Minnesota Cannabis Update: August 2024
The preapproval application period for Minnesota cannabis licenses closed on August 12, 2024, shedding light on the future of the state’s cannabis industry. If you received social-equity (SE) status and submitted your preapproval application, here’s what you should know before the lottery.
What is License Preapproval?
Preapproval for a Minnesota cannabis license must be issued by the Office of Cannabis Management (OCM) before the next stage of licensing. It’s important to note that preapproval is not the same as a full cannabis business license.
Businesses with preapproval should focus on securing legal control over their location, obtaining zoning or planning approval, and possibly raising capital to fund their startup. It’s important to note that preapproval does not allow a cannabis businesses to start operating yet.
Once the rulemaking process is completed and the rules are officially adopted, applicants who meet the necessary Minnesota cannabis license requirements can convert their license preapproval into a full Minnesota cannabis license. Doing so will authorize them to begin business operations.
However, SE applicants with preapproved licenses for specific business types (including the cultivator, mezzobusiness, and cannabis microbusiness license in Minnesota) can start growing cannabis plants under existing medical cannabis rules, even before the new rules are adopted.
Details About the Lottery
The first lottery draw is expected to be held during the fall of 2024 after each application is reviewed by the Office of Cannabis Management (OCM). This initial draw will only include the licenses that authorize cultivating, processing, or opening a dispensary in Minnesota.
There are a specific number of licenses that can be awarded in each category. There will be additional licenses awarded in future application rounds for SE applicants, and general applicants (not qualifying for SE status). Below is a table sharing the number of applications submitted for each license category, along with the number of licenses that will be awarded in this round.
The three categories with fewer applicants than available licenses—cannabis wholesaler, transporter, and testing facility—won’t require a lottery.
Additional Findings
The data generated during the first application window presents a variety of insights that reveal who applied, and what’s to come. We learned that military veterans and individuals with prior marijuana convictions represent the largest group qualifying for social equity cannabis license status under Minnesota’s new cannabis law. Here’s what else was found:
Applicant Numbers
1,817 applicants for 280 licenses applied by the deadline, with the Office of Cannabis Management (OCM) now reviewing them to ensure they meet minimum Minnesota cannabis license requirements.
Residency
Over 50% of applicants for social equity cannabis license status had a Minnesota address, but the law does not require residency.
License Category Stats
The cannabis microbusiness license in Minnesota, and cannabis mezzobusiness categories are the most competitive. However, some categories like cannabis wholesaler, transporter, and testing facility have fewer applicants than available licenses, suggesting potential challenges in meeting industry needs.
Lottery Timing
The timing of the lottery depends on how quickly the OCM can review applications, which is the main factor determining the rollout schedule.
Industry Rollout
Early cultivation rights have been granted to ensure cannabis products are available when dispensaries open in the spring of 2025. However, only lottery winners in specific categories, such as microbusinesses and cannabis mezzobusinesses, will be able to start growing cannabis after preapproval.
Temporary License Caps
The Legislature has imposed temporary caps on certain license types, which will be lifted once the industry rollout is fully underway.
If everything goes as planned and license caps are lifted, Minnesotans could expect “rolling licensure.” This means that there might not always be time specific Minnesota cannabis license application windows and a lottery system. Instead, licenses would be reviewed, scored, and awarded more frequently and consistently.
Next Steps
Those who are selected in the preapproval licensing lottery will then be required to undergo a background check, and complete any final steps communicated to them by the OCM.
There will then be a license conversion period, with details that the OCM has yet to fully disclose. Regardless, there are a variety of next steps you’ll need to work through, starting with your standard operating procedures (SOP).
Finding a Compliant Location
The first thing you’ll need to do after securing a preapproval license is complaint location, and securing zoning or planning approval. While searching for a location, keep the following set back distances in mind:
- 1,000 feet from a school
- 500 feet from a daycare
- 500 feet from a residential treatment facility
- 500 feet from any attraction in a public park regularly used by minors, such as a playground or athletic field
Creating Standard Operating Procedures
There are a variety of SOP plans that are required for a successful license application submission. If your application was selected, now is the time to complete the actual SOPs. Remember, SOPs can vary depending on the license that was applied for. However, you’ll generally need to submit procedures for:
- Accounting and Tax Compliance
- Inventory Control Storage & Diversion Prevention
- Quality Assurance
- Cultivation Plan (for Microbusiness, Cannabis Mezzobusiness & Cultivation licenses)
Beyond SOPs, you’ll also need to finalize your business plan, security plans, and more.
Why Work With CannDelta?
By choosing CannDelta, you’re partnering with a team of Minnesota cannabis consultants who are deeply committed to your success. Whether you plan on opening a dispensary in Minnesota or any other cannabis business, CannDelta can guide you through the entire process. Our extensive experience across North America gives us a unique perspective on the ever-changing dynamics of the cannabis industry.
Fill the form below to get in touch with a cannabis licensing expert today!
Frequently Asked Questions
What is the Minnesota Cannabis License Preapproval Process?
The Minnesota cannabis license preapproval process is the first step in securing a cannabis business license. Those who want to open a cannabis business must first apply for license preapproval. Doing so requires the submission of a cannabis business license application. If the application meets all of the requirements, and the application fee is paid, the application will be entered into a lottery draw. The applicants who are selected in the lottery draw will receive license preapproval, which allows them to move forward in the licensing process.
How can I Apply for a Minnesota Cannabis License in 2024?
You can apply for a Minnesota cannabis license in 2024 by applying in the general application window, which is expected to open in fall or winter of 2024. Minnesota’s regulating body, the Office of Cannabis Management (OCM), has announced that there will be a general application window opening, but they have not announced when. You can apply by preparing your application and all required documents, plans, and more.
When Will the Cannabis License Lottery Take Place in Minnesota?
The license preapproval lottery will take place shortly after the license application window closes. Minnesota’s Office of Cannabis Management (OCM) has not released an official date for when the lottery draw will take place. However, it is likely to take place at the end of summer or start of fall, 2024.
How Does the Minnesota Cannabis License Lottery Work?
The Minnesota cannabis license lottery is a random draw that determines which applicants are issued license preapproval. All applicants with complete and compliant applications will be entered into the lottery, where they will have a chance at being selected.
How Long Does the Minnesota Cannabis License Application Process Take?
The cannabis license application process generally takes a substantial amount of time. This is because of how extensive the application requirements are. Initial applications for license preapproval require a series of detailed plans and documents that can be difficult to create. Cannabis licensing experts with application experience can accelerate the process without sacrificing quality.
How Many Mirobusiness Licenses Were Awarded by the OCM?
Minnesota’s Office of Cannabis Management (OCM) awarded 100 Microbusiness licenses. There were a total of 586 applicants who applied for license preapproval in the first (social equity) application round. There will be a general licensing period that will likely open in the fall or winter of 2024.
What's the Difference Between a Microbusiness Licenses & Mezzobusiness License?
Both the microbusiness and mezzobusiness licenses allow the license holder to engage in a variety of activities.
These include:
- Retail
- Transport
- Cultivation
- Packaging
- Extraction
- Product manufacturing
- Wholesale
- On-site consumption
- Medical cannabis license types
The difference between these licenses is that a microbusiness can conduct these activities on a smaller scale than the mezzobusiness license. For example, a microbusiness license allows a business to open one dispensary, while the mezzobusiness licenses allows the licensee to open three dispensary locations.