Apply for a Minnesota Cannabis Business License

Minnesota Cannabis Licensing is on the Horizon

After signing a bill to legalize cannabis possession and initiate the regulatory process in May of 2023, Minnesota legislators went back to the drawing board in the 2024 legislative session for a slew of changes to the structure and substance of their adult-use cannabis program and rollout.

Every state finds a unique way to award cannabis business licenses, and no method of choosing businesses for coveted cannabis licenses has proven foolproof or risk free. Minnesota’s legislature finally thinks they’ve found the best path forward and has settled on a qualified or vetted lottery for their cannabis business selection process.

Timeline and Preapproval for Social Equity License Applicants

Call it what you want, the first license window for cannabis business applicants in Minnesota opens on July 24, 2024 and closes on August 12, 2024. This initial “preapproval” round is limited to qualified and vetted social equity businesses. Additional cannabis business application windows are slated to open in the fall or winter of 2024 for all cannabis business entrepreneurs and license types. Each of the limited licenses offered will involve a highly qualified lottery if submissions exceed available licenses.

Preapproval Business Licensing

The “preapproval” process for licensing did not appear in the initial Minnesota legalization bill, and in previously proposed legislative changes, the Minnesota Office of Cannabis Management (OCM) coined these “temporary” licenses. The pre-approval process will not require a property (but future rounds may). Those social equity applicants not chosen in the “preapproval” lottery will be included in future rounds and an additional application fee will be waived.

To qualify for the “preapproval” or first round of cannabis business licensure in Minnesota (July into August), an applicant must satisfy at least one of the social equity requirements and verify their status between June 24 and July 10, 2024. The newest version of law changes the social equity qualifications in several ways, such as changes for veterans and farmers.

Qualifying Social Equity Status

The new social equity qualification language states that an applicant qualifies as a social equity applicant if they satisfy one of the following seven options:

Immediate Offenses – Was convicted of an offense involving the possession or sale of cannabis or marijuana prior to May 1, 2023
Relational Offenses – Had a parent, guardian, child, spouse, or dependent who was convicted of an offense involving the possession or sale of cannabis or marijuana prior to May 1, 2023
Dependents – Was a dependent of an individual who was convicted of an offense involving the possession or sale of cannabis or marijuana prior to May 1, 2023
Veterans – Is a military veteran, including a service-disabled veteran, current or former member of the national guard
Veterans With Offenses – Is a military veteran or current or former member of the national guard who lost honorable status due to an offense involving the possession or sale of cannabis or marijuana
Disadvantaged Resident – Has been a resident for the last five years of one or more subareas, such as census tracts or neighborhoods [that have been disproportionately impacted or economically disadvantaged]; or,
Farm Operators – Has participated in the business operation of a farm for at least three years and currently provides the majority of the day-to-day physical labor and management of a farm that had gross farm sales of at least $5,000 but not more than $100,000 in the previous year.

Limits on Minnesota’s Cannabis Business Licenses

Minnesota has instituted license caps on certain cannabis businesses until July 2026. These licenses will be limited to:

Limits on Minnesota’s Social Equity “Temporary” Licenses

Of the licenses available, half must go to social equity applicants and half will be open to all applicants. Around half of the total social equity licenses are reserved for the first application round of social equity “preapproval” applicants, which opens this July. The preapproval/social equity licenses are limited by license type, as follows:

13 cannabis cultivator licenses
6 cannabis manufacturer licenses
38 cannabis retailer licenses
25 cannabis mezzobusiness licenses
100 cannabis microbusiness licenses
20 cannabis wholesaler licenses
20 cannabis transporter licenses
50 cannabis testing facility licenses
10 cannabis delivery service licenses

Notably, microbusiness license amounts are limited in the social equity round this summer but are not limited generally.

