Minnesota's new cannabis chief on tribal compacts, rules and when state could see a 'pretty robust' legal pot market

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The Minnesota Office of Cannabis Management (OCM) on Tuesday began accepting business license applications from prospective marijuana entrepreneurs hoping to enter the state's legal cannabis market. OCM interim director Eric Taubel, who previously served as the agency's general counsel before succeeding former interim director Charlene Briner last month, sat down with the Minnesota Star Tribune on Wednesday to discuss tribal compacting, launching the cannabis industry and more.

Here is a transcript, lightly edited for length and clarity.

Matt DeLong: Can you say any more about when you expect the first tribal compacts to be finalized?

Eric Taubel: I think it's hard to know for certain when we'll get the official pen to paper. The first negotiations started really in the fall of '23 and then it continued throughout 2024. They picked up intensity over the summer and fall. So we feel like we're getting close. In some ways. Every time you think you're almost to the end, there's a little bit of an issue that bubbles up. I would anticipate that pretty shortly — in the next month or two — we'd see some agreements.

MD: Do you expect the compacts to more or less look the same for each tribe, or will they be tailored?

ET: Every negotiation is individual with the leadership and negotiating team appointed by each of the councils for the 11 tribes, so there will be distinctions and differences. The overall framework is really guided by the statute that requires the governor to enter into those negotiations. A lot of the terms will be similar and cover the same exact ground, specifically because the compacting statute sort of lines up what the governor should do, what he can't do, what's off-limits, what's inbounds, those sort of things.

On the whole they'll look similar, but I think you'll see distinctions between communities and nations based on their particular interests.

Ryan Faircloth: The legislation envisioned this early-mover advantage, as Charlene Briner would say, for social equity applicants. What would you say to those folks who were hoping to get that advantage and now believe that maybe that advantage is going to the tribes instead, since the preapproval lottery isn't happening?

ET: It's something I struggle with because it operates from an assumption that there's one winner in the cannabis market launch — that the Minnesota market will only have one person, one group of people, one type of applicant that gets to be victorious. I think that mindset is problematic because the original House File 100 [the bill that legalized adult-use cannabis in Minnesota in 2023] contemplated tribal enterprise and tribal compacts. It contemplated social equity licensees and also what we refer to as the Minnesota craft market. The idea was an ecosystem that had multiple avenues to success and multiple types of businesses all operating together in the same space.

I think the preapproval lottery that OCM introduced last session was designed to create that runway for businesses. It reflected a view that the challenge for many social equity applicants in other states was access to capital and the ability to set up physical locations in a way that would time up well with market launch. Oftentimes, those applicants felt like they were trailing the market.

So I think the idea that there can only be one group or one type of applicant that gets early access or a victory early in the market, I generally just reject the premise there. Every other market has launched with such a substantial cannabis infrastructure relative to Minnesota, that maybe there is some concern that there's only a little bit of room left.

Ohio was a recent example people pointed to that launched really fast. On their first day of cannabis activity, they had 98 dual licenses. Those were 98 existing licensees in their marketplace. We have no licensees. We have two [medical cannabis] registrants and they have 16 stores. Some of those stores just opened recently. We look so different, in terms of available space for applicants and businesses, that no one group is gonna get a head start.

By our supply estimate, we need 1.5 million to 2 million square feet of canopy. Our existing medical, I think, has about 60,000 square feet of canopy. We're talking hundreds of thousands of available canopy to fill the early market, so everyone is going to get a shot.

The other thing that I think is really interesting is that there's now an opportunity not for competition, but for cooperation. The tribal nations have spent a lot of time and money — there are five or six that have built pretty incredible state-of-the-art cultivation facilities on tribal lands. They're going to need places to put that product that they're growing. As these early social equity microbusinesses — I think there are 192 that are queued up as qualified applicants as of [Tuesday], based on our conversion from the preapproval to this licensing round — they're going to be looking for product. So there's a chance for these two business types to work together to create an opportunity for both to succeed.

RF: From a precedent standpoint, we would be a national outlier in terms of giving tribes an early position in the market, right?

ET: Yeah, most states that are coming into compacting are coming at the tail end. Interestingly, that's a situation that's similar to social equity. Early states like Washington, Oregon and Colorado have added social equity provisions well into the sort of launch of their program. Both with respect to social equity programs and tribal compacts, the Minnesota Legislature made an intentional decision to front end that kind of work into the cannabis program, rather than doing a launch and then chasing after those provisions.

