Politics and Government

Minnesota House approves bill that attempts to speed up legal cannabis marketplace roll out

A storefront that reads hemp house
Hemp House is a chain of stores that sell THC and CBD derived products in the Twin Cities. They are looking to move into the recreational marijuana space early next year.
Jacob Aloi | MPR News

The Minnesota House voted Thursday to speed up the process for getting cannabis dispensaries lined up by giving them a route to pre-approval of operating licenses.

On a 69-62 vote, lawmakers voted to allow the office to start issuing license pre-approvals as early as this summer. Supporters say that would allow them to secure funding, rent real estate and take other steps to get up and running. They still wouldn’t be allowed to commercially grow or sell the marijuana itself.

“A number of provisions in this bill are designed to expedite the process of setting up a good legitimate marketplace for cannabis to displace that illicit marketplace that’s out there,” said the bill’s sponsor, Rep. Zack Stephenson, DFL-Coon Rapids. 

The proposal would also put the Office of Cannabis Management in charge of enforcement for hemp-derived edible products and medical marijuana. Those responsibilities currently fall to the Department of Health. Many of the recommendations in the bill came from the new agency overseeing the marijuana market. 

The policy changes come less than a year after lawmakers voted to permit adults 21 and up to possess and use small amounts of cannabis and to grow up to eight plants at home.

While edible hemp-derived THC products — like edibles and seltzers — have been allowed since 2022, the recreational cannabis law didn’t immediately green light the creation of dispensaries for full-fledged marijuana.

A couple of Native American tribes have opened dispensaries on their reservations under sovereign authority — more expect to before long — but other prospective dispensary owners and commercial cultivators have had to wait for the state’s go-ahead to get started.

In less than a year, the state expects a broader array of cannabis stores to be up and running. Before that can happen, growers and distributors will have to get licensed through the state.

The state intends to elevate social equity applicants from minority communities or those that were disproportionately affected by the enforcement of criminal laws around marijuana.

Some Republicans raised concerns about a change to the license eligibility system that would remove a solely merit-based selection process for deciding who gets licensed and introduce a lottery if there are more qualified applicants than available licenses. 

“This bill does some good, but it really doesn’t fix much of anything on what’s not going to work in the cannabis bill,” Rep. Nolan West, R-Blaine, said. “It does a triple backflip handstand to try and shoehorn ideological positions that are not about a safe and functioning marketplace.”

West sought to change the requirements around the lottery system to receive a license back to the merit-based system. 

Stephenson and other lawmakers said the system under the existing law would include a lottery. But the change would alter the process to get entered into the pre-application lottery.

“The difference here between current law and the bill is moving from a more subjective scoring system under current law, to a more objective sort of binary yes-no choice under this bill,” Stephenson said. “And that’s designed to make things smoother, clearer, less subject to litigation and have it happen faster.”

In other states, selection systems based solely on merit have attracted lawsuits that hampered license issuance.

But a group of cannabis entrepreneurs predicted the change would backfire. More than two dozen wrote to lawmakers this week, asking them to oppose the change. They contend that ill-prepared businesses could slip through.

“The simplicity of the lottery system allows for exploitation through application flooding, submission of spurious applications, and the manipulation of social equity measures by predatory entities,” they wrote. “Such practices undermine genuine competition and social justice efforts.”

The chamber adopted GOP amendments that would require the office to study the impact of cannabis on minors, set an 18-month window for a licensed dispensary owner to use or lose their license and set other benchmarks for getting the market going. 

The Senate plans to vote soon on a companion bill, setting up potential negotiations on a compromise plan in the final month of session. Stephenson said he would be open to changes to the lottery system as part of the conference committee debate.

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