Welcome Minnesota Cannabis: Legalization In The Land of 10,000 Lakes

A Rundown of Minnesota’s New Adult-Use Cannabis Program

2023 is shaping up to be an active year for cannabis nationwide! New York will be opening its annual adult-use application window in a few months’ time and both Maryland and Delaware recently passed legislation opening up their adult-use markets. Now, it’s Minnesota’s turn. Governor Tim Waltz has signed legislation which will enact a sweeping 320-page bill to legalize cannabis in the state, making it the 23rd state in the country to do so. Things are moving quickly in the state as the Office of Cannabis Management site is already up and running too. So, what’s in the language of the law? And what should we expect from the Land of 10,000 Lakes as it enters the adult-use market? Let’s dive in.

Introducing Minnesota’s Office of Cannabis Management (“OCM”)

As mentioned above, Minnesota’s Office of Cannabis Management (OCM)  will formally be established by July 1 of this year, though the OCM has already been busy building out its online presence. The OCM will oversee the regulatory framework for the adult-use program as well as the state’s medical cannabis and hemp programs. However we anticipate anywhere from 12-18 months for the OCM to begin adequately building out its infrastructure to address good consumer, health and safety protections. The language of the law also details the creation of a cannabis advisory council along with requiring specific studies and reports on legalizations impact, and set up a track and trace system. Metrc is currently the state’s provider for its medical program, and we anticipate it will be what the state chooses for adult-use.

Cannabis Possession Limits

Anyone 21-years or older will be able to possess or transport up to two ounces of cannabis flower in public, up to two pounds in their private residences, and grow up to eight plants (four mature ones) at their home. Home cultivation is allowable indoors and outdoors but must be done in an enclosed, locked space out of public view. Individuals also will be able to possess up to eight grams of cannabis concentrates and up to 800 milligrams of THC in edible products. These provisions will become effective on August 1.

Standard and Unique Business License Types

There are going to be an astonishing 15 different license types offered in the state. We have some of the standard ones (cultivator, manufacturer, retail, microbusiness, transporter, and delivery), but also some unique ones. The one which caught our attention most was the incredibly named “mezzobusiness.” “Mezzo” being Italian for “medium,” this license allows for cultivation up to 15,000 square feet and allow for manufacturing and selling cannabis products. It’s a micro, but larger. A mezzo! Up to three retail locations are allowable for this license, but this will not allow for on-site consumption.

Cannabis Wholesalers & Event Organizers

There are also licenses for wholesalers and event organizers, with this event license being good for four-days and does allow for changed entrance fees for cannabis consumption in an on-site consumption area (if the municipality allows this, local approval is required before holding a cannabis event).

Program Tax Structure and Fees

There will be a 10% tax rate on cannabis products with no taxes applied for its medical program. This rate will remain in place for four years before it can be adjusted by the Minnesota Department of Revenue. State and local taxes would also apply to retail sales, but local governments cannot impose a sales tax solely on cannabis products. The fees vary depending on the license type with a cannabis cultivator paying a $10,000 application fee, a $20,000 initial license fee, and an eventual $30,000 renewal fee. Manufacturers would pay $10,000 for the application and license fee then $20,000 for renewal. Retailers would pay $2,500 for the application and license fee with $5,000 for renewal while a microbusiness would be exempt from a license fee, a $500 application fee, and $2,000 to renew.

Cannabis Industry Revenue Expectations

Overall, the Minnesota Department of Revenue estimates adult-use sales would generate $107 million in annual tax revenue for the state and $21.5 million for local governments. The Department estimates that there could be more than $300 million in tax revenue generated for state and local governments from 2024-2027. At a state level, this tax revenue will be distributed to state agencies overseeing the cannabis industry, law enforcement efforts, and legislative grants.

Social Equity Applications

There will be a Division of Social Equity within the Office of Cannabis Management and social equity applicants will be eligible not only to receive special legislative grants, but also priority in the application process. The social equity applicant criteria features some provisions which we have seen before in other states, such as those who were convicted of selling or possessing cannabis, family members of those convicted of these cannabis of offenses, and residents of communities disproportionately impacted by cannabis prohibition. However, also included in the social equity criteria are farmers from underrepresented communities and veterans or active military members who lost honorable status due to an offense involving the possession or sale of cannabis.

Start Your Minnesota Cannabis Business Now

It’s never too early to begin financial modeling and business planning for your Minnesota cannabis business. The license application window will be here before you know it. Knowing your business plan will require a qualified application means that the best prepared entrepreneurs will be the ones who stand head and shoulders above the competition. If you want a help with this, we have you covered.

Stay updated with our guide to Minnesota cannabis and contact our team of Minnesota cannabis consultants now.

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