With the extensive portfolio of new laws passed during the 2023 Minnesota legislative session, several issues stayed under the radar, including fairly significant changes to Minnesota’s laws regarding lobbyists and lobbying reporting. If your organization is already required to file lobbying disclosure reports, you will be impacted by these changes. Further, due to the expanded scope of the law, if anyone within your organization communicates with any elected official or government entity, you may now be required to file lobbying disclosure reports, regardless of whether you are currently required to file.

Increased Threshold for Required Registration

The Legislature made it easier for individuals to lobby without having to register as a lobbyist. Previously, if a person spent more than $250 of personal funds on lobbying, they were required to register with the Minnesota Campaign Finance Board. Effective January 1, 2024, only those who spend more than $3,000 will need to register..

Local Government Lobbying Greatly Expanded

Previously, communication with local governments was only qualified as lobbying if it was directed at “metropolitan governmental units,” which was defined to include:

• The seven counties within the identified Seven-County Metropolitan Area (Anoka, Carver, Dakota, Hennepin, Ramsey, Scott and Washington counties)
• Cities within those seven counties with a population of more than 50,000 (14 cities)
• Metropolitan Council
• Metropolitan Airports Commission
• Regional Railroad Authority

Beginning on January 1, 2024, this will be expanded to now apply to all “political subdivisions.” According to the Campaign Finance Board, “for the purposes of lobbying, political subdivision means a county, town, city, school district or other municipal corporation or political subdivision of the state authorized by law to enter into contracts.” This will encompass the following:

• All 87 counties in Minnesota
• 853 cities
• 330 school districts
• 1,764 townships
• Regional Railroad Authority
• Soil and Water Conservation Districts
• Water Management Boards
• Hospital Districts
• Any other “political subdivision”

Further, lobbyist principals must register once reaching the $3,000 threshold for official actions spent at any level of political subdivisions, and once that threshold is met, they must register all subsequent clients. Examples of such official actions that have been cited by the Campaign Finance and Public Disclosure Board include:

• Zoning or ordinance changes
• Approval of a housing subdivision
• Liquor license
• “Budget, and so much more”

The expanded scope of lobbying to include all political subdivisions is likely to greatly expand the number of individuals who are required to register as lobbyists, despite the increased $3,000 threshold.

Legislative Action Defined

A definition of “legislative action” has been created in statute and means any of the following:

• The development of prospective legislation, including the development of amendment language to prospective legislation;
• The review, modification, adoption, or rejection by a member of the legislature or an employee of the legislature, if applicable, of any (i) bill, (ii) amendment, (iii) resolution, (iv) confirmation considered by the legislature, or (v) report;
• The development of, in conjunction with a constitutional officer, prospective legislation or a request for support of opposition to introduced legislation; and
• The action of the governor in approving or vetoing any act of the legislature or portion of an act of the legislature.

This had not been defined previously, and this definition comes into play when filing lobbyist reports as described below.

Significant Changes to Lobbyist Reports

Minnesota currently has two types of reports related to lobbying, and both will continue to exist, but with significant changes.

Lobbyist Principal Reports

These reports are filed each March and have previously primarily contained a single dollar amount, rounded to the nearest $20,000, that an entity spent on lobbying and related expenditures. Beginning with the report filed in March 2025, which covers calendar year 2024, this report will now need to include the total lobbying-related expenditures (including lobbyist compensation, paid advertising for grassroots lobbying and other administrative expenses) rounded to the nearest $9,000 for each of these four separate categories:

• Legislative Action (as newly defined)
• Administrative Action
• Public Utilities Commission (PUC)
• Political Subdivisions

Lobbyist Disbursement Reports

Previous lobbyist disbursement reports require reporting on broad categories of issues, as well as a breakdown of associated costs. Beginning in June 2024, however the Campaign Finance Board is creating a completely different report that lobbyists will need to use. The report will no longer require any funding amounts to be reported, but will instead focus on what issue is being lobbied. The specific information required will differ, depending on whether the issue falls within the Legislative Action, Administrative Action, PUC or Political Subdivision categories.

Regarding legislative action, as of now, the Campaign Finance and Public Disclosure Board is estimating that it will have 26 general topics, and within those nearly 700 specific topics, that lobbyists will have to choose from. Lobbyists will be expected to include each of the general topics that they lobby for, along with up to four specific topics within each general topic. If they lobby on more than four specific topics, lobbyists are to choose the ones that are most important to the client. This means that the specific topics being lobbied will be more publicly available than under the previous reporting system.

Administrative action refers to attempting to influence the content or adoption or repeal of administrative rules. Lobbyists will be expected to report each state agency, board and commission that they seek to influence, and further list the draft rule number as assigned by the Revisor of Statutes and the specific subjects that they seek to influence within the rules.

