Minnesota Prepares for Cannabis Market with New Legislation

LOS ANGELES- Minnesota will allow some commercial cultivators to begin growing cannabis later this year in preparation for the state’s upcoming retail market. The state will award cannabis business licenses through a vetted lottery system instead of the previously used merit-based application process.

Governor Tim Walz signed a cannabis policy bill on Friday that implements several significant changes to Minnesota’s year-old recreational cannabis law.

The bill establishes a process for social equity applicants to be preapproved for cannabis business licenses this year, while others must wait until 2025 to apply. Social equity applicants include individuals or family members of individuals previously convicted of cannabis offenses, military veterans, residents of high-poverty areas, and “emerging farmers” who have managed small farms for at least three years.

Preapproved social equity applicants may start growing cannabis later this year to help build the state’s supply chain, provided they obtain local zoning approval and comply with Minnesota’s existing medical cannabis cultivation rules. Since the state has not yet finalized recreational cannabis cultivation rules, regulators will use the medical rules in the interim.

Those who begin growing cannabis this year will not be allowed to process or sell it until licenses are distributed more broadly next year.

The state’s Office of Cannabis Management will use a “qualified lottery” to distribute cannabis business licenses next year. Applicants who meet minimum qualifications, such as securing property and developing operational plans, will be entered into the lottery, with winners chosen at random.

The bill signed by Governor Walz also sets caps on certain license types, such as retail dispensaries, during the market’s first two years to prevent oversaturation. It allows cities to open municipal cannabis stores without participating in the lottery process, permits doctors to recommend cannabis for any condition, and allows registered medical cannabis patients to designate a caregiver who can grow up to eight cannabis plants on their behalf.