Minnesota could soon launch its legal marijuana market. Here’s what happens next.

The approval of cannabis regulations this month was a key milestone on the road to the long-awaited launch of the state’s legal marijuana market. Office of Cannabis Management Interim Director Eric Taubel sat down with the Minnesota Star Tribune this week to lay out where things stand right now, what still needs to happen and how his agency is approaching the licensing of pot businesses.

Administrative Law Judge Eric Lipman’s approval of the rules that will govern the state’s legal marijuana industry on April 2 was one of the final major hurdles the OCM needed to clear before it can begin licensing cannabis businesses in Minnesota.

The regulations are set to be published in the state register on Monday, according to OCM spokesman Josh Collins. Once that happens, the rules take effect and the OCM can start issuing business licenses, though that likely won’t happen immediately.

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The OCM provided a flow chart that lays out the licensing process, from application to final licensure.

The OCM has received more than 3,500 applications for cannabis business licenses so far, including social equity and general applicants. Social equity licenses are intended to help veterans, individuals who have been harmed by cannabis prohibition and those living in areas of high poverty enter the legal cannabis industry.

The OCM last fall canceled a social equity license preapproval lottery, which would have allowed successful applicants to proceed with the work of setting up their businesses and allowed those seeking licenses that allow cultivation to start growing, after several lawsuits were filed by applicants who alleged they were unfairly denied entry.

Cannabis business licenses fall into two buckets: license types that are limited in number by law, such as cultivator, manufacturer and retailer licenses; and those that are unlimited, including microbusiness, testing facility and medical cannabis combination business licenses.

Lotteries are expected to be held later this spring to award capped license types, while applicants for uncapped license types who meet minimum requirements can proceed with the licensing process without entering a lottery once rules are in place.

Before they can open, licensed businesses must secure “labor peace agreements” with unions, undergo background checks and ensure they’re in compliance with local zoning ordinances. They also must pass a pre-opening inspection by the OCM.

Applications received this year are being reviewed in stages to best facilitate the launch of the market, Taubel said. Half of the 30 OCM permanent and temporary employees working on licensing are focused on uncapped license types, with the other half are dedicated to capped categories.

For uncapped licenses, reviewing applications for testing facility licenses is the highest priority, followed by microbusinesses and medical cannabis combination business licenses, both of which allow the holder to grow, process and sell cannabis products.

Microbusinesses will be allowed to cultivate on a relatively small scale and operate one retail store. Medical cannabis combination businesses will be permitted to grow on a much larger scale and operate one store per congressional district, serving both the medical and adult-use markets.

Delivery, transporter and wholesaler licenses will be reviewed last among capped license categories.

Reviewing applications for cultivator, manufacturer, and mezzobusiness licenses {similar to microbusinesses but at a larger scale) are the highest priorities for capped license types. Because cannabis retailers are the final stop in the supply chain, those license applications will be reviewed last.

The OCM expects to finish reviewing new applications for the highest-priority capped license types by next week, Taubel said.

Ramsey County District Judge Stephen Smith on Friday sided with a group of applicants who were admitted to the canceled social equity preapproval lottery; he ordered the OCM to either immediately conduct that lottery or appear in court April 21 to explain why they didn’t. Taubel said in a statement Sunday that the OCM will seek expedited dismissal of the order. If Smith again orders the OCM to hold the lottery after that hearing, Taubel said the OCM will comply. For now, the agency is focusing on the new social equity and general lotteries later this spring to award full licenses, rather than preapproval.

Applicants who were granted entry into the canceled preapproval lottery are automatically entered into the upcoming license lotteries. Additionally, many social equity applicants who were initially rejected from the preapproval lottery were given an opportunity to fix problems with their applications. About 80% of those applicants are also now approved for the lotteries this spring.

Taubel said he envisions roughly six lotteries to be held within about a week in late May or early June. First will be three separate social equity lotteries for cultivator, manufacturer and mezzobusiness licenses, followed by three general lotteries for those license types. Additional lotteries for retailer licenses are likely to be held within weeks after the first round of lotteries, Collins said.

Applicants who do not win a license in the social equity lotteries will also be included in the general lotteries.

More than half of all applicants are seeking the uncapped microbusiness license. There are nearly 200 social equity microbusiness applicants who were approved to enter the canceled preapproval lottery. These applicants, and any others who have been approved for uncapped license types, will be able to move forward in the licensing process once rules are in place. When these businesses have completed all of their requirements and passed a pre-opening inspection from the OCM, they will be licensed and can open their doors.

Five of Minnesota’s 11 tribal nations have already opened legal marijuana businesses on tribal lands. The governor’s office is negotiating cannabis compacts with 10 tribes. Each tribe must negotiate its own compact with the state. A draft of one such compact that was obtained by the Star Tribune in February would allow tribes to license up to five retail marijuana stores outside of tribal lands, as well as cultivation facilities with a total of up to 30,000 square feet of plants.

Taubel said the first couple of compacts are in the final stages before approval. Once a compact is in place, a tribal business can open outside of tribal lands immediately. White Earth Nation’s cannabis business, Waabigwan Mashkiki, expects to open its first off-reservation dispensary in Moorhead pretty quickly once the tribe’s compact is in place. It plans to open another store in St. Cloud soon as well.

Taubel estimated that the best-case scenario for issuing cannabis business licenses to applicants that have met all of their requirements and are ready to begin operating would be roughly 30 days after rules are in place. He said he believes the first state-licensed businesses and tribally owned off-reservation stores are likely to start operating around the same time.

Of course, state-licensed cultivators will need to grow cannabis before it can be processed, packaged and sold. It will likely be several months before these businesses can grow, test and package a substantial supply of marijuana. Tribal businesses are expected to help fill that gap by supplying their products to state-licensed businesses, but demand is still likely to exceed supply for some time.

Minnesota’s two medical cannabis suppliers, Green Thumb Industries, which operates the Rise chain of dispensaries, and Vireo Health, owner of the Green Goods chain, are likely to be among the first state-licensed businesses to begin selling adult-use cannabis under new medical cannabis combination business licenses.

They will be permitted to sell a portion of their existing medical cannabis stock to adult-use customers, Taubel said. Going forward, they will be required to grow distinct supplies of adult-use and medical cannabis products, which must be kept separate throughout the entire supply chain until they are sold.

Ryan Faircloth of the Minnesota Star Tribune contributed to this article.