PUC lobbyist reporting requirements are similar, and refer to attempting to influence rate setting, power plant and powerline siting, or granting of a certificate of need. Information to be reported will be the project docket number and the full project name, as provided on the PUC website.

The political subdivision reporting is expected to include a listing of the official actions the lobbyist is trying to influence, along with the specific area of interest for each action. This will be required for each political subdivision that the entity or person lobbies.

Rulemaking Process Beginning

Many questions remain regarding exactly how these various changes will be implemented. The Campaign Finance and Public Disclosure Board is just beginning the process of drafting Administrative Rules, which will provide further clarity on the changes, but if your organization has any questions or wishes to engage in the rulemaking process, please contact us.

The New Standard on Employer Rules and Policies

Last month, the NLRB issued a ruling in the Stericycle case adopting a new legal standard regarding policies surrounding an employee’s right to organize. Under Section 7 of the National Labor Relations Act,  workers have the “right to self-organization, to form, join, or assist labor organizations, to bargain collectively . . . and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection,” including the right to discuss pay and benefits.  The Stericycle decision provides a new framework for determining whether an employer has unlawfully restricted these Section 7 rights through its rules or policies (referred to collectively hereafter as “rules”), and applies to all employers regardless of whether their employees are represented by a union.

Under the new legal standard, if there is a challenge to an employer policy or rule alleging that employee rights under Section 7 have been violated, the General Counsel of the NLRB must show that the rule has a reasonable tendency to chill employees from exercising their Section 7 rights. If that standard is met, then the rule is deemed presumptively unlawful unless the employer is able to show that the challenged rule both advances a legitimate and substantial business interest and that the rule could not be replaced with a more narrowly tailored one. If successful, the rule will instead be found lawful.

One Letter Makes a Big Difference

To meet the “reasonable tendency to chill” standard, the NLRB decided that the  General Counsel is required to prove that an employee “could reasonably interpret the rule to have a coercive meaning” that chills the ability of workers to engage in their Section 7 protected rights. This marks a difference from the previous standard, which considered whether  an employee “would” interpret the rule in this manner, and works to relax the burden to which a rule may be challenged.

In analyzing whether this burden is met, the NLRB considered the following factors: “the specific wording of the rule, the specific industry, and workplace context in which it is maintained, the specific employer interests it may advance, and the specific statutory rights it may infringe.”

“Reasonable” vs. “Economically Dependent”

The NLRB noted that these factors will be viewed from the perspective of an economically dependent, non-lawyer employee, rendering the intent of the employer being immaterial to the analysis. The NLRB then went a step further to state that, even if there is a “contrary, noncoercive” reasonable interpretation of the rule, the rule could still nonetheless be presumptively unlawful under the new standard and ambiguous rules will be construed against the employer. This perspective also marks a change that serves to relax the burden on the employee – under the previous standard, relevant factors were considered from the perspective of a “reasonable” employee.

Employer Recourse

If the rule is determined to be unlawful by the Board, an employer can rebut the presumption of unlawfulness by showing both that the rule advances a legitimate and substantial business interest and that the rule could not be replaced with a more narrowly tailored one. If those two conditions are shown, then the employer’s rule will be upheld. However, the NLRB did not give guidance on how exactly employers can prove that their rules advance a legitimate and substantial business interest, and we anticipate that future challenges and/or case law will help provide guidance on the level of proof required by employers to satisfy this standard.

As a result of the changes to the legal standard under the Stericycle decision, the General Counsel now has a much lower burden to invalidate a challenged work rule or policy.

Next Steps for Employers

As a result of the decision, all employers should consider revisiting their employee handbooks and policies for compliance with Stericycle. In particular, employers should:

• Review policies and rules from the perspective of an “economically dependent” employee, and decide whether any of them could reasonably be interpreted to chill or prohibit a Section 7 protected right, even if they have not actually been interpreted in this way before.
• If any rules or policies raise any red flags or potential ambiguity, revise the language to be more clear and straightforward to prevent any unintended or problematic interpretations (e.g., explicitly state that “in no event, shall this rule be enforced or construed in such a way as to prohibit or chill employees’ rights to exercise their Section 7 protected rights”).
• Employers may want to consider creating written evidence illustrating how the rule serves an important and substantial business interest, as well as how the rule is narrowly tailored to serve that purpose.
• When drafting new rules or policies, employers should consider this new language in light of the considerations above, as well as any future opinions or decisions clarifying the scope of this standard.

All of our employment and labor attorneys are available to answer your questions about compliance with Stericycle and any other employment and labor questions you may have.

