Minnesota has officially legalized adult-use cannabis with the passing of HF 100. This monumental legislation reflects a progressive shift in attitudes toward cannabis, recognizing its potential benefits and acknowledging the will of the people. With this legalization, Minnesota becomes the 23rd US state to embrace the economic opportunities and social justice reforms associated with legalizing recreational cannabis.
This momentous step also paves the way for a regulated cannabis industry that ensures product safety, generates tax revenue, and fosters job creation. We are excited about the positive impact this move will have on the lives of Minnesotans and the state as a whole, and look forward to working in this emerging market!
Minnesota Cannabis Legalization: HF 100
HF 100 effectively legalized recreational cannabis use for adults 21 and older and, starting August 1st, cannabis consumers will be allowed to possess up to two ounces of cannabis. The legalization bill contains many similarities to other established cannabis markets, such as Illinois, and includes provisions for social equity as well as an emphasis on smaller businesses over large vertically-integrated companies.
Although it will likely be at least 12 to 18 months before legal adult-use cannabis sales begin, the Minnesota Department of Revenue estimates that recreational cannabis sales could generate about $107 million in annual tax revenue for the state and roughly $21.5 million for local governments by 2027. Of this total, it is estimated that state and local governments could generate more than $300 million in tax revenue between 2024 and 2027.
In addition to legalizing adult-use cannabis in Minnesota, HF 100 provides guidelines for future cannabis business licensing. The bill outlines multiple different cannabis business license types, including:
- Cannabis Microbusiness
- Cannabis Mezzobusiness
- Cannabis Cultivator
- Cannabis Manufacturer
- Cannabis Retailer
- Cannabis Wholesaler
- Cannabis Transporter
- Cannabis Testing Facility
- Cannabis Event Organizer
- Cannabis Delivery Service
For those looking to start a Minnesota cannabis business, HF 100 requires that applicants reside in the state, or if the applicant is a business entity, the bill requires 75% ownership by Minnesota residents and business incorporation within the state.
In addition to cannabis business licensing, HF 100 includes provisions for the expungement of cannabis related offenses. Non-felony cannabis offenses will be automatically expunged, while a board will review more serious cannabis crimes. On August 1st, the Bureau of Criminal Apprehension will begin expunging records.
Minnesota Cannabis Regulatory Authorities
Minnesota’s adult-use cannabis program will be governed by the Office of Cannabis Management and will include a 30-person Cannabis Advisory Council.
A Division of Social Equity will report directly to the Office of Cannabis Management and will help guide the state’s social equity program. This Division will be charged with administering grants to communities that experienced a disproportionate, negative impact from cannabis prohibition in order to promote economic development, provide services to prevent violence, support early intervention programs for youth and families, and promote community stability and safety. Additionally, the Division of Social Equity will act as an ombudsperson, or representative, for the Office of Cannabis Management to provide information, investigate complaints, and provide or facilitate dispute resolutions.
In addition to the regulatory authority of the Office of Cannabis Management, local governments will also play a role in governing Minnesota’s recreational cannabis market. Although local governments cannot prohibit the establishment or operation of cannabis businesses, they can impose additional regulations, such as limitations on the time, place, and manner of cannabis business operations. Local governments can also prohibit the operation of a cannabis business within 1,000 feet of a school, day care, nursing home, union headquarters, house of worship, or the Capitol or Capitol grounds provided that the prohibition does not have the effect of prohibiting the establishment or operation of a cannabis business within the locality.
Future of the Minnesota Cannabis Market
While there is currently no set date for cannabis business licensing to begin, Governor Walz has stated his intention to have a cannabis business licensing and regulation pathway established by May 2024. Those interested in entering the newly legalized adult-use cannabis market in Minnesota should start preparing now by:
- Understanding Minnesota’s cannabis laws: read HF 100 and learn the state’s guidelines for the adult-use cannabis market.
- Determining your eligibility for social equity: give your business an advantage in the cannabis business licensing process by applying as a social equity applicant.
- Educating yourself on recreational cannabis markets: visit adult-use cannabis businesses in other established markets to ensure you understand the vertical.
- Building a financial model: ensure you’re clear on the economics of starting a cannabis business by mapping out your finances.
- Forming an experienced team: contract with professionals with previous cannabis business licensing and operating experience to ensure your cannabis business is set up for success.
How Can Point Seven Group Help?
The team of cannabis consultants and professionals at Point Seven Group have worked extensively in the U.S. and international cannabis markets and are familiar with the unique challenges of the cannabis industry. Follow us on social media to stay up to date with more cannabis industry updates!
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