We are now less than one week away from the long-awaited
commencement of Minnesota's adult-use cannabis business
licensing round and prospective applicants are earnestly preparing
to file business license applications as early as next week.
Minnesota's Office of Cannabis Management ("OCM") had
initially kicked off a Social Equity Applicant ("SEA")
license pre-approval process in 2024, but announced in December
that it was ending that pre-approval process and moving forward
with a standard license application cycle launching this month.
This decision followed the commencement of litigation by certain
SEAs that were denied by the OCM in the pre-approval process and
sued based on perceived procedural errors and hurried timelines.
Following the OCM's pivot in December, there is now just one
single license application and lottery process for SEAs and general
applicants.
Although the OCM application portal is not yet open, Minnesota law,
OCM's draft regulations relating to adult-use cannabis
(published in the State Register on January 13, 2025), and
existing guidance shed light on what will be required in order to
submit a "passing" application that would qualify an
applicant for inclusion in the OCM's license lottery (for those
license types subject to numerical caps) to be convened sometime
this Spring. Below we have provided a high-level summary of the key
dates and details for this imminent license application
round.
Key Dates:
- January 30, 2025 - SEA verification window closed.
- February 18, 2025 - OCM license application window opens (SEA and general applicants).
- March 14, 2025 - License application window closes.
- May or June - OCM to hold license lottery.
Available License Types and Endorsements:
- Microbusiness - Can grow, make, sell, and buy
cannabis (including plants and seedlings), lower-potency hemp
edibles, and hemp-derived consumer products. They can also have an
on-site space where customers can use cannabis. Available
endorsements include:
- Cultivation
- Extraction and concentration
- Production of customer (consumer) products
- Retail operations
- On-site consumption
- Edible cannabinoid product handler endorsement
- Mezzobusiness - Can grow, make, sell, and buy
cannabis (including plants and seedlings), lower-potency hemp
edibles, and hemp-derived consumer products. Available endorsements
include:
- Cultivation
- Extraction and concentration
- Production of customer (consumer) products
- Retail operations
- Edible cannabinoid product handler endorsement
- Cannabis cultivator - can grow cannabis plants
from seed to maturity. Cultivators are allowed to harvest, package,
label, and transport fully grown cannabis plants to manufacturers.
They can also package, label, and transport seedlings. Available
endorsements include:
- Medical cannabis cultivation
- Edible cannabinoid product handler endorsement
- Cannabis manufacturer - can process raw
cannabis plants into various products, such as edibles,
concentrates, wax, oils, and tinctures. Manufacturers can buy
cannabis flowers, cannabis products, hemp plant parts, hemp
concentrate, and artificially derived cannabinoids from other
cannabis businesses. They turn these materials into cannabis
products, then package and sell them to other cannabis businesses.
Available endorsements include:
- Medical cannabis processor
- Edible cannabinoid product handler endorsement
- Cannabis retailer - can sell packaged cannabis
products to the general public and medical patients. They can buy
cannabis (including plants and seedlings), lower-potency hemp
edibles, and hemp-derived consumer products from other cannabis
businesses and sell them to customers. Available endorsements
include:
- Medical cannabis retailer
- Edible cannabinoid product handler endorsement
- Cannabis wholesaler - can buy cannabis,
cannabis products, and lower-potency hemp edibles, and hemp-derived
consumer products from cannabis businesses and then sell them to
other cannabis and lower-potency hemp business. They can import
hemp-derived consumer products and lower-potency hemp edibles that
contain hemp concentrate or artificially derived cannabinoids.
Available endorsements include:
- Hemp-derived product importer
- Edible cannabinoid product handler endorsement
- Cannabis transporter - can move cannabis, cannabis products, lower-potency hemp edibles, and hemp-derived consumer products between businesses. No endorsements available.
- Cannabis testing facility - can obtain and test immature cannabis plants and seedlings, cannabis flower, cannabis products, hemp plant parts, hemp concentrate, artificially derived cannabinoids, lower-potency hemp edibles, and hemp-derived consumer products from businesses licensed to produce those items. They ensure these products meet safety standards. No endorsements available.
- Cannabis event organizer - can plan and host cannabis events lasting up to four (4) days, and may allow for the sale of cannabis, lower-potency hemp edibles, and hemp-derived consumer products to customers at events. This is a temporary license that must be applied for per event. No endorsements available.
- Cannabis delivery service - can purchase cannabis, lower-potency hemp edibles, and hemp-derived consumer products from specific cannabis businesses and sell and deliver those products directly to consumers. No endorsements available.
- Lower-potency hemp edible manufacturer - can
produce edibles from hemp. These manufacturers can create, package,
and label lower-potency hemp edibles, and sell them to cannabis
businesses. Available endorsements include:
- Extraction and concentration
- Edible cannabinoid product handler endorsement
- Lower-potency hemp edible retailer - can sell
packaged lower-potency hemp edibles to consumers. Available
endorsements include:
- On-site consumption
- Edible cannabinoid product handler endorsement
- Medical cannabis combination business - can grow medical and adult-use cannabis (subject to law), manufacture medical and adult-use cannabis products, lower-potency hemp edibles, and hemp-derived consumer products; package and label those products; and purchase immature cannabis plants and seedlings, cannabis flower, cannabis products, hemp concentrate, and artificially derived cannabinoids from businesses licensed to sell those products. No endorsements available.