Retailers, manufacturers, and online marketplaces – are you ready to INFORM your customers?  On June 27, 2023, online marketplaces and “high-volume third party sellers” must comply with the new federal statute – the Integrity, Notification, and Fairness in Online Retail Marketplaces for Consumers Act (the “INFORM Consumers Act”).  Designed to combat fraud and the sale of counterfeit goods, the INFORM Consumers Act imposes certain obligations on high-volume third-party sellers and the online marketplaces on which they sell.  The INFORM Consumers Act requires (1) the collection and verification of information and (2) the disclosure of certain information. Continue reading to learn more about whether your business qualifies as a high-volume third-party seller and the obligations imposed.

Are you a high-volume third party seller?

Under the INFORM Consumers Act, online marketplaces are required to collect and verify information from “high-volume third party sellers” which are defined under the Act as participant in online marketplaces that have entered into 200 or more discrete transactions and an aggregate of $5,000 or more in gross revenues in any continuous 12-month period within the prior 24 months (a “high-volume seller”) on that marketplace.  High-volume third-party sellers include manufacturers and retailers that sell on online marketplaces in addition to their own websites or bricks-and-mortar location.  If you are a high-volume third-party seller, the online marketplace must collect certain information from you.

What does the online marketplace need to collect?

The online marketplace must collect and verify the following information from the high-volume seller: (1) bank account information; (2) contact information, including a working email and phone number; and (3) tax identification number. The information must be certified annually by each high-volume third-party seller. If the high-volume third-party seller does not provide or certify the information, then the online marketplace must suspend any future sales activity.

The online marketplace must verify the information within 10 days.  If the information is not verified, then the seller’s account will be suspended.

What information must be disclosed?

If you are a high-volume third-party seller with an aggregate total of $20,000 or more in annual revenue in an online marketplace, then you have additional information disclosure requirements.  These high-volume third-party sellers must disclose the following information the clearly and conspicuously (a) on the product the product listing page, or (b) in the order confirmation or other document made to the consumer after the purchase is final:

1. the full name of the seller;
2. the principal physical address of the seller;
3. the contact information for the seller “to allow for the direct, unhindered communication” with the high-volume third-party sellers including:
   1. a current, working phone number;
   2. a current, working email address; or
   3. other means of direct election messaging; and
4. whether the seller uses a different business to supply the product that is being purchased.

Failure to comply can be expensive.  For manufacturers and retailers, violations can mean the suspension of your account and lost sales.  For online marketplaces, a violation can subject the marketplace to enforcement action by the Federal Trade Commission or an action by a state attorney general.

What does this mean for manufacturers and retailers?

In short, if you are a high-volume third-party seller on an online marketplace, then you will have some compliance obligations.  A high-volume third-party seller with more than $5,000 in gross revenue but less than $20,000 will only have information collection obligations; those with more than $20,000 per year in gross revenue on the marketplace  will have additional disclosure obligations.  Businesses may also have to update product listing pages or online marketplace “storefronts.”  While the information collection and disclosure obligations may come with certain expenses and costs, there is a benefit to manufacturers and retailers.  Brands and retailers will have more transparency regarding certain sellers and may help streamline the enforcement of unauthorized reseller policies.  The INFORM Consumers Act is designed to help protect consumers from fraud and counterfeit goods, but  it will also help manufacturers and retailers protect their brands and legitimate goods and sales.  To further combat unauthorized resellers, manufacturers and retailers may report false or misleading seller information in an attempt to remove anonymous unauthorized resellers.

Session has wrapped!

The 2023 legislative session concluded with time to spare, adjourning just after 10:00 pm on Monday night. This will be the final Top 5 of the year, but don’t fret: next session will be here before we know it on February 12, 2024. After passing the suite of budget bills this year—plus an overdue bonding package—next session, legislators will be tasked with compiling another bonding bill and making changes to policy.

Workforce

Amid a struggling labor market and a surge of new energy for workers’ rights and labor unions, the Minnesota Legislature passed a sweeping set of new regulations. Among others, the new laws include:

• Paid Family and Medical Leave, a state-run program funded from payroll taxes paid by both employers and employees, will give workers up to 20 weeks per year to recover from illness or care for an ailing family member.
• Earned Sick and Safe Time requires employers to offer employees a minimum of 48 hours of paid leave per year, accruing at a rate of one hour per 30 hours worked. Workers can use the time as traditional sick time or to care for family members.
• A ban on non-compete clauses for all workers (learn more on this from our Employment team here), as well as a ban on no-poach agreements made between fast food companies, and on captive audience meetings.
• Specific protections for workers in key industries including meat packing, warehousing, and construction; among these are wage theft protections for subcontractors.

Taxes

A bill that delivers $3 billion in tax cuts to Minnesotans also raises taxes by $1 billion. Means-testing won out this session: Minnesota households that made less than $150,000 in the 2021 tax year can look forward to a $260-per-person direct payment, while social security recipients making under $100,000 per year and families who make less than $35,000 per year and have children will see additional, substantial tax cuts. Minnesota’s highest earners and investors will now be subject to new taxes on capital gain earnings over $1 million, investment profits, and dividends. Corporate taxes for multinationals will also increase with a change to further bring the state into conformity with the federal tax code.

