Third in a series on the Minnesota Adult-Use Cannabis Law. Read our first look at the law and our review of local control and moratoriums.

Recreational use of marijuana has been legal in Minnesota for people over the age of 21 since August, but retail sales are still months away.

Before a business can sell or produce cannabis in the state, the entity must first obtain the appropriate licensing from the Office of Cannabis Management.

That, however, is not expected to start until early 2024 (or more likely 2025) because the office is not yet fully operational. Once it is up and running, the office will need to develop regulations before it can start issuing licenses for businesses in the cannabis industry – including cannabis retailers, cultivators, microbusinesses and others.

Below is a summary of both the application process and parameters around Minnesota cannabis licensure.

Application Process

To acquire a license, an applicant must submit all required information to the Office of Cannabis Management. Within 90 days of receiving a completed application and the results of any required criminal history check, the office will issue the appropriate license or send the applicant a notice of rejection listing the reasons why the office denied the application.

Each cannabis license applicant must meet certain minimum requirements to obtain a license. Among other things, an applicant must be at least 21 years old, the entity applicant must be organized in Minnesota and the license holder or related managers cannot be a peace officer or a health care practitioner who certifies qualifying medical conditions.

Application Contents

A license application must include general information, such as the name, address and date of birth of the applicant, a criminal history and fingerprint consent form, and a certification that the applicant will comply with the legislation requirements. The statute requires all “directors, managers, and general partners” of an entity applicant to submit to a criminal background check and fingerprinting.

There are a number of other details a potential applicant must provide, including: a copy of the business’ security plan; a copy of the applicant's business plan showing the expected size of the business, anticipated growth, the methods of record keeping, the knowledge and experience of the applicant and any officers, directors, managers, and general partners of the business; the environmental plan; the address, legal property description and general description of the location that the applicant plans to operate, including the planned square feet of space for cultivation, wholesale and retail, and the applicant’s wastewater, ventilation and electricity plans. This will require applicants to have established their team and operational plans well in advance of operating (and without any guarantee the business will receive a license), which has shown to be economically burdensome in other markets.

For applicants that are business entities, the application must include a disclosure of ownership and control, copies of the applicant’s articles of incorporation, bylaws or partnership agreement, and a list of funding sources for the business. Additionally, if the business is a retail operation, it must register with the city, town or county in which the retail establishment is located. See our other alert regarding local control and other considerations for retail applicants.

Social Equity Applicants

The Office of Cannabis Management will prioritize license applications from social equity applicants. Individuals are considered social equity applicants if they live in low-income areas that have experienced a disproportionate impact from cannabis prohibition, are military veterans who lost honorable status due to a cannabis-related offense or were convicted of cannabis-related offenses before May 1, 2023.

License Transfers

Issued licenses may be transferred subject to the prior written approval of the Office of Cannabis Management. A new license must be obtained when the form of the licensee’s legal business structure changes to a different type of legal business structure, or when the licensee dissolves, consolidates, reorganizes, undergoes bankruptcy, insolvency, or merges with another legal organization. However, licenses issued to social equity applicants may only be transferred to other social equity applicants, and hemp business licenses may not be transferred.

Canopy Limits

All licenses permitted to cultivate cannabis are restricted in how much plant canopy may be grown at any one time. “Plant canopy” is defined as “the surface area within a cultivation facility that is used at any time to cultivate mature, flowering cannabis plants. For multiple tier cultivation, each tier of cultivation surface area contributes to the total plant canopy calculation. Calculation of the area of the plant canopy does not include the surface area within the cultivation facility that is used to cultivate immature cannabis plants and seedlings.” The below chart contains the plant canopy limits for each cultivation license, and how many retailer locations that license may operate. The Office of Cannabis Management may increase (but not decrease) limits consistent with its enumerated goals, such as establishing a viable market to compete with unlicensed sales.

Cannabis License Chart

Below is a chart that outlines the fees associated with each business license type, the statute that contains the specific license application requirements for each license, and the cross-licensing limitations. Additionally, for further information on each type of license, the chart provides the statutory section that applies to each type of license. The text of the bill is not yet available through the Office of the Revisor of Statutes, but the law’s text can be found here.

Keep in mind that any cannabis license must be renewed on an annual basis. Licenses are subject to renewal fees, as set forth below.

Conclusion

Over the coming months, the Office of Cannabis Management will further establish processes and timelines to apply for licenses. It also will develop regulations that outline how and when businesses can participate in Minnesota’s cannabis industry.

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