OCM Proposed Bill - Some Surprises!

OCM Proposed Bill - Some…

By Jen Randolph Reise, Head of Business and Cannabis Law

TL;DR: It’s just proposed at this point, but MN-OCM’s long-awaited 2024 bill proposes the changes OCM previewed in January’s reports to the Legislature, as well as some actual numbers for a proposed round of temporary licenses for social equity applicants, tweaks to the social equity applicant definition, and caps on license types generally – including NO cap on microlicenses, which is great news for Minnesota entrepreneurs.

What is the OCM's Proposed Bill?

On March 6, we finally got to see MN-OCM's proposed bill, filed as SF No. 4782.

It's 101 pages but a lot of it is conforming changes. Here's the most interesting bits:

1) More Details on The Proposed Temporary License Round, Including for The First Time a Number of Licenses OCM Proposes to Issue in That Round.

OCM proposes to issue temporary licenses to social equity applicants ONLY, and these would NOT allow licensees to grow or handle cannabis any earlier than the general licensing rounds.

Instead, they would allow social equity licensees to "prepare for business operations" by acquiring their site, getting zoning / planning approval from local government, and raising capital.

These temporary licenses would be convertible into a full license as long as recipients were not disqualified by failing to make required filings or various bad acts and meet applicable zoning and land use laws.

They are proposing to grant this many temporary licenses in July:

  1. cannabis microbusiness licenses, 100;
  2. cannabis mezzobusiness licenses, 11;
  3. cannabis cultivator licenses, 13;
  4. cannabis manufacturer licenses, six;
  5. cannabis retailer licenses, 50;
  6. cannabis wholesaler licenses, 20;
  7. cannabis transporter licenses, 20;
  8. cannabis testing facility licenses, 25;
  9. cannabis event organizer licenses, ten; and
  10. cannabis delivery service licenses, ten.

See Sec. 37 of SF No. 4782 (line #s 34.28-39.11)

2) Changes to The Definition of Social Equity Applicant

This proposed change would affect prongs 2 and 4 of HF100's definition of social equity applicant, below:

  1. You or a close family member were convicted of possession or sale of cannabis prior to May 1, 2023 [note: this could be in any state, or federal, as I read it];
  2. All military veterans qualify;
  3. You have been a resident for 5+ years of an area that meets certain standards for poverty or disproportionate enforcement of drug laws; or
  4. The broad "emerging farmer" term is removed; instead, you are "currently a farmer or an aspiring cannabis farmer who faces barriers to education or employment".

Also, an entity qualifies as a social equity applicant if 65% of its equity is held by social equity applicants (as OCM has previously proposed)

See Sec. 44, SF No. 4782 (line #s 46.21 - 47.20)

3) License Process: Caps, Lottery System

Finally, the draft shifts the entire licensing process to an application plus lottery system rather than a points system. It also provides for caps on the number of licenses in the various categories, but with NO CAP for micro licenses.

Here's the maximum number of licenses they propose granting:

  1. cultivator licenses, 25;
  2. product manufacturer licenses, 12;
  3. retailer licenses, 100; and
  4. cannabis mezzobusiness licenses, 22.

See Sec. 45, SF No. 4782 (line #s 47.21 - 50.6)

Takeaways on the OCM's Proposed Bill

Remember, this is just proposed legislation. It is not yet law, and can (will?) be edited in the legislative process. That means Minnesotans can (and should) make our voices heard in advocating for parts of this bill that we like and for making changes we want to see.

Social equity applicants should follow closely and start working with their consultant or lawyer to be ready for a July round that is looking somewhat likely.

Finally, no cap on micros in the full 2025 round would mean that all applicants who meet the minimum standards (e.g. a complete application) can get licenses, without the stress of a lottery.  That is great news for many of our clients, and for Minnesota entrepreneurs. 

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