Bonding

At nearly the last minute possible, a deal on a bonding bill came together between DFL and GOP leaders. Republicans agreed on a package that spends $1.1 billion in cash and $1.5 billion in general obligation bonds, plus $300 million to use for struggling nursing homes. While bonding bills are typically not considered during a budget year, it has been several years since leaders were able to agree on a package. With the backlog of infrastructure projects cleared, legislators are poised to examine a new set of projects during next year’s session.

What’s left for next year?

A proposal to legalize sports betting stalled this session, as tribal leaders and Minnesota’s racetracks failed to reach an agreement on the amount of funding allocated to racetracks before the session wrapped. A proposal to ratify the Equal Rights Amendment to the Constitution failed to clear its final hurdle as well, with leaders signaling that an amendment of this type should include the right to an abortion. Finally, a bill passed by both chambers that would institute an array of worker protections for rideshare drivers, who are classified as independent contractors, was vetoed by Governor Tim Walz on Thursday. In his first veto in four years, the Governor coupled the action with an executive order to form a task force aimed at studying workplace protections for these drivers. All three of these proposals are expected to see further action next session, which begins February 12, 2024.

Our Legislative Top 5 will return for the 2024 session!

Minnesota Governor Tim Walz is poised to sign an omnibus bill recently passed by the Minnesota state legislature, which includes provisions that would broadly ban non-competition agreements throughout Minnesota beginning on July 1, 2023. Once the bill is signed into law, Minnesota will become the fourth state in the country to have a similar ban on non-competition agreements, joining California, North Dakota and Oklahoma.

What types of agreements are included?

The bill’s prohibition covers all standard non-competition agreements that restrict an employee from working for a competitor or working in a certain region for a specified time. The bill defines  “covenant not to compete” as an agreement that prohibits a former employee, after termination of employment, from:

• working in a specified geographic area;
• working for another employer for a specified period of time; or
• working for another employer in a similar area of work.

The bill also applies to any individual who performs services for an employer including both employees and independent contractors.

What types of agreements are excluded?

The new law will be broad in scope, but does provide two exceptions:

• The ban does not apply to non-competition agreements agreed upon during the sale of a business within a reasonable geographic area and during a reasonable length of time.
• The ban also does not apply to non-competition agreements agreed upon in anticipation of the dissolution of a business. This means that partners, members, or shareholders of a business can agree that all or any number of the parties will not carry on a similar business within a reasonable geographic area and for a reasonable length of time.

In addition to the above exceptions, the Legislature included language stating that this law will not apply to non-disclosure agreements, or agreements designed to protect trade secrets or confidential information.  Covenants not to compete would not include non-solicitation agreements, which are broadly defined as agreements restricting the ability to use client or contact lists, or solicit customers of the employer. This means that there will still be ways that businesses can protect themselves against unfair competition from former employees. These provisions are likely to be the focus of future disputes between employers and employees/contractors. Employers should pay close attention to the language they use to protect their trade secrets and other critical business information.

What about forum selection clauses?

The bill bans the use of a state forum clause that would require an employee to agree to a different state as either (i) the forum of a dispute or (ii) as the choice of law as a “condition of employment.” As a result, employers will not be able to avoid Minnesota’s ban on non-competes by simply using a different forum for its Minnesota employees/contractors.  In light of this, all employers should review their current contracts for forum clauses and also review template agreements that may currently provide for a different state’s forum (for Minnesota employees/contractors).

When does the law go into effect?

The law will apply to all agreements effective on or after July 1, 2023. The law will not be retroactive, which means current employment agreements that contain non-competition agreements will still be valid.

What are the consequences if an agreement with an employee contains a non-compete clause?

After July 1, 2023, any “covenant not to compete” entered into with an employee working in Minnesota will be void and unenforceable. However, the law will not invalidate the entire contract that contains a non-compete clause; only the impermissible clause will be invalidated. Nonetheless, employers should carefully review any employment agreements moving forward, because the bill explicitly provides that the employer may be liable for reasonable attorneys’ fees incurred by an employee who enforces their rights under the law.

Suggested next steps

• Review your existing non-competition agreements. These agreements are still in effect, but may be harder to enforce given the current state of the law in Minnesota. Also review the language of any non-disclosure, non-solicitation, and confidentiality agreements, as those provisions are likely to be on more solid footing before a court.
• Revisit your policies and procedures related to the protection of trade secret information, to ensure you have strong measures in place to protect valuable trade secret information.
• Review your template documents for employment and independent contractor agreements, and look to strengthen language in the non-disclosure, non-solicitation, and confidentiality provisions.
• Review template documents and change any forum selection clauses that require a non-Minnesota forum for Minnesota employees/contractors.
• Review your template documents to remove non-competition language and provisions for Minnesota employees and independent contractors.

