Minnesota Legalizes Cannabis: What Entrepreneurs Need to Know About the New Law
By Krissy Atterholt
May 30, 2023
Minnesota’s adult-use cannabis bill was signed into law by Gov. Tim Walz on May 30, making The North Star State the 23rd to legalize cannabis. Read on to learn more about the law, including who will oversee cannabis regulation, available license types, and licensing considerations.
Who Will Oversee Cannabis Regulation in Minnesota?
Office of Cannabis Management
The Office of Cannabis Management (the Office or OCM) has regulatory authority over the cannabis and hemp consumer industry in Minnesota. OCM is responsible for promoting public health and welfare, eliminating the illicit market, meeting market demands, promoting a craft industry, and prioritizing social equity. OCM will promulgate rules; issue and renew licenses; establish and update standards for testing, packaging, and labeling; impose civil and administrative penalties; establish limits on potency; and perform additional duties required under Minnesota’s Cannabis Legalization Act (the Act). The Office will also work with state departments and agencies in the development and implementation of a rule if that department or agency has expertise or regulatory interest in the subject matter.
Division of Medical Cannabis
Housed in the OCM, the Division of Medical Cannabis (DMC) will operate the medical cannabis program. DMC will be responsible for administering the patient registry for medical cannabis patients. The Act states DMC may oversee the licensing and regulation of medical cannabis businesses, which will be determined by later OCM rulemaking.
Division of Social Equity
The Division of Social Equity (DSE) within the OCM will promote the development, stability, and safety of communities that have experienced a disproportionate, negative impact from cannabis prohibition and usage. It will administer programs to promote economic development, improve social determinants of health, and provide other services and support programs. DSE will also be responsible for awarding CanRenew grants to eligible organizations for investments in communities where long-term residents are eligible to be social-equity applicants. In addition to these duties, it will investigate complaints, facilitate dispute resolutions, and report the status of complaints and social equity in the cannabis industry.
Cannabis Advisory Council
The Cannabis Advisory Council (the Council) will consist of 51 members ranging from industry-relevant state commissioners (or a designee) such as the Commissioner of Agriculture, experts in related areas such as an expert in drug abuse prevention, treatment, and recovery, a substance-use-disorders, and members of federally recognized Tribes. Many members of the Council are to be appointed by the governor. The Council will meet to review national and state cannabis policy, review developments and products in the hemp and cannabis industry, make recommendations to the OCM, and perform other duties as provided by law.
What License Types are Available?
There will be a total of 16 cannabis business licenses, medical cannabis business licenses, and hemp business licenses. OCM application fees, initial license fees, and renewal fees vary among license types. Application fees start at $250 and go up to $10,000.
Individuals seeking retail licensure, including cannabis microbusinesses and mezzobusinesses with retail endorsements, should also expect to pay retailer registration fees from the local unit of government of the locality where they intend to open their establishment.
Minnesota cannabis license types include:
- Cannabis microbusiness
- Cannabis mezzobusiness
- Cannabis cultivator
- Cannabis manufacturer
- Cannabis retailer
- Cannabis wholesaler
- Cannabis transporter
- Cannabis testing facility
- Cannabis event organizer
- Cannabis delivery service
- Lower-potency hemp edible manufacturer
- Lower-potency hemp edible retailer
- Medical cannabis cultivator
- Medical cannabis processors
- Medical cannabis retailer
- Medical cannabis combination business
What are Some License Considerations to Be Aware of?
Ownership Requirements and Disqualifiers
To hold a cannabis or hemp license in Minnesota, an individual or business entity must meet state ownership requirements. If a license holder or applicant is a business entity, every officer, director, manager, and general partner of the entity must also meet all of these requirements. Below are a few key provisions to keep in mind.
To be an applicant or license holder, a business or individual, as applicable, must:
- Be at least 21 years of age
- If the applicant or license holder is a business entity, be incorporated in the state or otherwise formed or organized under Minnesota state law
- Not be employed by OCM or any state agency with authority under the Act
- Not be a licensed peace officer
- Pass the criminal history check
- Have filed any previously required tax returns for a cannabis business
- Have paid and remitted any business taxes and other dues relating to the operation of a cannabis business
- Meet all other requirements under law
Limitations on the Number and Types of Licenses
Office of Cannabis Management Limitations
There are varying limits on the number and type of license types an individual, cooperative, or business can hold. These limitations extend to every member of a cooperative and every director, manager, and general partner of a cannabis business. For example, a cannabis manufacturer licensee may also hold a cannabis cultivator license, a medical-cannabis cultivator license, a medical-cannabis processor license, and a cannabis event organizer license. However, beyond these exceptions, the license holder cannot own or operate any other cannabis or hemp business.
Furthermore, if the license holder is a cooperative or business, none of the cooperative’s members or business’s directors, managers, and general partners may own or operate any other cannabis or hemp business outside the exceptions.
OCM has not set a limit on the number of cannabis manufacturing licenses a person, cooperative, or business can hold but allows for OCM to set a limit, as is true for many license types.
Additionally, OCM cannot issue licenses to a single applicant that would result in the applicant being vertically integrated, unless otherwise provided for by law.
Those interested in seeking a cannabis or hemp business license should also be aware that local governments may limit, by ordinance, cannabis retailer registrations to no fewer than one registration for every 12,500 residents. Additionally, if a county has one active registration per every 12,500 residents, a city or town within that county is not obligated to register a cannabis business.
Local units of government are also granted the authority to place reasonable restrictions on the time, place, and manner of operations of cannabis businesses within their jurisdiction, so long as the restrictions do not prohibit the establishment or operation of the businesses themselves. Local governments may prohibit the operation of a cannabis business within 1,000 feet of a school or 500 feet of a daycare, residential treatment facility, or an attraction with a public park used by minors, including a playground or athletic field. OCM will work with local units of government to develop model ordinances for reasonable restrictions.
Vicente LLP recently hired Minnesota cannabis attorney Jason Tarasek and opened a Minneapolis office. Our team will continue to actively monitor developments in Minnesota’s adult-use cannabis business, medical-cannabis business, and hemp business implementation. Sign up to receive Minnesota cannabis implementation updates from Vicente LLP.
It’s never too early to start preparing for licensing by building your team, forming your business, applying for trademark protection, performing community outreach, finding real estate, and more! Please contact us for assistance in achieving your goals in this new cannabis market.