Newly appointed Office of Cannabis Management director says state has issued 13 microbusiness licenses

[MUSIC PLAYING] NINA MOINI: Our top story on Minnesota Now, the state office that regulates cannabis in Minnesota has an official director for the first time in nearly two years. Governor Tim Walz named Eric Taubel to the role yesterday. Taubel had been interim director since January, and he steps into this more permanent version of the job now as the first non-tribal cannabis retailers are preparing to open. As of August 6th, the state had issued 10 licenses in the microbusiness category. Joining me now to talk about what's next is Eric Taubel. Thank you so much for your time this afternoon, Eric.

ERIC TAUBEL: Yeah, thanks for having me.

NINA MOINI: For starters, let's just start with the basics of what a microbusiness means. I mentioned that there are 10 licenses. What does that mean? And what does that mean for the future of what businesses could open?

ERIC TAUBEL: Yeah, and just as a note about the happenings at the office as of this morning, we're now up to 13 licenses.

NINA MOINI: Nice. OK.

ERIC TAUBEL: Yeah, every day a few more come online. And the microbusiness is really an entry point business license for people who are interested in running a cannabis business. For the most part, Minnesota's market limits businesses to one part of the supply chain. So there's cultivators. There's manufacturers. There's delivery drivers. And then there's retailers.

But these microbusiness licenses are actually allowing individual operators to do all of those things, just at a smaller level than the large license. So it's a fully vertically integrated license where someone could grow a small amount of cannabis, turn it into edibles, and then sell it out of a retail shop in the front.

NINA MOINI: OK. So then further up the supply chain you're talking about, there are not yet any growers or testing facilities, I understand, that have been licensed by the state. White Earth Nations' business is, right now, the only legal source of the plant, correct? So will they be the major supplier then for the first dispensaries?

ERIC TAUBEL: Yeah. So the licenses that we've issued so far, a number of those microbusinesses have indicated that their primary business operation will be cultivation, so we're seeing some early entries into that. But those large-scale cultivators are still finishing their work in the last steps of the licensing process to get open. As of right now, you're correct that the only-- well, the only legal source for adult use retail cannabis would be through White Earth, subject to their compact. We anticipate, in the next couple of weeks or so, we'll see some more tribal nations come online with compacts.

And then the other thing to keep in mind is that Minnesota's medical cannabis market still exists, and we have, I think, 56,000 patients as of last week in that program. And so people seeking medical cannabis can continue to access those products through the two existing medical providers.

NINA MOINI: I think businesses, and customers alike, want to know, will there be enough supply for dispensaries to open? Or are these businesses going to have to be in a situation where they're waiting and waiting?

ERIC TAUBEL: Yeah. And I think this is a common feature that every state that legalizes cannabis faces. We often joke around here that there's only a few challenges with running a state program or something that's federally illegal. But this product supply chain is one of the biggest ones, because in most other industries-- I think about when microbrews first got really popular-- you could import Yuengling from Pennsylvania or Fat Tire from Colorado. But with cannabis being federally illegal, it can't cross state lines, and so all the product that will ever be sold has to start from seeds in Minnesota.

And so we always knew that Minnesota would never have a fully mature market on day one. We had relatively low cannabis infrastructure. Our medical program, compared to other states, is pretty small. But also, the legislature and advocates who wanted to legalize cannabis in the state had kind of a different model in mind.

They talked about the Minnesota craft market, and it was a market that would be both equitable but also sustainable. So it wouldn't be a market where there'd be a big rise and then crash and market consolidation. Rather, businesses would have a chance to slowly build over time to create a market where someone could have a small family business that runs a cannabis microbusiness for years. And so I think that's the reality, that we're in those early stages of the walk towards maturity.

NINA MOINI: So do you think that businesses will be waiting? I mean, they're going to have to be at the behest of when they're supplied, so they're going to probably be having to wait, it sounds like.

ERIC TAUBEL: Yeah. Well, I will say that the Office is taking a number of steps to try to minimize some of that, recognizing that we want to make sure people do have access to these products and the businesses have products on their shelves. So one of the things we announced last month was what we called the product transition period, which will allow for cannabis stores to sell those currently available hemp-derived products that you currently can find in liquor stores or other shops around town.

The other thing we've done is recognizing that continuity for our medical patients is important, and that the product that medical patients currently have access to is safe and well-tested. When we convert, we move the current medical providers from the current system into the new system as licensees. Product that they've already grown, tested, packaged, we're going to allow that to be sold into the adult use market, and so that'll be another stream of product that will be available.

And then finally, as I noted a second or two ago, there's some more tribal compacts that we believe are going to come on line soon from Nations that have cultivated cannabis products. And so we'll also see an increase in the amount of available product from tribal nations in the coming weeks, as well, to try to meet some of that demand.

NINA MOINI: OK. Also, we just have a few minutes, but I want to make sure that I'm able to ask about, recently, we've heard about some cities-- Albert Lea, a recent one-- that blocked the opening of a dispensary that had a cannabis license, and then accepted a couple of others. I mean, what is your office and the state's role like? Do you have a role in what these municipalities are able to allow?

ERIC TAUBEL: Yeah. So the way the process generally works is that for every kind of cannabis business, we have to ask the local unit of government that oversees that business if the business is in compliance with their local zoning and other ordinances, as well as fire code and state building code. And then in the retail space, there's a little bit of a change, where cities or counties have to register those retail businesses so that they know where they are so they can do the 21 plus age verification checks.

Now, the other states that have legalized cannabis have faced challenges in eradicating the illicit market, in part because locals could opt out of the cannabis industry. And so in California, for example, there's this patchwork of legal cannabis in localities that have allowed it, and then the illicit market thrives in those that are prohibited. So the legislature made the choice to say, you got to have cannabis businesses anywhere in the state if we're going to eradicate the illicit market. But it did give locals the authority to cap the number of retailers or certain types of retailers in their jurisdiction.

And if the local chooses to set a cap, they can decide how best to allocate those retail registrations. Our office has given guidance to locals for the past year or so, that if you're choosing to institute a cap, you should be really clear and transparent with applicants about what standards you're going to use to award those caps so that people can make informed business decisions.

NINA MOINI: And so moving forward, are you concerned at all that people will get things going, get their license, and then be rejected?

ERIC TAUBEL: I don't think so. I mean, like I say, we're up to about 13 now, and by and large, we haven't really seen a lot of issues similar to what happened in Albert Lea popping up elsewhere. And so I think that for the most part, it's going pretty smoothly. I will say-- and I tell this to applicants all the time-- just like the state and just like them, the local units of government are doing this for the first time, as well, and so they're trying to make decisions that are best for their communities and trying to figure out whose lane is whose lane in terms of the state and the locals.

And so I offer to our applicants that they should have grace for the local units of government that they're working with, go in with a sort of a smile and an open mind to try to work with them to figure out what their rules are and what makes sense both for the business and the local unit of government.

NINA MOINI: It's going to take working together, it sounds like. Well, Eric, thank you very much for stopping by Minnesota Now. We hope you'll come back sometime and keep us posted.

ERIC TAUBEL: Yeah, I'd be happy to. Thanks for the time.

NINA MOINI: Thank you. Eric Taubel is the newly appointed director of the state's Office of Cannabis Management.