The Minnesota Legislature has passed legislation legalizing adult recreational cannabis use. The bill has been approved by both the House and Senate, and has been sent to the Governor’s desk for approval. This is a mere formality as Governor Walz has pledged to sign the bill into law.

Generally speaking, the law permits recreational cannabis[1] use for adults age 21 and older beginning August 1, 2023. It will no longer be a crime for Minnesotans to have up to two pounds of cannabis at their home and transport two ounces while in public. The law allows individuals to grow up to eight flowering plants—with no more than four being mature—at a single residence without a state license. The law also creates a regulatory framework to license businesses to cultivate, manufacture and sell cannabis at retail dispensaries.

With cannabis use and possession becoming legal beginning August 1, 2023, Minnesota employers need to take action to review their drug and alcohol testing policies by that date. Below are answers to many of the questions frequently asked by Minnesota employers about this new law. These questions and answers are applicable to employers who are not regulated by federal contractor or federal drug testing requirements, or Federal Department of Transportation requirements, as marijuana is still illegal under federal law.

Question: Can employees use cannabis at work?

Answer: No.  Employers are not required to permit employee use, possession, or distribution of cannabis products at the workplace. Employers may also prohibit being under the influence at work. These requirements should be in the employer’s policies and the policy should specifically state that being under the influence of cannabis is not permitted. Simply prohibiting “drugs”  or referring to “drug testing” will no longer suffice, because the new law removes cannabis products from the definition of “drug” in certain portions of the statute.

Furthermore, adults may only use cannabis for recreational purposes in certain locations. Public use is limited to businesses or events licensed for on-site consumption. Smoking cannabis products is prohibited in public places.

Question: Can I discipline employees for using cannabis at work?

Answer: Yes, if any of the following requirements are met:

1. As a result of consuming a cannabis or hemp-derived product, the employee does not possess the clearness of intellect and control of self that the employee otherwise would have; or
2. If testing verifies the presence of cannabis flower, a cannabis product, a lower-potency hemp edible, or a hemp-derived consumer product following a confirmatory retest; or
3. If discipline is provided for in the employer’s written work rules, if such work rules meet the minimum requirements of the Minnesota Drug and Alcohol Testing in the Workplace Act (“DATWA”), Minn. Stat. § 181.952.

Employers should review their policies to make sure they meet the minimum requirements of DATWA, which was revised by the new legislation. Managers should also be trained on the employer’s policies and how to document employees suspected of being under the influence of cannabis.

Question: If I learn that an employee uses cannabis outside of work, can I or should I do anything based on that information?

Answer: No. If an employee uses cannabis outside of work hours and off of work premises, then an employer may not lawfully discipline an employee for that behavior. Minnesota’s “Lawful Consumable Products Statute” prohibits employers from disciplining or discriminating against employees or job applicants for their use of lawful products outside of work. The new cannabis law specifically states that cannabis flower, cannabis products, lower-potency hemp edibles, and hemp-derived consumer products are “lawful consumable products.”

Question: Can I test job applicants for cannabis?

Answer: No, unless it is required by state or federal law or there is an exception. This is a change from previous law. The new law prohibits testing job applicants for cannabis as a condition of employment. Going forward, an employer may not refuse to hire a job applicant solely because the applicant’s test results indicate the presence of cannabis.

Exceptions: The new law provides that for certain positions, cannabis is still considered a drug and employers may test applicants for cannabis. The positions are: safety-sensitive positions (as defined by statute); peace officers; firefighters; a position requiring face-to-face care, education, training, supervision, counseling, consultation, or medical assistance to children, vulnerable adults, or healthcare patients; a position requiring a commercial driver’s license or requiring the employee to operate a motor vehicle for which state or federal law requires drug or alcohol testing of the applicant or an employee; any position funded by a federal grant; or any other position for which state or federal law requires testing of a job applicant or an employee for cannabis.

Question: What is a safety-sensitive employee?

Answer: Safety-sensitive is defined by Minnesota statute. “Safety-sensitive position” means a job, including any supervisory or management position, in which an impairment caused by drugs, alcohol, or cannabis usage would threaten the health or safety of any person.

Question: Can I test employees for cannabis?

Answer: It depends. Under the new law’s amendments to DATWA, “cannabis testing” is distinguished from “drug and alcohol testing.” Any test must be done pursuant to an employer’s policy that is compliant with DATWA, and the policy must specifically outline the types of testing an employee may be subject to under the policy.

Reasonable suspicion. After August 1, 2023, employers may test employees for cannabis if the employer has reasonable suspicion that the employee:

1. has violated the employer’s written work rules prohibiting the use, possession, sale, or transfer of drugs, alcohol, or cannabis while the employee is working or on the employer’s premises; or
2. has sustained a personal injury (as statutorily defined) or has caused another employee to sustain a personal injury; or
3. has caused a work-related accident or was operating or helping to operate machinery, equipment or vehicles involved in a work-related accident.

