Minnesota cannabis agency wants streamlined laws for faster dispensary openings

Minnesota lawmakers should tweak marijuana laws this session to help growers and dispensaries start their businesses faster, the state's Office of Cannabis Management recommended in its initial report to the Legislature this week.

Among several specific changes the agency wants is a temporary license system, particularly for social equity applicants, meaning those harmed directly or indirectly by past criminal enforcement of marijuana laws.

"This strategy would accelerate the timeline, help ensure adequate supply ... and offer first-mover advantage for social equity applicants in support of the 2025 market launch goal," the report stated.

While marijuana became legal to possess and use for adults 21 and older last summer, an extensive rule-making process has kept the cannabis application process from opening until early 2025. Low-dose THC products derived from hemp and cannabis businesses on reservations are filling the gap in the meantime.

The agency predicts the state will need at least 381 dispensaries to meet the requirement that local governments provide at least one retail registration per every 12,500 residents.

To speed up the application process once it begins, the Office of Cannabis Management (OCM) wants to do away with part of the law that requires applicants to have a location secured — and have local government input — before applying.

"Requiring applicants to secure premises and comply with local codes before being considered for a license imposes a significant financial burden," OCM writes. "This is especially true for social equity applicants and small businesses who may invest substantial capital without any assurance of securing a license."

Applicants who meet certain criteria receive extra points toward their license, but the OCM said the current framework lacks "meaningful advantages" and is vulnerable to legal challenges like those that delayed marijuana businesses opening in Detroit.

Setting up a separate license classification for social equity applicants could avoid those challenges, the office wrote. And changing requirements that social equity applicants must be 100% owners of their businesses could allow more to enter the market. Financing for cannabis businesses is hard to come by due to marijuana's continued illegal status at the federal level.

"Learning from other states, a more practical approach is mandating a minimum 51% ownership by social equity applicants, facilitating better capital acquisition," the report said.

Leili Fatehi, a partner at cannabis consulting firm Blunt Strategies who worked closely with lawmakers as they passed Minnesota's marijuana law, applauded the recommendations. She said they "reflect a strong alignment with the values and goals at the heart of the legalization legislation passed last year, launching an efficient, robust and equitable adult-use cannabis program."

"These efforts, coupled with a focus on reducing red tape, highlight a dedication to establishing a well-regulated, inclusive and thriving cannabis industry in Minnesota," Fatehi said. "As the Legislature looks to refine these policies, we're poised to continue leading the nation with the best cannabis laws, balancing speed, efficiency and equity to create a model market."

The OCM also wants to consolidate medical and recreational marijuana licenses for growers and processors, a move that would reduce "burdensome and expensive" regulatory oversight and compliance.

"By reducing costs and inefficiencies for operators, these savings could be passed onto the consumer," OCM said.

Overall, the changes are meant to "reduce the risk of bottlenecks and delay resulting from litigation at either the state or local level and undue financial hardship to applicants" on the way to creating a projected $1.5 billion industry in the state.