What Minnesota Cannabis Licensees with Retail Operations Can Expect from Local Governments: License Limits, Zoning, Fees, and Compliance Checks

By Krissy Atterholt

Apr 11, 2023

The Minnesota adult-use cannabis legalization bill, Senate File 73 (SF 73), would create 12 adult-use license types. Of those 12, four adult-use license types would allow for retail operations—cannabis microbusiness with a retail operations endorsement, cannabis mezzobusiness with a retail endorsement, cannabis retailer, and lower-potency hemp edible retailer. To better understand the local government’s role in the legalization of cannabis (should SF 73 pass), we broke down some of the afforded powers that local governments would have over adult-use licensees with retail operations.

*Note there are differences in fees, local registration, enforcement, and other retail license requirements between House File 100 and Senate File 73. This article was written using SF 73’s language. Should both bills pass, a bicameral conference committee will resolve any outstanding differences.

Local Restrictions on Minnesota Cannabis Retail Licenses

Although local governments in Minnesota would not be able to flat-out prohibit cannabis retailers from operating in their jurisdiction, they may adopt reasonable restrictions on the time, place, and manner of the operation so long as the restrictions do not prohibit the establishment or operation of cannabis businesses. Reasonable restrictions would include prohibiting cannabis retailers from operating within 500 feet of a school, daycare, or park. Local governments could, by ordinance, also limit the number of licensed cannabis retailers based on their class and population. For example, SF 73 would explicitly allow cities of the first class and counties to limit the number of licensed retailers to one license for every 10,000 population, and cities of the second class to limit to at least four licenses plus one license for every 5,000 over a 45,000 population. Additional limits would exist for cities with smaller populations. It is unclear where the limits of “reasonable” will take local governments in restricting cannabis businesses in their boundaries, but the definition of reasonable will be tested should adult-use cannabis become legal.

Additional Limits on the Number of Retail Licenses

Retailers should also be aware of the general restrictions SF 73 could have on the number of retail locations a licensee may operate and where their businesses could operate. Under SF 73, cannabis microbusinesses would only be allowed to operate a single retail location, whereas cannabis mezzobusinesses would be allowed up to three retail locations. Cannabis retailer licensees, on the other hand, would be allowed to operate up to five retail locations, but no person, cooperative, or business would be allowed to hold a license or own or operate more than one cannabis retail business in one city and three retail businesses in one county. These limitations would effectively serve to counter monopolization in any one area of the state.

Local Registration Fees for Minnesota Cannabis Retailers

In addition to these limitations, adult-use retailers would also face local registration and enforcement. Retailers would be required to register with the city, town, or county they are located in before making retail sales to customers. To obtain one’s first local registration, a cannabis licensee with retail operations must:

  • Have a valid license issued by the State
  • Pay the applicable registration fee to the local unit of government
  • Be found in compliance with the requirements of the State at any preliminary compliance check the local government performs
  • Be current on all property taxes and assessments where the retail establishment is located

The local unit of government may impose an initial retail registration fee of up to half the amount of the initial state license fee of the licensee and a renewal fee of up to half the amount of the licensee’s state renewal. The initial local registration fee would include both the initial fee and the first annual renewal. The next renewal fee would not be imposed by the local government until the time of the second renewal. However, local governments would not be allowed to charge an application fee and could only charge co-located adult-use and medical retailers a single registration fee. Making a sale to a customer without a valid local registration could lead to a civil penalty of up to $2,000 per violation.

Local Enforcement Checks of Cannabis Retailers

Prior to issuing a cannabis retail registration, a local unit of the Minnesota government could conduct a preliminary compliance check to ensure the retailer is in compliance with operational requirements and are within the limits on the types of products that may be sold. Preliminary checks would be optional, but the local government would be required to conduct compliance checks on every cannabis business and hemp business that they have registered in their locality. These units of government would assess compliance with age verification, operations, and limits of consumer products being sold. At least once per calendar year, local governments would be required to conduct unannounced age verification compliance checks, which would involve an underage individual, who is at least 17 years of age but under 21, attempting to purchase cannabis or hemp products under the supervision of law enforcement or an employee of the local government. Retailers should also expect an annual operational and product compliance check.

Under Minnesota SF 73, Cannabis Compliance is Key

SF 73 would allow local governments to keep close tabs on cannabis retailers to ensure active compliance. Licensees who are not able to maintain compliance would face penalties, suspension, and revocation of their local registration and state license. And although these are not the only limitations placed on cannabis licensees with retail operations by local governments, they are very important to keep in mind as one prepares for the legal adult-use market in Minnesota to open.

For more information on what you can do to prepare to open your retail cannabis business, pass local enforcement checks, and operate compliantly from the start, please reach out to Vicente’s Minnesota team.

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