Random testing for certain employees. After August 1, 2023, employers may conduct random cannabis testing of employees if they are employed in safety-sensitive positions, or are professional athletes subject to a collective bargaining agreement.

Treatment program testing. After August 1, 2023, employers may conduct cannabis testing on employees who have been referred by the employer for substance-use disorder treatment or evaluation, or who are participating in a substance use disorder treatment program under an employee benefit plan. If this is the case, the employee may be requested or required to undergo cannabis testing and drug or alcohol testing without prior notice during the evaluation or treatment period and for a period of up to two years following completion of any prescribed substance-use disorder treatment program.

Exceptions. The following positions may still be tested pre-employment, as required by law, or as part of routine physical examination testing during employment: safety-sensitive positions (as defined by statute); peace officers; firefighters; a position requiring face-to-face care, education, training, supervision, counseling, consultation, or medical assistance to children, vulnerable adults, or healthcare patients; a position requiring a commercial driver’s license or requiring the employee to operate a motor vehicle for which state or federal law requires drug or alcohol testing of the applicant or an employee; any position funded by a federal grant; or any other position for which state or federal law requires testing of a job applicant or an employee for cannabis.

Question: Do employers need to test employees for cannabis or other drugs or alcohol?

Answer: Not unless required by other state or federal law. DATWA does not impose a requirement for employers to test employees for drugs, alcohol, or cannabis. Furthermore, employers may forego disciplining or testing specifically for cannabis, drugs, or alcohol and may manage employee performance issues separately. For example, instead of testing or mentioning substance use, an employer may discipline employee behavior, such as using profanity, acting out, or causing damage or accidents.

Question: What about medical cannabis?

Answer: Minnesota’s medical cannabis program is still in place. There will be additional medical cannabis licenses allowed under the new law. It is still unlawful for an employer to discriminate against a person who is enrolled in the medical cannabis program unless the employer would lose a monetary or licensing-related benefit under federal law or regulations. Patients enrolled on the medical cannabis registry may still present their medical cannabis registration verification to their employer in the event the patient tests positive on an employer’s drug or cannabis test. Employers are not required to permit an employee enrolled in the medical cannabis program to be under the influence at work.

Question: Should companies revise their drug and alcohol policies?

Answer: If you have employees in Minnesota, probably. For example, if an employer wants the ability to discipline or test Minnesota employees for use of cannabis at the workplace, policies must be revised to specifically mention “cannabis” rather than simply “drugs.” Depending on the type of testing conducted, other revisions may be required.

Question: What if my company has employees in multiple states?

Answer: Drug, alcohol, and cannabis testing is largely dependent on state law, and your policies should have provisions to meet specific state requirements, if any. Depending on the states covered and the conduct an employer wants to regulate, an employer could have a broad policy applicable to all employees. However, separate state policies may be prudent, depending on the company. Minnesota has one of the strictest employee drug, cannabis, and alcohol testing laws in the country.

Winthrop & Weinstine continues to monitor the situation, and we will provide updates on this topic if Minnesota agencies provide more specific guidance. For more information about employee drug, alcohol, or cannabis policies, please feel free to reach out to any member of our Employment Counseling team.

[1] The Minnesota law references “cannabis flower,” “cannabis product,” “hemp edibles,” and “hemp-derived consumer products,” which will broadly be referred to as “cannabis” in this article.

At long last, Minnesota’s recreational cannabis industry is officially budding. In the early morning hours of May 20, 2023, the Minnesota Senate voted to legalize recreational cannabis by passing a final bill which, once signed by Governor Tim Walz, will operate as the legal framework for Minnesota’s brand-new and heavily regulated recreational cannabis industry. Once the bill is signed into law, Minnesota will become the 23^rd state to legalize marijuana and will set a new market ablaze for a wide variety of potential participants including consumers, cultivators, retailers, processors, and even event organizers and delivery service providers.

Due to limitations in the bill on fully vertically integrated business structures, some integral participants in the new industry will be the companies specializing in the transportation, shipping, and logistics of cannabis. While this will undoubtedly become a lucrative segment of the industry, it will also come with a swath of potential legal hurdles and pitfalls. Here are five considerations every future cannabis transporter should keep in mind as it sparks up its cannabis shipping strategies.

