Minnesota cannabis agency begins accepting license applications for pot businesses

Eighteen months after Minnesota legalized marijuana for adult use, the state’s new cannabis agency began accepting applications Tuesday for the first round of marijuana business licenses. The licenses will be awarded to qualified applicants in lotteries later this spring.

The opening of the application window marks a key milestone on the path toward launching the state’s legal marijuana market for the Office of Cannabis Management (OCM). The agency has faced challenges in recent months — including a change of leadership in January, just weeks after it canceled a planned social equity license preapproval lottery amid a wave of litigation from applicants who alleged they were unfairly disqualified.

“Getting licenses into the hands of business owners is our priority and today marks another step towards opening Minnesota’s cannabis market,” said OCM Interim Director Eric Taubel in a news release. “There is a great deal of interest from business owners who want to get started in this new space. We’re looking forward to working with applicants to take the crucial next steps in becoming licensed so they can make their businesses a reality.”

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The OCM posted application instructions and other resources for prospective cannabis entrepreneurs on its website last week.

Applications for most license types will be accepted until March 14. Applicants who meet requirements for license types that are capped in number — including cultivator, mezzobusiness, manufacturer and retailer licenses — will be entered into one of two lotteries expected to be held in May and June.

The first lottery will be for a limited number of social equity licenses, which are intended to give access to the industry to veterans, individuals who were negatively affected by cannabis prohibition and those who live in areas with high rates of poverty. Only applicants who have already had their social equity status verified will be eligible.

More than 200 social equity applicants who qualified for the canceled preapproval lottery will also be entered. Many of those who were previously rejected will be given an opportunity to fix problems with their applications and be entered into the new lottery as well. All other applicants, as well as qualified social equity applicants who do not receive a license in the first lottery, will be entered into the second.

For uncapped license types, such as microbusiness, delivery service and wholesaler licenses, qualified applicants will be allowed to proceed with the licensing process without entering a lottery. Licenses for event organizers, as well as lower-potency hemp edible manufacturers and retailers, will not be available until later this year.

Businesses will not be able to open until rules governing the legal marijuana market are in place, expected within weeks. Licensed businesses must secure “labor peace agreements” with unions, undergo background studies and ensure they’re in compliance with local zoning ordinances. They also must pass a pre-opening inspection by the OCM.

Another group of nearly 200 social equity applicants who sought cannabis microbusiness licenses — which allow the holder to cultivate, process and sell marijuana products — through the canceled preapproval lottery are now moving forward in the licensing process and could open their businesses sooner than those entering upcoming lotteries.

Cities or counties that intend to open municipal cannabis stores should submit applications during this window, but they will not be subject to a lottery.

Five of Minnesota’s 11 tribal nations are currently operating marijuana businesses on tribal lands. The OCM said earlier this month that it expects the state’s first tribal cannabis compact to be finalized by March, which could allow a tribe to operate up to five retail stores outside reservations.

White Earth Nation’s tribally owned cannabis company Waabigwan Mashkiki is preparing to open an adult-use marijuana dispensary in Moorhead next month and another in St. Cloud later this spring.

Shaun Tetreault, a Watertown resident who qualified for the canceled social equity preapproval lottery and is a plaintiff in a lawsuit against the OCM seeking to reinstate it, said he is proceeding with his application in the new lottery process. But he noted his odds of receiving a license are drastically lower now.

“A lot of the motivation was being one of the first 13 licensed cultivators in Minnesota,” Tetreault said. “Now if they’re opening it up to general licensing and doubling the social equity [applicant pool], it makes it less attractive because there’s more competition.”