Minnesota recreational cannabis licensing to be delayed for months

Prompted by legal challenges over the state’s recreational cannabis licensing process, Minnesota’s regulatory agency says the issuance of permits will be delayed for months, quashing expectations of the market opening in early 2025.

Under a new timeline, licenses will be issued via lottery sometime between May and June, the Minnesota Office of Cannabis Management (OCM) announced Wednesday.

The agency initially was expected to conduct a licensing lottery on Dec. 2, 2024.

In October, the regulator said it expected adult-use regulations to be finalized by the first quarter of 2025 followed by the launch of sales.

State moves away from preapproval process

Now, the OCM is ending the license preapproval process in favor of a standard licensing process for both social equity and general applicants beginning early next year, according to a Wednesday news release.

“This step allows the office to prevent delays to the market launch due to ongoing litigation and retain some benefit to social equity by allowing applicants for license preapprovals to move into this new round,” the release noted.

The decision comes a few weeks after Ramsey County District Court Judge Stephen Smith halted the licensing lottery for prospective businesses after some rejected applicants filed a lawsuit claiming the process lacked clear criteria and prohibited appeals.

The ruling “essentially eliminated the head start advantage that was initially offered through this social equity license preapproval process,” Mitchel Chargo, a partner at Hinshaw & Culbertson law firm in Minneapolis, told MJBizDaily via email.

The OCM said it will notify the 648 applicants who qualified in the preapproval process that their applications will move to the next licensing process.

How licensing process will work

Applicants aiming to secure a license uncapped by statute will not be subject to a lottery and will continue the process.

Applicants for licenses that have more applicants than available permits will be entered into the social equity lottery, and if they are not selected, they will have another opportunity in the general lottery, the OCM said.

Those denied licenses will have another opportunity in the general licensing cycle or they may opt out entirely and request a refund of their application fee.

The general licensing cycle will include a lottery and licenses reserved specifically for social equity applicants for certain permit types.

The window for social equity applicant verification will open Jan. 15.

The OCM will begin accepting social equity and general licensing applications on Feb. 18.

“This is a small win for the actual social equity applicants that aren’t part of the straw man conspiracy,” said Michael Mays, CEO of Quantum 9, a Chicago-based cannabis consulting firm.

“In my opinion, this approach is an admission by the OCM that they improperly denied applicants, which is the real issue here.”

Chris Casacchia can be reached at chris.casacchia@mjbizdaily.com.