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Big dreams, stiff rules: State starts search for medical pot makers

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Medical marijuana laws
Legislative analyst and attorney Jamie Olson talked about Minnesota's new medical marijuana laws at a meeting for prospective manufacturers in St. Paul.
Tim Nelson/MPR News

The ground floor of Minnesota's medical cannabis industry was crowded Friday morning. 

Prospective makers and users, employees, investors, union organizers and even would-be bankers were among the hundreds on hand as the state's Department of Health rolled out its plan to pick just two suppliers of medical cannabis to Minnesotans.

Related coverage: The latest on Minnesota's new medical marijuana program

Medical marijuana will be legal next July, and the state is trying to forge a path for suppliers through a thicket of regulation -- and doubts. Only two licenses to legally grow pot in Minnesota will be awarded this year.

"Considering I started with a concern that nobody was going to bid, I'm actually pleased that there's this amount of interest," said Manny Munson-Regala, an assistant health commissioner who's overseen the process since lawmakers approved medical marijuana this spring. "How much of it is serious and will be sustainable, I guess we'll see."

Medical cannabis manufacturer meeting
Attendees listen to Minnesota Department of Health officials talk about the state's plan to establish a pair of medical cannabis providers later this year. The meeting was held at the Minnesota History Center.
Tim Nelson/MPR News

Craig Andrews is among the serious. He owns Roots Hydro-Organics, a hydroponic store in St. Paul. He said he knew "a little bit about the growing process and all sorts of plants but conceded the hurdles state officials laid out Friday are daunting. 

"Sounds like it's going to be a pretty tough row to hoe the first year," he said. The growers will "have to have really deep pockets, and a lot of good people on your back helping you out. A good team."

Jamie Olson, a legislative analyst and attorney, detailed the hurdles -- a list that ran for almost 40 minutes

"The law requires that both manufacturers have four distribution sites, so there will be eight distribution sites total," she told the crowd in an auditorium of the Minnesota History Center, where officials had to move the meeting because of how many people were interested.

There are four security requirements in the law, she said, including an alarm system, facility access controls, perimeter intrusion detection system and a personnel identification system. There may more that come up in the rules, I'm not sure," Olson said. 

The lucky winners may also face two possible audits and must keep detailed financial records. 

For all that, there were more questions than answers about shape of the medical cannabis business. Could existing pharmacies dispense it? How would it be taxed by the IRS? Would banks be willing to handle marijuana money? 

Assistant health commissioner Manny Munson-Regala
Minnesota Department of Health assistant commissioner Manny Munson-Regala describes the rule-making process for medical manufacturing regulations to prospective growers at a meeting in St. Paul.
Tim Nelson/MPR News

Munson-Regala told attendees that manufacturers will probably have to answer many of those questions themselves, and his department expects to see those answers.

"That's part of our assumption is that folks getting into this better be in it for the long run. This is not a one-time and done operation," he said. "You're taking care of patients. They better be able to count on you to produce and deliver medication in a predicable way."

Many were undaunted, driven, they said, by more than mere commerce. 

"At first, I don't think it will be very lucrative but (if) the law does change as it has in other states, then I think it will be more lucrative," said John Olson, who founded a medical startup in Rochester to get into the business.

"You think this is the thin edge of more legalization?" he asked. "We definitely hope so."

The state will post its official request for applications Sept. 5, due Oct. 3. Two winners will be selected in December. The state wants them to start supplying medical cannabis next July.