Minnesota legislators finalize cannabis bill that would allow growing to start this year

Aspiring cannabis entrepreneurs who meet social equity criteria could begin growing marijuana later this year — ahead of everyone else — under a bill finalized by Minnesota lawmakers on Wednesday.

The state is also poised to change how it will award cannabis business licenses, shifting from a points-based scoring system for applications to a lottery for qualified applicants.

Those are the topline items in an expansive policy bill that would make numerous changes to Minnesota’s recreational marijuana law. Legislators have sent the bill to the House and Senate for final passage.

“This really is a bill that listened to what the community was saying,” said Sen. Lindsey Port, DFL-Burnsville, during a legislative conference committee meeting Wednesday. She sponsored the cannabis policy bill in the Senate.

The bill paves the way for cultivation to start this year instead of next, ensuring there will be some supply when the retail market opens, while maintaining the law’s social equity focus.

Only social equity applicants — people harmed directly or indirectly by previous criminal enforcement of marijuana laws — would be allowed to start growing cannabis this year. Other aspiring cultivators have to wait until next year, when the state’s Office of Cannabis Management begins issuing licenses to the broader population.

Social equity applicants seeking to cultivate this year would have to be preapproved for a cannabis business license, obtain local zoning approval and abide by the state’s existing medical cannabis cultivation rules. They would not be allowed to manufacture or sell what they grow until licenses are rolled out more broadly next year.

The Office of Cannabis Management would be required to begin accepting applications for license preapprovals no later than July 24, and to close the process by Aug. 12.

The state is still in the process of writing rules for the recreational marijuana industry, which is why legislators chose to leverage the existing medical cannabis cultivation rules to enable earlier growing.

Many stakeholders in the cannabis community had asked legislators to allow any operationally ready business to begin growing this year, not just those who are deemed social equity applicants. They also opposed the shift from a points-based application system to a lottery, citing concerns about gamesmanship and unprepared applicants winning licenses.

Legislators and regulators worked to address some of those concerns, strengthening the lottery’s entry thresholds. They added business ownership disclosure requirements and prohibited applicants from submitting more than one application, to ease worries about large companies gaming the lottery with multiple entries.

“What you see in the bill is a reflection of the very feedback that we got,” said Charlene Briner, interim director of the Office of Cannabis Management. “I think that it is a good reflection of how advocacy can shape and improve sound ideas.”

Some disagreed with the final bill. During the Wednesday conference committee meeting, Rep. Nolan West, R-Blaine, said he thought legislators were making changes they were going to regret. He criticized the lottery system for cannabis business licenses as leaving the new market up to a “luck of the draw.”

“We are setting this market up for failure,” West said. “I think we’re all going to be embarrassed in a couple of years.”

Another change in the bill would allow patients enrolled in Minnesota’s medical marijuana program to designate a caregiver to cultivate up to eight cannabis plants on their behalf. Minnesotans 21 and older are allowed to grow up to eight cannabis plants per residence under the state’s recreational marijuana law.

Sellers of hemp-derived THC products would get more flexibility, including the ability to sell tinctures that use eye-droppers for doses. Bars and breweries would also be able to pour THC beverages without making the customer open it themselves.

”There has been a lot of confusion and growing pains with the current hemp market in the way the statute has been enforced by the Department of Health,” said cannabis industry attorney Carol Moss. “There has been inconsistent enforcement. A lot of people are frustrated.”

Under the bill, the Office of Cannabis Management would take over hemp-derived regulations and enforcement on July 1.

Kurtis Hanna, a longtime cannabis lobbyist in Minnesota, said he thinks legislators struck a good balance between what was wanted by advocates and the cannabis office.

“Not everyone gets exactly what they want, but I think it was a good compromise in the end,” Hanna said. “I think we’re going to see a much smoother rollout, earlier licensing than what was first anticipated.”

Staff writer Brooks Johnson contributed to this story.