Minnesota suburbs puzzle over pot regulations while they wait for state rules

When it comes to regulating cannabis, cities are still pretty green.

Mayors, city councils and city staff are just starting to think about how they will deal with the regulatory and cultural shift that is adult-use cannabis, which will become legal Aug. 1 in Minnesota.

The state Office of Cannabis Management is in its infancy, without even a director yet, much less regulations or model ordinances for cities to follow.

As cities cast about for first steps, a few are passing — or at least talking about — temporary moratoriums on cannabis businesses that will last until state regulations are more fleshed-out and cities have enough time to craft their own rules.

Mankato passed a moratorium lasting up to one year in late May, said City Manager Susan Arntz.

"There are so many unknowns with what the state rules are going to end up becoming," she said. "We are opting to implement a measure ... so that our community has time to kind of work through and make decisions on how they want to handle it."

The city moratoriums don't affect personal use, possession or home-growing of marijuana by people over age 21.

But most cities are still figuring out their next steps.

"Until the Office of Cannabis Management is up and running to have some more details, a lot are just taking the-wait-and-see approach," said Kyle Hartnett, assistant research manager for the League of Minnesota Cities. "City councils are kind of going back to the staff and talking among themselves, seeing what steps they want to take to move forward."

West St. Paul is likely to pass a temporary moratorium — council members will vote on the final reading of an ordinance Monday evening — after its experience regulating the lower-potency THC products legalized in 2022.

Regulating those products was "procedurally, not as smooth as we may have wanted it to go," said Nate Burkett, West St. Paul city manager.

The city passed a moratorium on THC products initially then repealed it when its licensing ordinance took effect early this year.

A cannabis moratorium, he said, buys the city time for more discussion and careful work on city regulations. Burkett said other cities are likely not rushing to pass similar ordinances because they know the state won't be ready to issue retail-sale licenses for at least a couple of months. But he figures many will eventually enact moratoriums.

"I expect that many cities will do the same thing," Burkett said.

In Hopkins, City Attorney Joe Sathe proposed a moratorium on cannabis businesses in the city until Jan. 1, 2025 — the longest moratorium allowed under the state law.

Sathe suggested waiting to approve any cannabis businesses until state regulators get into the weeds of regulation, and craft model ordinances for cities to follow. But council members pushed for a shorter ban, so Hopkins is expected to vote on a shorter moratorium on Tuesday, possibly as brief as 90 days.

South St. Paul city staff are working on the first steps of a moratorium ordinance after discussing the idea last month, and Richfield is set to start talking about local cannabis regulations Tuesday.

Last fall, Richfield passed a yearlong moratorium on businesses selling the lower potency hemp-derived THC products legalized in 2022. Five counties and 72 cities have moratoriums on the products, according to the Public Health Law Center at Mitchell Hamline School of Law. Eight other cities repealed moratoriums after instituting licensing regimes.

The Richfield moratorium was meant to address concerns like how to license and regulate THC sellers, and a worry that locally regulating THC sales — testing potency, making sure no one sold to underage buyers — would be a time-suck for city staff.

Council Member Sean Hayford Oleary, the sole vote against the THC moratorium, said he hoped more-comprehensive state laws and regulations, and a state regulatory body to manage adult-use cannabis, would make cannabis easier for cities to manage than lower-potency THC products have been.

In the meantime, he said, he wondered if Richfield's moratorium was pushing THC businesses to Richfield's neighbors. Bloomington, Edina and Minneapolis are not under moratoriums.

Concern about driving business away is also being discussed in Hopkins. Assistant City Manager Ari Lenz said the city has already started getting inquiries from cannabis businesses about setting up shop.

The council wanted to see city staff draft a shorter waiting period, to show Hopkins is open to dispensaries and other cannabis businesses.

"Those businesses are going to go somewhere," City Council Member Alan Beck said during a council meeting last month. "And there are vacancies on Mainstreet."