1. Transporter Licensing. One of the 16 different license types authorized by the final bill (H. F. No. 100A) is a cannabis transporter license. The cannabis license application process will be primarily managed by the Office of Cannabis Management (the “Office”), and will impose a wide variety of applicant requirements and procedures prior to the issuance of a transporter license. The Office will consider numerous criteria when making license determinations including general market stability, social equity considerations, security and record-keeping capabilities, business plan and financial strength, industry experience, environmental plans, equipment capabilities, and logistics plans, among others. Accordingly, those aiming to break into cannabis shipping and transportation should be prepared to address and satisfy application requirements that go far beyond simply having an existing transportation business.
2. Limitations on Transporters Holding Other License Types. The final bill also limits other cannabis license types that a cannabis transporter is allowed to hold. Specifically, those who obtain a cannabis transporter license may hold a cannabis wholesaler license, a cannabis delivery service license, and a cannabis event organizer license, but no other cannabis-related licenses. Given these limitations, a decision to apply for and/or hold a transporter license could, in certain situations, result in a company being prohibited from participating in other aspects of the cannabis economy.
3. Authorized Actions of Transporters. The final bill also limits the types of cannabis-related products and materials a licensee is allowed to transport, and the locations and types of businesses that transporters are allowed to ship to and from. Those who obtain a transporter license need to be cautious regarding what products are being transported and  where they are being loaded and delivered.
4. Records and Storage Requirements. The bill also imposes stringent records and storage requirements. Among other requirements, all cannabis transporters need to maintain and carry requisite proof of licensing, as well as all transportation records, logs, chain of custody documents, and financial records for a minimum of 3 years. In addition, cannabis products must be transported in locked and secure storage compartments which, depending on the type of storage, may only be accessed by separate key or combination pad.
5. Delivery, Passenger, and Inspection Restrictions. Finally, the bill imposes additional restraints on the delivery schedules and permitted passengers who may accompany cannabis shipments. All cannabis delivery times and routes must be randomized, which will force transporters to account for added uncertainty in completing shipments. Additionally, the mandated randomized delivery routes must be staffed with a minimum of two employees, and at least one delivery team member must remain in or with the delivery vehicle at all times. To ensure compliance and protect against theft or other foul play, the bill prohibits any person under the age of 21 or who is not employed by the licensed cannabis transporter from entering the transporting vehicle, and states that any cannabis-transporting vehicle may be stopped or inspected at any cannabis business or en route during transportation.

These five legal considerations represent just a small sampling of the statutes and rules that will govern future cannabis transporters in the State of Minnesota. Ultimately, the potential legal hurdles and issues affecting cannabis transporters will expand once the Office begins accepting licensing applications and the recreational cannabis market opens for business. Winthrop & Weinstine boasts a wide array of experienced attorneys who stand at the ready to assist in providing legal services to any person or business who hopes to be a future participant in the budding cannabis industry, whether as a transporter or in any other capacity.

Final Days of Session: What’s Left?

Democrats have now sent all major budget bills to the Governor for signature, with the exception of major packages in transportation, health & human services, taxes, and capital investment. Although Rep. Frank Hornstein (D-Minneapolis) has told media that a new gas tax and a delivery fee (to apply to food delivery and rideshare services) may be included in the transportation package, the conference committee hasn’t met publicly for a week. Leaders have made assurances that the health & human services package has an agreement, but the gargantuan spreadsheet and bill language is still being compiled. Finally, the jury is still out on the direction of a capital investment bill: currently, without a deal between the DFL and GOP, lawmakers are considering a $1.3 billion cash-only proposal. If a deal were to materialize, there is still time to include general obligation bonding in the bill.

Tax Bill

Taxes conference committee members agreed this week on a sweeping package of tax cuts and increases (H.F. 1938). The bill includes a variety of new provisions including:

• A one-time $260 (per filer and dependent, to a maximum of $1,300) direct payment for households making under $150,000 per year
• Child tax credit of $1,750 per dependent, with a gradual phase-out based on income
• Tax relief for Social Security benefit recipients making up to $100,000 jointly per year
• Changing the existing renter’s income tax refund to a credit
• Bringing Minnesota into federal conformity on global intangible low-tax income (GILTI)
• New 4d property tax benefits for affordable housing providers
• Increases in local government aid
• Reinstatement of historic preservation tax credit

Adult-use Recreational Cannabis

Late Thursday night, the House passed the conference committee report for the adult-use recreational cannabis bill (H.F. 100). The Senate is expected to pass it on Friday and send to the Governor for signature. If passed, the bill will decriminalize marijuana possession for personal use on August 1, 2023. Dispensary sales of recreational product would not be available for more than a year while a new state agency, the Office of Cannabis Management, is set up and begins to process license applications.

Four Days, 96 Hours, or 5,760 Minutes

This week marks the final full week of the 2023 legislative session and, as of Friday morning, fewer than 100 hours until session must adjourn. Floor debates this week have centered around lengthy lists of minority caucus amendments and hours of member testimony. In a press conference Thursday with Senate Majority Leader Kari Dziedzic (D-Minneapolis), Speaker Melissa Hortman (D-Brooklyn Park) said leadership would not hesitate to use procedural maneuvers to end unproductive debates and finish their business on time. They may need it: in the final 100 hours, legislators aim to pass three major budget bills, plus a capital investment bill and the adult-use cannabis bill.

