As the projected launch date for the adult-use market nears, political leaders, state regulators, and the governor's office continue to tweak the cannabis reform legislation.
It's been almost 11 months since the Minnesota State Legislature passed a groundbreaking bill legalizing adult-use cannabis in the Land of 10,000 Lakes. Since then, the path to realizing a fully functional and regulated recreational market has been a tad bit bumpy.
Barely three months after Governor Tim Walz (D), an ardent supporter of the law and the cannabis industry, signed the measure into law, he faced a firestorm of criticism following his ill-fated appointment of Erin Dupree to become the first director of the newly established Office of Cannabis Management.
One day after Walz announced Dupree as the new director, she was forced to resign abruptly following an MPR News-APM Reports investigation. The investigation discovered that Dupree's hemp business, Loonacy Cannabis Co., allegedly sold products that exceeded state THC potency limits. Investigators also found that she owed large sums to former business associates and employees and had amassed tens of thousands of dollars in federal tax liens.
However, Walz's misstep in appointing Dupree is not the only hiccup encountered by lawmakers, state health officials, and the governor's office since the bill's passage. Licensing rules, social equity concerns, and how to handle the economically robust legal hemp industry are just a few of the other issues causing concern for supporters of and potential businesses tied to the burgeoning recreational cannabis market sector.
To address those issues and maintain the statute's self-imposed deadline for a Spring 2025 launch, the bill's initial sponsors and other high-profile proponents of legal marijuana have introduced their legislative plans for "modifying" the law this week. Sensitive to the notion that the legalization measure requires "fixing," Sen. Lindsey Port (Burnsville-DFL), the lead sponsor for the bill in the Senate, pushed back on the criticism of the new law and its alleged problems.
"As I said many times last year, it won't be the last time the Legislature hears a cannabis bill. Prohibition of alcohol ended nearly 100 years ago, and we still have a liquor bill nearly every year," Port said.
"As I said many times last year, it won't be the last time the Legislature hears a cannabis bill. Prohibition of alcohol ended nearly 100 years ago, and we still have a liquor bill nearly every year."
- MN State Senator Lindsey Port (DFL)
Both Sen. Port and Rep. Zack Stephenson (DFL-Coon Rapids), the bill's House sponsor, have stated they intend to introduce a comprehensive omnibus cannabis bill containing all of the proposed modifications in one package.
In anticipation of that bill, the Office of Cannabis Management (OCM), still headed by interim director Charlene Briner, introduced a 100-page proposal (Senate File 4782/House File 4757) as a stage setter for the more extensive and detailed measure teased by Port and Stephenson this past week.
The substantial list of changes includes:
- Adjusting the distribution method for social equity licenses.
- Modifying the ownership ratios for those license holders.
- Placing the hemp-derived product market under the regulatory purview of the OCM sooner than initially suggested.
- Putting numerical caps on each license type rather than allowing the OCM to decide.
Most of the suggested changes are viewed as a means to achieving the exact launch date outlined by the original HF 100 but with a much lower risk of potential litigation.
One of the main issues heavily targeted under the myriad of OCM proposals is a plan to replace the points-driven system for distributing licenses to enter the recreational market with what the agency characterizes as a "vetted lottery" system, with multiple lotteries.
Under this tiered system, only those applicants who meet specific social equity criteria and demonstrate the ability and knowledge to run a business will be allowed to enter the first lottery. After the initial wave of licenses is guaranteed, other applicants can enter a different lottery later for the remaining licenses.
According to interim director Charlene Briner, this proposed lottery would eliminate the potential of subjective judgment calls by OCM staff that could open the door to future litigation. Briner contends that the points system, outlined in the current law, would most likely favor the "well-capitalized and politically savvy," exposing the state to lawsuits that could significantly delay the launch of retail sales next Spring.
However, not all industry advocates and stakeholders are pleased with the proposed changes. One of those individuals opposed to the OCM modifications is John Bartee, president of the Cannabis Retailers and Manufacturers Association of Minnesota. What Briner and her colleagues view as a path toward enhancing opportunities for potential social equity applicants, Bartee sees as a hostile and threatening act against those same individuals.
"The proposed lottery system is a cause for alarm from our members who have worked the last ten months to prepare for a merit-based scoring system," Bartee said while testifying before the State Legislature last week. He believes large multi-state operators (MSOs) will be encouraged to submit more applications, or what he described as "more tickets to play," to increase their odds of securing licenses.
"The proposed lottery system is a cause for alarm from our members who have worked the last ten months to prepare for a merit-based scoring system."
- John Bartee, President-Cannabis Retailers and Manufacturers Assoc. of Minnesota
Still, other social equity activists fear that changing the ownership ratios from the current law's requirement of 100% investment by social equity applicants to 65% could expose those individuals to opportunistic financial predators.
Calandra Revering, founder of the Minnesota Association of Black Cannabis Professionals, said the lottery and change in ownership percentages "has created a path for multi-state operators to come in and expand their footprint in Minnesota." According to Revering, other states have allowed big businesses to partner with social equity applicants to garner licenses, only to see those MSOs quickly force the SE partner from the company a short time later.
"As one of my colleagues who has opened cannabis operations in other states told me, this is called Rent a Minority," and it is on its way to Minnesota thanks to OCM's proposal, she said.
"As one of my colleagues who has opened cannabis operations in other states told me, this is called Rent a Minority."
- Calandra Revering, Founder of the MN Assoc. of Black Cannabis Professionals
There is no perfect system for rolling out a successful launch of a brand-new industry so heavily coveted by thousands of would-be marijuana millionaires. The promise of such dazzling financial returns from one of the planet's fastest-growing and most lucrative markets is bound to have imperfect moments and some not-so-savory characters maneuvering to snatch their piece of the pie.
However, tweaks, changes, modifications, or whatever word politicians use are necessary when trying to accomplish such a daunting and vital task. Hopefully, all perspectives will be heard and incorporated into the process. Regardless, the market will launch next Spring, and Minnesotans will be able to buy their weed.
