Last week, the Minnesota Office of Cannabis Management (“OCM”) issued its annual report to the Legislature for 2024. When HF100 was signed into law last Spring by Governor Tim Walz, Minnesota became the twenty-third state in the nation to legalize marijuana for adult recreational use. Since that time, however, there have been more questions than answers with respect to what Minnesota’s new cannabis market will actually look like, or when it will come online. This OCM report provides the first—albeit high-level—answers to some of those questions.  OCM’s report, which “offers recommendations from the Office to ensure the effective rollout of Minnesota’s regulated adult-use cannabis program,” includes the following key take-aways:

  • The report emphasizes OCM’s desire to strengthen the social equity components of the current legislation in order to “help ensure social equity applicants have improved access to the capital necessary to begin businesses and build generational wealth.” To achieve this goal, OCM recommends the following actions:
    • Replace the current point-system (and corresponding point-bonus for social equity applicants) with an entirely new social equity license classification, presumably to ensure that social equity applicants are guaranteed a meaningful percentage of cannabis licenses.
    • Provide a temporal advantage to social equity applicants by allowing them to enter the market before other license-holders. OCM further suggests that temporary licenses and temporary regulations could be issued in order to facilitate the early launch of a limited adult-use market.
    • Define social-equity ownership percentages in a manner that enables those business to efficiently raise capital (for instance, requiring less than 100% ownership by individuals who qualify as social equity applicants).
  • The report recommends eliminating the need for applicants to secure a location prior to applying for a license in order to reduce the financial burden of initially pursuing a license.
  • OCM suggests eliminating the requirement that local governments be given the opportunity to provide input regarding specific license applications, suggesting that such a requirement invites unnecessary risk of litigation and licenses that go unused.
  • Finally, OCM suggests eliminating the legislation’s current distinction (and separation) between medical and adult-use cannabis for purposes of cultivation.  In doing so, OCM recognizes that eliminating this arbitrary distinction between a “medical” plant and an “adult-use” plant for cultivation purposes should lead to lower retail prices for consumers and a more streamlined licensing processes.

There is no way of knowing which, if any, of these recommendations the legislature may adopt in the 2024 session. Nonetheless, this report by OCM is informative for market on-lookers. Not only does the report provide the Office’s first public statement regarding perceived shortcomings in the statute it will be enforcing, but it also provides insight into OCM’s own priorities in advance of future rulemaking.

January 22, 2024