In talking with people in other states, you can imagine why it's harder to get positive results from things like compacts and social equity programs after you've built and launched than it is to build and launch with those in mind. I think it's very much true that we're an outlier in those regards and that was an intentional choice by the architects of the original cannabis bill.

RF: One more thing on the compacts I wanted to ask about is the exemption from local ordinances. Will cities have a say? What does that look like?

ET: The compacts have to contemplate local [governments] because people are going to have to locate these businesses somewhere. There's always, in state government, these continuums of, what's the guiding principle or law — state law or local or federal, those sort of things. This is just another area where there's going to be a little bit of overlap between what the state says and what [local governments] say.

We're lucky in that, generally speaking, we don't worry too much about federal law because it says everything we're doing is illegal, so that takes one of the pieces off the table. But otherwise, there are going to be certain provisions where the compacts will look to state law and other places where locals will have a role to play. But some of that really is subject to the negotiations in the compact right now. Once we have finalized agreements we can speak to that with a little more clarity.

RF: What's the latest on rules and when those might be done?

ET: Rules comments closed on Feb. 12. We got a substantial amount of comments. A lot of the feedback was related to some of the provisions around things like potency limits. But otherwise it feels like we've got a little bit of work on our end to go through those comments. We want to make sure that we give each of them the thorough review they deserve.

We have a team internally that's been putting together a list of what things we think we need to change, what things we would like to change, what things have to change. We'll make those decisions and work with the Revisor's Office to get those changes put in place. Once they're in place, we then petition the administrative law judge over at the Office of Administrative Hearings to review our rules and give us the thumbs up or thumbs down.

RF: Do you have a timeline on when you think this might be done?

ET: We're still on the timeline we've been on. Now that I'm not the general counsel, I'm way more excited to assign things to the legal department to do on unreasonable timelines, since I don't have to do it. We've tasked them with that project and we're going to try to get that turned around as fast as possible, so we can continue to meet our goal of end of March, early April, we're publishing the notice of adoption. That's always been the goal. We're meeting our internal deadlines to make that happen.

RF: When do you expect those 192 [social equity] microbusinesses to potentially have licenses in hand and be able to move forward?

ET: This is one that I think will be interesting, because in that 192 there are some people that are sort of dreamers, that put together their application and they have a hope and a prayer about building a little cannabis business.

Then I think there's some very serious people who have done the groundwork and have probably identified locations, have built out facilities. We can't control what the applicant is doing to get ready. But in the next couple weeks, while we're still doing work on rules, they're doing criminal background checks. They're going to be getting their labor peace agreement signed off on. The other thing they'll be doing is starting to work with local governments to get zoning approval and those sort of things they need to be able to open a physical location.

Once the rules get published, we'll start checking with those qualified applicants. As soon as they tell us, "we've got a location where we're approved," we'll send that out to the local [government] to have the locals say yes or no, they are approved as to zoning. Then we'll send an inspector out to their facility to give them the green light to go.

I think, realistically, in a month or so after rules are adopted, if there is someone who's a micro[business] or delivery or transporter who has all their ducks in a row and has punched all the buttons, they could have an operational license at that point. But that is obviously contingent upon them doing their work while we're doing our work as well.

RF: Do you expect the microbusinesses to be able to adequately serve the market early on?

ET: This goes back to the point I made about the lack of cannabis infrastructure in the state, which is that no group of license types or applicants is going to be able to serve the market early. We aren't going to have a launch that looks similar to other states because there's no back-end, existing infrastructure for cultivation, manufacture and transportation, delivery or retail. It's always going to have to be a bit of a crescendo.

We're excited to see Minnesota look different and that some of those early people in the market could be smaller cultivators and could really give themselves a chance to get a foothold in the market and create a brand identity. But I'm not sure that there's any way to, overnight, produce the kind of cannabis infrastructure you would need to have a fully saturated market at launch.

MD: Since you've taken the helm as the interim director, are you doing anything differently from what [former OCM interim director Charlene Briner] was doing?

ET: On the whole, no. I've been here since January of last year. Char was a collaborative leader who brought a lot of people to the table, so by and large, I always felt like my voice was heard. I felt very bought into the decisions we were making.

One of the staff members asked if I was a safe place for a cry and a hug, and I was like, "Well, you can certainly cry. But I'm not a hugger." That's a slight distinction there in terms of personality type.

