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Jacob Schlichter of The Smoking Tree LLC is suing the City of Albert Lea for blocking registration of his recreational-cannabis dispensary in late July.

The lawsuit was filed Monday and alleges the city’s rejection was based “purely on politics — specifically, members’ policy disagreements with Minnesota law.” It also cites comments made by city council members disagreeing with state cannabis statutes.

Schlichter gained attention as one of the first people in the state to complete the Office of Cannabis Management’s licensing process to sell recreational cannabis. Then, 

Albert Lea’s city council denied Schlichter’s business in a July 28 city council meeting

 after lengthy discussion about lack of local control under state cannabis laws.

“The City Council neither had nor articulated a basis to deny the application,” wrote David Liebow, Schlichter’s attorney, in the lawsuit’s petition. “Nevertheless, in a 4-3 vote, the City Council did deny the application.”

Schlichter’s lawsuit accuses the city of defying state law and also cites comments made by city manager Ian Rigg during the July 28 meeting: “We have heard the concerns from the public and weighed those as much as we could within the powers that we did have, that the state has given us. And our only option is to defy the state and see lawsuits.” 

Schlichter is now demanding the city council grant his registration and comply with state law, which says municipalities cannot prohibit the establishment or operation of a licensed cannabis business. He also appealed the decision in state court on Aug. 20; that case is pending.

“My entire business is literally on the line because of it,” Schlichter told MPR News on Tuesday. “Tens of thousands of dollars down the drain if none of this goes my way, and that doesn't include the legal fees.”

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Minnesota cities and counties can cap the number of retailers to one per 12,500 residents. Albert Lea previously capped the number of recreational-cannabis dispensaries allowed in the city to two. After denying Schlichter, the city council approved two registrations for Christopher Gracia of Matchbox Farms and Cristina Aranguiz of Black Husky on Aug. 11. In that meeting, 

the city council reconsidered granting registration to Schlichter’s business and ultimately struck it down

Schlichter’s criminal history, particularly a 2017 misdemeanor conviction involving a minor, became the center of controversy in the weeks the city council was considering granting him registration. Schlichter opened his storefront on Aug. 3 despite the city registration denial, selling cannabis-themed clothing.

Rigg proposed the city adopt additional requirements after the two dispensaries open, like conducting their own background checks on licensees and expanding their ability to deny registrations based on criminal history. The state Office of Cannabis Management requests criminal history checks for all license applicants, but misdemeanors are not disqualifying.

“I urge all local governments to take a hard look and rely on their own criminal history background checks to bring this process in parity with alcohol licensing,” Rigg said at the time.

Rigg told MPR News on Wednesday “the city denies the claims asserted by Mr. Schlichter and will vigorously defend its obligations to protect the residents of Albert Lea.”

In a letter filed to district court Tuesday, Albert Lea argued the Minnesota Court of Appeals is the correct place for Schlichter’s case and his lawsuit should be dismissed.

OCM declined to comment on the lawsuit. But OCM said in August that it has made clear to local governments they cannot prohibit the establishment or operation of a licensed cannabis business and can only enact “reasonable restrictions” on time, place and manner of a business.

“The specifics of how a local government selects businesses to receive a limited number of retail registrations are not specified in statute and are up to the local government,” said Jim Walker, OCM’s public information officer, in August.

Schlichter is likely the first — if not one of the first — recreational cannabis business owners in Minnesota to file a lawsuit during the launch of the state’s adult-use cannabis industry. He hopes it helps others in similar gridlocks with their local government.

“What a double edged sword of being, having the honor of being the first lawsuit, right? All I can say is that I hope whatever comes of this can lay some groundwork for anyone behind me,” said Schlichter.

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Jacob Schlichter gained attention as one of the first people in Minnesota to complete the Office of Cannabis Management’s licensing process to sell recreational cannabis. Then, Albert Lea’s city council denied his business.

Man sues Albert Lea for blocking his cannabis dispensary from opening

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