License Limits:
Before July 1, 2026, the OCM may issue up to the maximum number of
licenses identified below:
For social equity licenses:
- Cannabis cultivator licenses – 25.
- Cannabis manufacturer licenses – 12.
- Cannabis retailer licenses – 75.
- Cannabis mezzobusiness licenses – 50.
For general licenses:
- Cannabis cultivator licenses – 25.
- Cannabis manufacturer licenses – 12.
- Cannabis retailer licenses – 75.
- Cannabis mezzobusiness licenses – 50.
Beginning July 1, 2026, the OCM will determine if any additional
licenses should be made available based on market data and
OCM's attendant obligations to ensure that there is a
sufficient supply of cannabis flower and cannabis products to meet
demand, to provide market stability, to ensure there is a
competitive market, and to limit the sale of unregulated cannabis
flower and cannabis products. If additional licenses are to be made
available, those made available to SEAs shall be in equal or
greater number to those made available to general applicants. For
any license types not listed above, OCM may issue as many licenses
as it deems necessary.
Key Application Criteria:
All cannabis business license applicants will be required to submit
biographical/background information and detailed operational
narratives demonstrating that the applicant has the resources and
technical wherewithal to successfully operate a cannabis business.
In terms of biographical/background information, applicants must
submit, among other things: 1) the name, address and date of birth
of the applicant; 2) the disclosure of whether the applicant has
ever filed for bankruptcy; 3) the address and legal property
description of the business, except an applicant is not required to
secure the physical premises at the time of application; 4) a
general description of the location or locations that the applicant
plans to operate; and 5) disclosure of ownership and control
details.
With regard to the latter, the application will require the
identification of any "true party of interest" (as that
term is defined in MN Statutes Section 342.185, subdivision 1,
paragraph (g)), and require each applicant to submit, among other
things:
- The management structure, ownership and control of the applicant (including, for any business applicants, the name of each owner, board member and officer of the company and any parent companies, including each owner's, board member's or officer's percentage ownership interest in the parent company and the cannabis business);
- As applicable, copies of articles of incorporation, bylaws, partnership agreements, operating agreements, or shareholders agreements;
- Copies of promissory notes, security instruments or similar agreements; and \An explanation of the funding sources used to finance the business.
Notably, >an entity or true party of interest may not submit more than one application for any single license type. This limitation does not apply to an individual, business, or entity that holds no more than 10% ownership of the applying business entity. In addition, an entity or true party of interest may submit applications for multiple license types >if it would not result in the applicant being vertically integrated in violation of MN Statutes Chapter 342. The Cannabis License and Endorsement Types Chart published by the OCM specifically identifies which licenses may be held simultaneously. Some examples of licenses that may be held in combination by a single true party of interest are:
- A single cannabis cultivator license and a single cannabis manufacturer license.
- A single cannabis wholesaler license and a single cannabis transporter license.
- A single cannabis wholesaler license and a single cannabis delivery service license.
- A single cannabis transporter license and single cannabis delivery service license.
- A single cannabis wholesaler license, a single transporter license, and a single cannabis delivery service license.
- A single cannabis retailer license and a single cannabis delivery service license.
In addition, applicants must develop and submit, among other things, the following narratives and documents:
- Business plan showing:
- Expected size of the business;
- Anticipated growth;
- Methods of recordkeeping;
- Knowledge and experience of the applicant (and any officer, director, manager, and general partner);
- Environmental plan; and
- Other relevant financial and operational components.
- Security plan showing security monitoring, security equipment and facility maps (if applicable).
- Standard operating procedures for:
- Quality assurance;
- Inventory control, storage and diversion prevention; and
- Accounting and tax compliance.
- Attestation from a bona fide labor organization confirming the applicant has a labor peace agreement.
- Description of any training and education that the applicant will provide to employees of the business.
Curing Deficiencies:
If the OCM receives an application that fails to provide the
required information or pay the applicable application fee, it
shall issue a deficiency notice to the applicant. The applicant may
submit the required information or pay the required application fee
within 14 calendar days from the date of the deficiency
notice.
License Duration, Restrictions on Transfer and Changes in
Location:
All OCM licenses, regardless of whether issued to an SEA or general
applicant are valid for 1-year and must be renewed annually.
Licenses issued to general applicants may be freely transferred
subject to prior written approval of the OCM unless the license
holder has not received a final site inspection. Licenses issued to
SEAs may only be transferred to another SEA for three years after
the date on which the OCM issues the license. Three years after the
date of issuance, a social equity license holder may transfer a
license to any entity, although transfers of any license that was
issued as a social equity license must be reviewed by the Division
of Social Equity and is subject to the prior written approval of
the OCM. In addition, a new license must be obtained whenever: 1)
the form of the licensee's legal business structure converts or
changes to a different type of legal business structure; or 2) the
licensee dissolves; consolidates; reorganizes; undergoes
bankruptcy, insolvency or receivership proceedings; merges with
another legal organization; or assigns all or substantially all of
its assets for the benefit of creditors.
Finally, the OCM is authorized to permit the relocation of a
cannabis license and may adopt requirements for the submission of a
license relocation application and establish standards for the
approval of such applications. Fees for such applications shall not
exceed $250.
Originally published by 13 February 2025
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