I come from a legal background, and as a litigator I tend to home in on things like the details and the research. I think Charlene is a great communicator. I think those personality differences shine through, but I'm not sure that there's any sort of policy or substantive distinctions, at this point, that have really emerged.

MD: Knowing what you know now, is there anything you would have done differently if you had been at the helm in the last couple of years?

ET: No, I don't think so. One of the things that I think is most exciting is that every other state that has launched has been subject to the specific statutory and social-cultural values of that state. So as they've matured and thought about things they could do to make their market better, they've tried to add things on the back end.

We were given the chance to build, from the start, what we view as the possibility of a market that is equitable, but values public health, and that ensures market integrity and customer satisfaction, those sort of things. I felt like we were always making good choices and the choices we were making were about driving equity and about driving public health and about driving consumer reliance on products that'll be in our market. So I feel good about the choices we've made.

MD: When do you think Minnesotans can expect to see a well-supplied market? Could that possibly be late this year or more likely next year?

ET: My gut is that, as we get towards the fall and winter of 2025, it'll look pretty robust. I think it'll be that sense where, out of nowhere, it will be, "Oh yeah, there's a bunch of cannabis retailers around here now, and there used to not be." But it will slowly creep up in a way that makes it seem like it goes overnight. That's what I would anticipate.

Over the last year or so, we've seen a number of operators that have talked about being ready and are in positions to get going. I know a lot of them are making preparations now, so as they get licensed, they don't have a lot of delays.

I'd also note that in the coming weeks we'll be introducing our budget proposals, one of which is focused on creating more capacity for labs. We've identified laboratory capacity as a high-profile issue, specifically to ensure that we can have a market that gets product quickly from cultivators and manufacturers to the shelves, with the right testing. So last year we created the reference lab, which will help us ensure the labs are accurate. This year we're moving forward with a recommendation to create a pathway for labs that aren't yet certified by this international certification organization ISO, so that we can get those labs up and running. I think that'll definitely help us get towards that more fulsome market by the end of the year.

MD: Do you think the tribes and these early social equity microbusinesses that might be licensed sooner might have enough combined capacity to serve the market early on?

ET: Yeah, I think so. Every market experiences some similarities, in terms of some early demand crunch on supply. That'll likely happen here. Similarly, in markets where there aren't caps on cultivation, you start to see a sort of precipitous fall.

I actually saw an article recently, one of the larger cultivators out of Michigan basically idled their grow facility for three months because the supply was so saturated in the state. I think that's one of the challenges — knowing that there'll be this real high-demand, low-supply market launch and not overcompensating by flooding the market with product.

But I think those early movers, both those microbusinesses as well as the tribal operations, will have a real chance to work together to bring those products across the state.

RF: Are you worried at all about litigation possibly tying up the next lottery? How do you avoid that?

ET: Yeah. The part of me that used to be a lawyer loves the sort of job security of cannabis licensing because there's always lawsuits. Sitting on the other side now, I don't love it quite as much, but I also think that the design principles have changed.

The current litigation has had a lot of action in terms of court filings. We've had one hearing, but we've never actually had any analysis of the merits of what OCM did, in terms of its application process and its review process and the denials it made.

I observed the courtroom proceedings in St. Paul, when the injunction was placed. My observation was that the judge had some concerns about the lack of the ability to cure mistakes in an application and had some concerns about the fact that if you got denied, you had no reconsideration rights. It's not surprising that judges care deeply about things like due process. I think his sense that applicants submit an application, got no feedback and then got a yes or no, didn't jibe with his expectation of how an application process should work.

In this next round, we've already issued those requests for more information to the preapproval applicants that got denied. So they're going to get a chance to fix the mistakes. That's different than last time. We eschewed that process to try to market-launch faster, to get us to the lottery as quickly as we could.

The other thing that changes is the statute for preapproval said you cannot offer a reconsideration process — final decision is final. This time we have to. So this time, for anybody that gets denied, their denial will have happened because no less than two reviewers denied them for the same reason [and] they had a chance to fix that denial. After not fixing that denial, they had a chance to ask the office to reconsider the denial based on legal arguments or evidence they present, and then only after that did they actually get denied.

