Social equity applicants could get 'head start' in Minnesota's marijuana market

Minnesota regulators are pushing a bill that would give aspiring cannabis business owners who meet social equity criteria a head start in the state's recreational marijuana market.

Leaders of the state's Office of Cannabis Management at a news conference Thursday called for several changes to Minnesota's marijuana law, including one that would grant temporary business licenses as early as July to social equity applicants ahead of the anticipated 2025 market launch.

Social equity applicants include people harmed directly or indirectly by previous criminal enforcement of marijuana laws.

Those granted a temporary license would be allowed to do the preliminary work necessary to set up their business, such as securing a building and obtaining local zoning approval. Prospective business owners would not be allowed to start operations until the cannabis office has solidified rules for the industry, which likely won't happen until early next year.

"It does not allow any operations of a business as soon as July; I want to make that very clear," said Charlene Briner, interim director of the cannabis office. "When rules are in place … they're able to move quickly. This is really a head start in particular for social equity applicants, and we are very excited about that."

Applicants who don't meet social equity criteria would trail behind in getting a license, unable to start the application process until the agency's rules have been set.

Briner said the state is on track to launch its recreational marijuana market in 2025, but the start might not happen in the first quarter of the year as some had hoped.

"It may not be a Q1 launch here; I want to manage expectations," she said. "We hope to have ... applications for licenses available in early 2025, but that process of standing up businesses may take a few months or it may take longer."

Leili Fatehi, a partner at the cannabis consulting firm Blunt Strategies, said the temporary licenses for social equity applicants would help to "even the playing field." Without a temporary license in hand, it could be difficult for them to secure the financing or property lease needed to start a business, she said.

"The issue that social equity applicants face is that they have difficulty getting in the door for those things to begin with," said Fatehi, who worked with lawmakers last year to pass Minnesota's marijuana law.

The bill would limit the number of temporary licenses available for retailers, growers, manufacturers and others. If applications for the temporary licenses exceed the number of available licenses, the cannabis office would have to use an "impartial, random" lottery system to determine who gets them.

The bill also suggests capping the overall number of cannabis business licenses that can be issued in the market's first two years.

"After that, we'll have enough data to evaluate market conditions," Briner said.

Among many other changes, regulators want to remove a requirement for applicants to secure a property before applying for a license, in hopes of tempering "undue financial burden." The bill also would consolidate the recreational and medical marijuana supply chains to help lower costs for consumers, and would give the cannabis office enforcement authority over the state's hemp-derived cannabis market starting this July.

"The reality is, cannabis is cannabis when you grow it," Briner said of consolidating the supply chains. "It is not until you get to the point of processing and manufacture that it becomes the distinct medical or adult-use products that people may be familiar with."