Judge orders Minnesota cannabis agency to hold canceled license lottery after all

Minnesota must conduct a preapproval lottery for cannabis business licenses that it abandoned late last year, a Ramsey County judge ruled Friday, saying social equity applicants who qualified for the drawing suffered a “public wrong” because of its cancellation.

“Canceling the lottery effectively casts aside the significant time and investment 648 qualified applicants put into shoring up their capacity to hit the ground running as a licensee,” Judge Stephen Smith wrote in his order.

The state’s Office of Cannabis Management had a legal obligation to conduct the lottery, Smith’s order states, noting the Legislature vested the office with the discretion to do so.

“[The Legislature] understood that allowing disadvantaged groups to build their capacity early on in the licensing process would enhance their ability to operate a successful business,” Smith wrote. “That advantage is lost if there is no social equity lottery.”

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The pre-license lottery is designed to give social equity applicants — which include veterans, residents of high-poverty areas and people negatively affected by cannabis prohibition — a head start in the new industry. It was canceled after lawsuits were filed by applicants who said their applications were unfairly denied.

OCM spokesman Josh Collins said the office is reviewing the judge’s order and declined to comment further.

The state has received more than 3,500 applications for cannabis business licenses so far from social equity and general applicants.

In an interview before the judge’s ruling, Leili Fatehi, a lobbyist and partner with Minneapolis-based consulting firm Blunt Strategies who organized the group of petitioners in the case, said she didn’t think a reinstated pre-approval lottery would slow the OCM down from issuing licenses to the broader public. The OCM is expected to hold its first license lotteries in May or June.

“I think that it can all happen simultaneously,” Fatehi said. “They could do it the day before, they could do it concurrently with the other lotteries.”

Shaun Tetreault, a social equity applicant who qualified for the preapproval lottery with the hopes of opening a cannabis cultivation business in Chisago City, said he felt vindicated by Smith’s order. Tetreault, who is also a petitioner in the case, said he likes his odds of getting a license.

“It’s been an emotionally exhausting process, but now our spirits have been lifted,” Tetreault said.