I think it's almost a virtual certainty that someone will sue us. Someone will get denied and be upset and make a challenge. But I think that lawsuit looks a lot different, in terms of the conditions under which that application got to the judge, than the current batch does. In that regard, I think we feel a lot more confident that we'll withstand challenge. The other nice thing is there was some ambiguity around where a challenge went: Did it go to the Court of Appeals? Did it go to the District Court?

The District Court judge, in issuing a stay, issued a subsequent order that noted he wasn't sure if he actually had subject matter jurisdiction to review the application denial. So I think the market's a lot clearer now that those denials go to the Court of Appeals. On the whole, based on those particulars, we feel better about future challenges. We certainly can't control if and when those challenges happen, though.

RF: Why do you think Minnesota has taken longer than some other states to go from legalization to retail sales?

ET: I think about this a lot, because it's obviously something that people say a lot. I will preface by saying, it doesn't feel like it's been a long time to me. It feels like I just started the last job and certainly just started this job. I also know that the people that work at OCM are doing really good work and working really hard, and so the idea that it's slow is in contrast with that lived experience of my co-workers.

That said, I think there are three categories that affect market launch speed. The first is existing cannabis infrastructure, and a pivot off that is a willingness to leverage that existing infrastructure.

The second is administrative law processes. How hard is rulemaking within your market?

And the third is office location [and] agency launch.

In the first bucket, most states do have pretty substantial cannabis infrastructure and choose to leverage it. So in that regard, if you have 98 licensees, you can dual-license. It's not that difficult to say, "OK, now you can do both."

Similarly, I think Massachusetts had 30 to 40 or 50 [licensees] that they were able to launch with. Obviously, Colorado had a huge existing medical infrastructure when they launched and they just sort of pivoted and turned it on. That's a big deal.

Even in Minnesota, and Rep. [Zack] Stephenson said this in last week's commerce hearing, that we simply don't have that infrastructure in Minnesota. So even if we had said on Day One that medicals now can do adult-use, it really wouldn't be enough to serve the market. And it would really imperil medical cannabis access for medical cannabis patients.

The second is rulemaking. A lot of states have, from my vantage point, pretty easy rulemaking processes. The Legislature says, make rules on this, and then they just publish the rules. And those are the rules. That's a pretty quick process.

In Minnesota, we have to get it into a specific form. That has to be done by the Revisor's Office and then has to go through an administrative law process; there has to be public comment. Generally speaking, best case scenario in Minnesota, it's a year to do any kind of rulemaking. If it's complicated, it's 18 months to two years. We're on a pretty good tight run with that.

The last thing I would note is that most agencies that have independent cannabis offices, those launch as independent after the market launches. Normally they're put inside an existing state agency — a Department of Commerce, a Department of Revenue, whatever it might be. Eventually they break off and become their own stand-alone agency.

Recognizing it's a multibillion-dollar market and that it's important to build experience and knowledge within the office, I think it was a smart choice to create the office at the same time you create the market. But that does carry some collateral consequences in terms of timing, because in order to write the rules you have to have lawyers and subject matter experts in the building. In order to do that you have to have an HR director who can write the position descriptions. So there's a couple pieces that have to be built first and I think this is always what interim director Briner was saying when she said we're building the plane while we're flying it. The plane was the office.

So Minnesota, on all three of those measures, has chosen a path that makes the launch maybe take longer. I think overall it'll be a better market because of these choices. But there are trade-offs that are made based on each of those categories.

MD: Is there anything that you think has been underreported in the last couple of years?

ET: I'm not sure. I feel like we've had a fair amount of attention on us. People are interested and I'm excited about that. There are a lot of people here that are committed to this and excited about this and doing really good work.

It's hard to see the headlines about whatever not positive things there are. I especially think about this a lot in light of what's happening in the federal government, with federal employees who are now kind of under siege. People that choose public service do it because they care about their communities and the people that they live by and work with. Everyone here is working as hard as they can and in good faith to get this thing done. That would be the only thing I would love to see more of, some of the good work we are doing. But I also understand the realities of reporting, what drives interest is the horse race and the topline stuff.

RF: Any interest in becoming the permanent OCM director?

ET: I applied to be the general counsel. I left the Department of Education to do this because it aligned more with my interests. So I've been excited every day I've been here to do this work. I continue to be excited to do this work in whatever capacity I'm asked. As I talk through where we are in terms of [market] launch, there are so many balls in the air that I think the continuity was a key factor in the decisionmaking. So I was happy to step into this role and will continue to be happy to serve in whatever role makes sense for OCM and the state.