By Jen Randolph Reise, Head of Business and Cannabis Law

TL;DR:

• Minnesota's 2024 Legislative session is over and we have the final package of tweaks to the Minnesota Cannabis licensing regime.
• A first licensing round for social equity applicants only, in all categories, will open by July 24.
• We have updated our "best-guess" timeline to reflect this session's changes (see below)

An especially chaotic session of the Minnesota Legislature, is over, and what a relief: The omnibus cannabis bill we were following so closely did pass both the House and Senate this past weekend (May 18-19) and will be signed by the Governor. We finally have more clarity as to what we can expect for cannabis going into the second half of 2024 and into 2025, including more information! Read on for what we got (and didn't get) this year.

Social Equity Application Timing: Concrete Dates

The bill states that OCM must begin accepting Social Equity applications no later than July 24, 2024, with the application period ending on August 12, 2024. That means we have just over two months to get ready to submit applications for those who qualify as social equity applicants.

Those applications will then be submitted to a qualified lottery, meaning that applications must be complete and meet OCM's minimum standards to be entered into the lottery.

Minnesota Cannabis 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 remains 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.

To recap - Social Equity Round 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;
   1. the poverty rate was more than 20%;
   2. the median family income did not exceed 80% of the statewide or metropolitan area’s median family income;
   3. at least 20% of the households receive assistance through SNAP (Supplemental Nutritional Assistance Program); or
   4. 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, OCM has said 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 of the other business. 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 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!

Have more questions? There's lots more that could be said. Here's the full text of the bill. Or, please contact us to discuss how the bill impacts your business and plans, and how North Star Cannabis Law can help you through social equity round licensing and beyond. Call us at 651 384 2782 or contact Nikki@northstarlaw.com.

Thanks to new team member Chris Meehleib for helping with this overview! Chris has his JD/MBA and is helping build the License Builder tool we'll be rolling out shortly to help our clients meet those application qualifications and get into the lottery.