Social Equity Applicant Definition: The final bill did NOT add women who own women-owned businesses as a category of social equity applicant, as I had hoped.
However, much of what we knew about Social Equity qualifications remain intact. Entities must be 65% or more owned by social equity applicants in order to qualify, as proposed by OCM earlier this year. And those who have primarily been impacted by the War on Drugs, plus veterans, will still be getting the first crack at getting into the industry.
Just to recap - Social Equity Applicants in Minnesota are:
1. People who have been convicted of marijuana sale or possession, or whose parents, children or spouses have such a conviction, either in Minnesota or elsewhere, prior to May 1st, 2023. Any convictions that occurred after this date unfortunately do not qualify, and in fact *ban* the convicted person from receiving a license.
2. All military veterans qualify;
3. Those who have been a resident for the last five years of one or more subareas that experienced a disproportionately large amount of cannabis enforcement (but we don't have maps for this yet); or
4. Those who have been a resident for the last five years where;
a. the poverty rate was more than 20%;
b. the median family income did not exceed 80% of the statewide or metropolitan area’s median family income;
c. at least 20% of the households receive assistance through SNAP (Supplemental Nutritional Assistance Program); or
d. the population has a high level of vulnerability to toxic substances, as laid out by the CDC; or
5. Those who have participated in the business operation of a farm for at least three years and currently provide the majority of the day-to-day physical labor and management of a farm that grossed between $5000 and $100,000 in the previous year.
Early Cultivation: What is even more exciting for those who qualify for Social Equity is that the current bill allows for Early Cultivation once they receive preapproval, so long as they can provide documentation that they will be in compliance with local zoning ordinances and state fire and building codes as well as other applicable Minnesota rules. This will be huge for the Minnesota Craft Cannabis community and an opportunity for Social Equity applicants to be the first to market!
Application Caps: The new bill also confirms that there will be a maximum number of licenses granted within the social equity round and sets caps for each license type. These numbers are as follows:
(1) cannabis microbusiness licenses, 100;
(2) cannabis mezzobusiness licenses, 25;
(3) cannabis cultivator licenses, 13;
(4) cannabis manufacturer licenses, 6;
(5) cannabis retailer licenses, 38;
(6) cannabis wholesaler licenses, 20;
(7) cannabis transporter licenses, 20;
(8) cannabis testing facility licenses, 50; and
(9) cannabis delivery service licenses, 10
However, in the second round (1Q2025) for regular applications, there will be no such cap on licenses for microbusinesses. Now that this legislative session is over and this has been confirmed, as the kids say, this is “No Cap”.
That means that, as long as a microlicense applicant meets OCM's qualifications to get into the lottery, they will be allowed to open a business. This removes a nice bit of the risk of planning to launch a microbusiness, and is really good for Minnesota craft cannabis.
The licenses that will definitely have a cap in the full round are:
(1) cannabis cultivator licenses, 25;
(2) cannabis manufacturer licenses, 12;
(3) cannabis retailer licenses, 75; and
(4) cannabis mezzobusiness licenses, 50.
True Parties of Interest: Another important requirement, for any applicant, is that there is only allowed to be one “True Party of Interest” per application and/or license. Someone can appear on multiple licenses only if they own less than 10% of the equity. The True Party of Interest rules also require disclosure of who is funding the entity and who owns all entities in the ownership structure.
Caregiver Grow: The new bill also confirms that those who are registered as a designated caregiver, may cultivate up to the maximum of eight plants on behalf of ONE patient, AS WELL as up to eight plants for themselves. As with the application caps we just discussed, while this was expected, it was great news to finally see this portion of the bill solidified!
H/t to Kayla Fearing of Healing Fear Consulting for her tireless advocacy for a caregiver program.
No 5-Hour Rule: Originally, HF100 included a rule, effective March 2025, that said hemp-derived retailers may not serve hemp-derived THC beverages to those who had consumed alcohol within the previous five hours. However, anyone who has worked in the food and beverage industry, or ever been to a bar in general knows that this would be a rule that would be very difficult to comply with. Thankfully, this was amended to something much more reasonable.
The requirement now is that hemp derived beverages cannot be sold or served to a consumer who is an “obviously intoxicated person,” which is much more aligned to how alcohol at bars and restaurants are governed.
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What a roller coaster ride this legislative session has been! While we did not get everything we had hoped for in this bill, there are still much more positives to come out of the session than negatives. And now that we have dates that we can work with, the real fun begins. It is time to start brushing off those business plans and getting ready to start preparing applications! Hooray to Legalized Cannabis in Minnesota!
