance, so businesses and attorneys must analyze them carefully. 

Universal Requirements 

Regardless of the license type or applicant category, all cannabis businesses must comply with Minnesota law, including:

1. Cannabis license application and renewal procedures

2. Criminal history check and disqualification requirements

3. General ownership disqualification requirements

4. SEA requirements

5. True party of interest requirements 

Notice to the OCM

All license types are required to notify the OCM of any ownership changes. Relevant documents are available under the “Change of Ownership and Control” section on the OCM’s Final Plan of Record page. 

Preliminarily Approved Applicants

Preliminarily approved applicants, such as those who have passed a criminal background check and entered into all applicable preliminary agreements, may not sell their application’s majority ownership interest to a third party. However, they can transfer a non-controlling stake, as long as the new equity holder meets all eligibility requirements and the OCM is notified.

Changing Ownership (Pre-Licensure)

Pre-licensure entities, despite being unable to transfer majority ownership, may change their ownership under the following constraints:

1. Cannot change the individual who holds the majority ownership interest of the cannabis business associated with the pre-licensure entity

2. Cannot require a new business registration with the Minnesota Secretary of State

3. Cause a pre-licensure SEA to no longer be classified as an SEA

4. Cannot add any owner(s) ineligible to hold a cannabis license due to previous criminal or civil offense history

5. It cannot violate Minnesota statutory provisions for a true party of interest.

Timing of OCM Review

Pre-licensure entities may change ownership at any time prior to licensure. However, the OCM will only review these changes once the pre-licensure entity has submitted its site registration in its application. This could mean that if an issue arises with a new owner, it may surface after the deal has closed further adding risk to early-stage transactions.

Active Licenses

Active licenses refer to those entities that have:

1. Obtained an OCM-issued adult-use cannabis license

2. Received certification at the local government level for compliance with applicable zoning and land use laws

3. Passed a state compliance inspection

4. Received an endorsement to conduct an activity.

Active licenses that have been issued an endorsement to conduct activity can begin operations for the adult-use cannabis activity connected to the license and are considered to have obtained full licensure at this point. This applies to all license types except for retail activity, which requires obtaining an additional local retail registration. Active licenses are permitted to transfer control upon prior written approval from the OCM.

Changing Ownership (Active Licensure)

Only active licenses may transfer control. This rule applies regardless of the type of license in question. Active licenses can change non-controlling ownership, like pre-licensure entities. However, whether the active license holder was a general applicant or an SEA will determine the degree to which ownership changes may be made. And businesses must report any changes in ownership structure to the OCM.

In addition, active licenses can change the majority ownership interest upon prior written approval of the OCM. To do so, active licensees should notify the licensing division at licensing.ocm@state.mn.us that they are requesting written authorization for a license transfer.

Special Rules for Social Equity Applicants (SEAs)

Licenses held by social equity applicants, both preliminarily approved and active, are subject to additional restrictions related to ownership and control:

Preliminarily Approved and Active Licenses

Ownership changes cannot reduce the SEA’s equity below the required threshold. At least 65% of the business must remain owned by individuals who meet Minnesota’s social equity qualifications.

Active Licenses Only

Controlling ownership of an active SEA license must remain unchanged for the first three years of business operations. This rule does not apply to general applicants.

Creative Deal Structuring 

The above guidelines suggest the possibility for creative deal structuring. However, anyone planning a transaction should know that any creative deal structuring also conforms to the ongoing true party of interest requirements.

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Need Help Navigating Cannabis M&A in Minnesota?

Whether you're buying, selling, or restructuring ownership in a licensed cannabis business, Vicente LLP’s cannabis attorneys can help you evaluate risk, maintain compliance with Minnesota’s evolving cannabis regulations, and structure deals that align with state and local law. Contact us today to schedule a consultation with our team.