Limit on Number of Applications and True Party of Interest

As part of the Minnesota license application, applicants must submit true party of interest information for owners and other specified interested parties. “True Party of Interest” (“TPI”) limitations in Minnesota apply to owners of a cannabis business up to a 10% threshold, but there are some listed exceptions. For owners who meet this threshold, they may not be a TPI for more than one application for any single type of license or for multiple types of licenses unless explicitly allowed (e.g., owning both a retail and cultivation license is disallowed). Under the TPI rules, private funding in exchange for ownership or a share of profits would need to be disclosed to the OCM, and all TPIs would need to submit to a background check.

Early Cannabis Cultivation – Supporting Supply and Social Equity

Early cultivation opportunities are not totally gone, but not as were once proposed. “Some industry lobbyists had wanted early cultivation permission for any grower that could show they were ready to grow — not just those who meet social equity requirements. Neither the House nor Senate agreed, and such a provision did not get into the conference agreement.”

To jumpstart the nascent market and support cannabis product supply, the early cultivation provision allows “preapproval” licensees to begin cultivating cannabis prior to the finalization of rules by the OCM. The “early cultivation” option only applies to cultivators, meaning that processing operations could not begin until state program regulations are finalized.

Preparing and Drafting Business Plans and Operating Plans

For any cannabis startup, a business plan is crucial to build the foundation for your operations and to share your objectives with potential investors and partners. For a cannabis license application, the business plan needs to cater to the requests of the governmental agency and be completely compliant with Minnesota law.

License Application Review

Applicants must submit a detailed application proving their capability to run a compliant cannabis business, and applications will be reviewed by the state for:

Security and record keeping
Employee training plan
Business plan and financial situation
Labor and employment practices
Knowledge and experience
Environmental plan

Written Plans Required in Minnesota Cannabis Applicaitons

All cannabis license applicants will have to provide copious corporate details (e.g., business ownership and control, true party of interest, background check release, labor peace agreement). All applicants must also submit extensive written plans (HF 4757, 342.14):

1) A copy of the applicant’s business plan showing

The expected size of the business
Anticipated growth
The methods of record keeping
The knowledge and experience of the applicant and any officer, director, manager, and general partner of the business
The environmental plan
Other relevant financial and operational components

2) Standard operating procedures for:

Quality assurance
Inventory control
Storage and diversion prevention
Accounting and tax compliance

3) A copy of the security plan, including security monitoring, security equipment, and facility maps if applicable.

4) A general description of the location or locations that the applicant plans to operate, including the planned square feet of space for cultivation, wholesaling, and retailing, as applicable.

5) A description of any training and education that the applicant will provide to
employees of the business.

Next Steps for Cannabis License Applicants in Minnesota

With the statute in place, applicant teams can prepare with more certainty going forward but many questions about the process still linger.

1) Start Business Planning Now

If you plan to apply as a social equity applicant, you will want to be ready for the July window. Start gathering the documents needed to prove your social equity status now. You can also make the best use of the time by completing your Financial Model and Business Plan for the application and for investment purposes, if necessary. If you’re not applying as a social equity applicant, it will likely be a few months before a window opens, but in the meantime, pay attention to the social equity licensing process as it will shed light into requirements and process.

2) Keep All Eyes On The OCM

The next key step for applicants to look out for is the release of the application form and further specifications from the OCM. Once the application form is available, Canna Advisors can scope and draft any required information to match the format and content requirements.

3) Choose A Consultant: Work with Our Minnesota Cannabis Experts

Whether in the planning stages or during license pursuit, Canna Advisors is available to provide guidance for businesses as they navigate Minnesota’s evolving cannabis business licensing process. From interpreting Office of Cannabis Management resources to developing business and operating plans, Canna Advisor’s cannabis experts can help increase the chances of your business opening in a timely and compliant manner.

Contact our consultants to get started on your Minnesota cannabis license application.

4) Stuck In The Process? Book A Consultation

For those who just need some quick answers or want to strategize regarding the application process, we offer one-off hourly consultation blocks. Book a spot with our team to get started.

How to Apply for a Minnesota Cannabis Business License