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Minnesota cannabis regulators say they’ll hold a lottery in the coming weeks to determine who will operate the state’s first legal marijuana businesses, but the Office of Cannabis Management is facing pushback this week after it rejected around two-thirds of the applicants it deemed ineligible.

It’s been more than a year since Minnesota’s adult-use cannabis law took effect. People 

 may possess, use and grow marijuana with some limitations. The Red Lake and White Earth tribal nations — which are independent — have been operating dispensaries for around 16 months. 

Lawmakers anticipated that it would take much longer to vet and license recreational marijuana businesses elsewhere in the state. The first to apply are people the statute considers social equity applicants, including those who live in high poverty areas, people harmed by the war on drugs, and military veterans. 

More than 1,800 people applied for 282 licenses, so the state is using a lottery to determine who will move forward in the process. But the Office of Cannabis Management on Monday notified around 1,150 applicants that their names would not be going into the hat. 

In a phone interview with MPR News on Tuesday, Charlene Briner, the interim director, said that the reasons varied from documentation problems to violations of ownership requirements. She said other applicants tried to game the lottery or submitted information that appeared to be fraudulent.

“[We saw] multiple applications that were identical in nature. We saw that some of them didn’t have IP addresses or websites that were valid. We saw some of them tying back to phone numbers that were not in service or phone numbers that went back to one particular individual,” Briner said.

Marijuana business owners will face complex rules, and Briner said that making it through the license application process is the first step toward proving that operators can handle a strict regulatory environment. 

“This is an objective review of specific criteria called for in statute. So it is very clear what is required. And we gave very clear instructions. There was no subjectivity. There was no comparing one applicant to another,” Briner said. 

Last month, OCM sent deficiency notices to around 300 applicants and gave them a chance to correct problems — particularly with payments. But Briner said allowing everyone to fix every single error would take months and delay businesses from opening. 

Lawyers and consultants who are helping shepherd would-be pot proprietors through the process say OCM’s rejection of so many applicants is unfair. 

Attorney Carol Moss represents more than a dozen clients who are trying to enter the recreational cannabis market. She said around half were rejected.

“A lot of these rejections are based on what I would describe as very flimsy reasons. For example, somebody uploaded a picture of their ID, and it was wavy and that got rejected,” Moss said. 

Moss said in many cases, OCM’s rejection letters don’t give an explanation. She said the office has been inconsistent in the way it handles applications. 

“These are not people who are gaming the system. So when I see those types of comments, it makes me concerned that the reviewers are looking at factors outside of the applications,” Moss said. 

Moss said that could open the Office of Cannabis Management to litigation — something she’s discussing with her clients.

Barring any action in the courts, the office is expected to move forward with its license lottery sometime in the next two weeks. But Briner says even when that part of the process is complete, the office still needs to finalize its operational rules. That means it’ll likely be several more months before Minnesota’s first recreational marijuana businesses will open to customers.

Matt Sepic

Author

Minnesota cannabis regulators say they’ll hold a lottery in the coming weeks to determine who will operate the state’s first legal marijuana businesses. But the Office of Cannabis Management is facing pushback this week after it rejected around two-thirds of the applicants it deemed ineligible.

Cannabis regulator faces heat after rejecting over 1,000 initial applicants

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