Right up Until the End

While some had hoped to make good on a House goal to adjourn by May 18, we have now passed that marker and all signs point to legislators using up all the time available to them. The legislature hasn’t adjourned early in a budget year in decades—indeed, it is more common that they convene a special session. While May 22 is the final day of session, lawmakers may work through the night. They have until 7 am on May 23 to finish their business.

An Early End to Session?

In recent years, the legislature has used up more than its fair share of session days to complete its work, but change may be coming this session. While legislators are not required to adjourn until May 22, the House passed a resolution to adjourn by May 18. Because the Senate did not pass a corresponding resolution, the May 18 deadline is non-binding. However, mark your calendars: the resolution included an indication that legislators will return for the 2024 session on February 12, 2024.

Major Budget Bills Passing

This week, legislators passed conference committee reports for two of the major omnibus budget packages, sending them to the Governor for signature. The agriculture and housing budget bills will be signed into law before session concludes. More than $1 billion will be allocated for housing access and affordability, paid for in part by a 0.25% metro area sales tax, the first-ever sales tax in Minnesota dedicated entirely to funding housing. The agriculture bill includes funding for broadband, soil health, milk, meat processors, and a new grain indemnity fund, as well as policy measures such as new regulations around PFAS in fertilizers.

Paid Family & Medical Leave

The Senate passed its version of the paid family & medical leave legislation—with some key differences from the House’s proposal. A maximum of 20 weeks is allowed under the Senate’s version, while the House caps their proposal at 18 weeks. In a first for this session, both bills passed with the bare minimum of votes. A conference committee begins meeting this week to reconcile differences before session concludes.

Cannabis Joint Conference Committee Convenes

A conference committee convenes for its first meeting this week to take up portions of the bill to legalize adult-use recreational cannabis. Substantial changes are expected to be made in several conference meetings before the bill reaches the floor. However, the bill is widely expected to pass. Cannabis could be decriminalized in Minnesota before the end of the year.

Deal or No Deal? Sports Betting, Guns, and Bonding

While legislators seem to have had little trouble agreeing on major budget bills this session, a handful of other contentious issues have drawn attention. First, amid doubts about whether DFLers in the Senate had the votes to pass controversial gun safety measures, the provisions successfully cleared a conference committee hurdle and are expected to pass a full vote in the coming days. Another bill, which would legalize sports betting, may be back in contention after appearing to stall in the House. Finally, leaders have spent the week trading offers on a long-awaited bonding bill comprising a mixture of general obligation bonds and cash. Because bonding requires a 60% super-majority for passage, this bill is one of the only opportunities for the minority caucuses to negotiate wins for their districts—or gain leverage over members in the majority.

Spring Has Finally Sprung

Both the weather and the pace of the Legislature have spoken: it is officially spring. Lately, the throng of Capitol lobbyists have congregated around near-daily floor sessions and conference committees, with trips to food trucks for lunch in between. Legislators have begun to cloister themselves in closed-door meetings, making for a tricky time for advocates to get face time with decision-makers.

Paid Family & Medical Leave

After a lengthy, sometimes-heated debate stretching into Tuesday evening, the House officially passed its version of Paid Family & Medical Leave. Most notably, an author’s amendment was adopted that tightened the definition of family members for whom care would be allowed under the bill, and lowered the cap from 24 weeks to 18 weeks (except relating to pregnancy). The Senate is likely to vote on the bill early next week—and their version may incorporate additional changes desired by Minnesota’s large employers.

Conference Committees

Conference committees for most major omnibus finance bills have held meetings for bill walkthroughs—some adding time for final public testimony. While some committees have publicly met several times, most are conducting their business by trading offers behind closed doors, as is typical.

Worldwide Tax Reporting Draws Attention

A provision contained in the omnibus tax bill has drawn significant attention this week, as it would be the first of its kind in the nation. The provision for mandatory worldwide combined reporting would require businesses to file a tax return with the state covering all business they do internationally; they would then pay proportional taxes based on Minnesota’s single sales factor. Business groups have suggested the unique proposal would discourage foreign-owned corporations from doing business in the state and could effectively double-tax some.

An Early End to Session?

Rumor has it that the DFL trifecta has set a soft goal of adjourning for the 2023 session a few days early. After enduring several years of unfinished business stretching into special session, many Capitol observers will consider it a victory if the legislative session is over before the May 20^th weekend. Less-controversial budget bills may find conference committee agreement as early as today, while larger and/or more contentious bills are not likely to pass until the final days of the session. If chairs’ negotiations stall, it’s possible that leadership will step in to make decisions in order to get bills across the finish line.