The Three-Tier Cannabis Wholesaler System : Minnesota’s Big, Fat, Unnecessary Roadblock to Business Growth

Ah, the Three-Tier System—the regulatory equivalent of a traffic jam designed not to protect consumers, but to block out-of-state businesses from selling to Minnesota businesses while funneling money into the hands of a few lucky distributors. If you thought this system was about fairness, safety, or economic efficiency, think again.

This isn’t about stopping shady, back-alley cannabis deals. It’s about forcing all hemp-derived cannabis products to go through Minnesota-based wholesalers, and guess what? If you want to be a wholesaler, you’ll need a specific Cannabis Wholesaler’s License.

And here’s the kicker: If you hold a Cannabis Wholesaler’s License, you won’t be able to hold any other type of cannabis or hemp license—potentially not even an alcohol license.

So let’s break this down in plain English:

• If you’re an out-of-state producer? Tough luck, you can’t sell directly to Minnesota retailers.
• If you’re a Minnesota retailer? Forget about buying directly from your favorite national brands—you’ll have to go through a select group of “approved” Minnesota wholesalers.
• If you’re a Minnesota producer who also wants to distribute? Nope! You have to pick a lane.
• If you currently hold an alcohol license and thought you could add hemp products to your portfolio? Think again. You might have to choose between selling booze or selling cannabis.

Why? Because this system isn’t about fairness—it’s about control.

Minnesota’s Three-Tier System: A Gated Community for Local Distributors

Under this system, Minnesota businesses wouldn’t be able to buy directly from out-of-state producers. Instead, all products would have to pass through a Minnesota-based wholesaler, who gets to take a cut, mark up the price, and decide what products even make it to store shelves.

• If you’re a hemp business in California, Oregon, or Colorado? No direct sales in Minnesota.
• If you’re a Minnesota dispensary looking for a specific brand? Better hope a local wholesaler feels like carrying it.
• If you’re a Minnesota-based manufacturer wanting to distribute? Oops, sorry! You have to get a separate Cannabis Wholesaler’s License—which means you can’t have any other cannabis or hemp license.

The Three-Tier System forces businesses to play by arbitrary rules that only benefit a handful of middlemen while shutting out competition.

The Three-Tier System Wasn’t Built for Today’s Economy—It Was Built for the 1930s

The idea of separating producers, wholesalers, and retailers came from the post-Prohibition era, when lawmakers were afraid that one giant booze company would take over and turn the country into an alcohol-fueled dystopia. They thought separating production, distribution, and sales would prevent monopolies and corruption.

Fast forward nearly a century, and those fears no longer apply to hemp-derived cannabis.

• We already have strict state regulations ensuring compliance.
• We have e-commerce, modern logistics, and third-party shipping solutions that make middlemen unnecessary.
• We have a free-market system that already works without government-mandated wholesalers.

But instead of embracing a modern, competitive cannabis market, Minnesota’s proposed system would create artificial barriers to entry, protect a select few distributors, and punish out-of-state businesses.

Interstate Commerce is a Thing Now. Minnesota Can’t Pretend It’s 1933.

In today’s world, businesses operate across state lines seamlessly. Look at Amazon. Look at Shopify. Look at every other industry that ships goods nationwide.

The idea that Minnesota businesses should be forbidden from purchasing products directly from out-of-state producers is ridiculous. Why should a store in Minneapolis have to pay extra fees to a Minnesota-based distributor just to buy the same product they could have ordered directly from a national supplier?

This isn’t just bad policy—it’s actively anti-business.

• Retailers will have fewer options and higher prices because they can only purchase from a select group of Minnesota-based distributors.
• Out-of-state producers will be locked out of the Minnesota market, even if they have superior products or better pricing.
• Minnesota manufacturers won’t be able to engage in competitive trade, hurting their ability to scale and expand beyond state borders.

And what’s the real reason behind this? To protect the profits of Minnesota-based wholesalers and distributors.

Want to Be a Cannabis Wholesaler? Prepare to Be Stuck in Regulatory Hell.

If you want to be a wholesaler under this system, get ready for a bureaucratic nightmare.

1. You’ll need a Cannabis Wholesaler’s License. No big deal, right? Well…
2. You can’t hold any other type of cannabis or hemp license.
3. You may not even be able to hold an alcohol license.

So let’s say you own a hemp-derived beverage company.

• You want to make the product? Cool. But you can’t distribute it.
• You want to sell directly to retailers? Nope. You have to go through a wholesaler.
• You want to distribute other brands to stores while selling your own products? Not allowed! Pick one or the other.
• You own a liquor store and want to expand into hemp-based beverages? Uh-oh, you might have to surrender your alcohol license.

Does that sound like a fair, open, competitive market to you? Or does it sound like a system designed to keep most businesses locked out while giving a handful of lucky wholesalers a monopoly?

Who Benefits? (Hint: Not Consumers or Small Businesses)

The only real winners in this system are the Minnesota-based wholesalers and distributors who get to play gatekeeper.

• They get to decide which products make it to store shelves.
• They get to add their markup, driving up costs for businesses and consumers alike.
• They get to block competition from out-of-state brands, ensuring they—and only they—control the flow of products into Minnesota.

Meanwhile, everyone else loses.

• Retailers get stuck with limited product selection and inflated prices.
• Out-of-state producers get locked out of the Minnesota market, even if they have the best product.
• Minnesota businesses are forced to follow restrictive rules, limiting their ability to grow.

This isn’t about fairness. This isn’t about safety. This is about protecting a few well-connected businesses at everyone else’s expense.

Minnesota, Don’t Fall for This Scam.

Minnesota has the opportunity to build a thriving, competitive cannabis industry—one that encourages innovation, supports small businesses, and allows for a free flow of goods across state lines.

Instead, the proposed Three-Tier System would artificially limit market access, drive up costs, and slow down industry growth—all while protecting a handful of distributors who don’t actually add any value to the supply chain.

So let’s make one thing clear:

• The Three-Tier System isn’t about protecting consumers.
• The Three-Tier System isn’t about preventing monopolies.
• The Three-Tier System isn’t about fairness.

It’s about control. It’s about protecting entrenched interests. It’s about limiting competition so that a few select businesses can profit at everyone else’s expense.

Minnesota, don’t let this happen. Let’s build a fair and open cannabis market—one that encourages competition, allows for interstate commerce, and gives businesses the freedom to grow without unnecessary middlemen standing in the way.

And if the distributors don’t like that? Maybe they should try competing instead of lobbying for protection.

What’s your take on the Three-Tier System? Drop your thoughts in the comments below—unless you’re a distributor, in which case, I already know you’re angrily typing about “fair markets” while cashing another unnecessary check. 😆