How to Win a Cannabis Business License in Minnesota

Although an exact date for the commencement of cannabis business licensing is yet to be determined, Governor Walz has expressed his commitment to establishing a clear pathway for licensing and regulation of Minnesota cannabis businesses by May 2024. Since winning a cannabis business license can be a competitive process, many entrepreneurs and investors are eager to enter Minnesota’s burgeoning cannabis industry. While the specific requirements and procedures for Minnesota cannabis licensing have yet to be finalized, there are several key steps that can increase your chances of obtaining a cannabis business license.

Winning a cannabis business license requires a combination of thorough preparation, compliance with regulations, and a compelling application that demonstrates your commitment to responsible operations and the overall success of the industry. Get started educating yourself about Minnesota cannabis licensing today to prepare to enter this new adult-use cannabis market!

Minnesota Cannabis Licensing: Process

Additional regulations will likely expand on requirements for cannabis business licensing, but currently, applicants will be required to receive zoning approval from the local government and provide all required information on forms to the Office of Cannabis Management in the manner prescribed by the Office.

If an applicant fails to submit all required information, a deficiency notice will be sent and the application will be given 10 days to submit required information. Failure by an applicant to submit all required information will result in the application being rejected.

Upon receipt of a completed cannabis business application and licensing fee, the Office of Cannabis Management will forward a copy of the application to the local unit of government in which the business operates or intends to operate. Local government will then provide certification as to whether the proposed cannabis business complies with local zoning ordinances and, if applicable, whether the proposed business complies with the state fire code and building code.

As part of the Minnesota cannabis business licensing process, every license applicant and prospective cannabis worker must submit to a criminal background check. This includes the submission of a completed criminal history records check consent form, a full set of classifiable fingerprints, and the required fees to the Office of Cannabis Management. For business entities, completed criminal background checks, like all other application requirements, are required from every cooperative member, director, manager, and general partner. 

Upon receipt of this information, the Office of Cannabis Management must submit the completed criminal history records check consent form, full set of classifiable fingerprints, and required fees to the Bureau of Criminal Apprehension. After receiving this information, the Bureau will conduct a Minnesota criminal history records check of the license applicant. The Bureau may exchange a license applicant’s fingerprints with the Federal Bureau of Investigation to obtain the applicant’s national criminal history record information. The Bureau will return the results of the Minnesota and federal criminal history records checks to the director to determine the applicant’s cannabis business license eligibility.

Within 90 days of receiving a completed application, the Office of Cannabis Management will issue the appropriate license or send the applicant a notice of rejection setting forth specific reasons that the application was denied. 

Once a cannabis business license has been issued, it may not be transferred. A new cannabis business license must be obtained if one of the following occurs:

• The form of the licensee’s legal business structure converts or changes to a different type of legal business structure
• The licensee dissolves, consolidates, or merges with another legal organization
• Within the previous 24 months, 50 percent or more of the licensee is transferred by a single transaction or multiple transactions to:
  • Another person or legal organization
  • A person or legal organization who had less than a five percent ownership interest in the licensee at the time of the first transaction
  • Any other event or combination of events that results in a substitution, elimination, or withdrawal of the licensee’s responsibility for the operation of the licensee

Minnesota Cannabis Licensing: Requirements

The Office of Cannabis Management is charged with establishing forms and procedures for the processing of cannabis business licenses. At a minimum, any application to obtain or renew a cannabis business license will include the following materials, documentations, and forms, if applicable:

• The name, address, and date of birth of the applicant
• The disclosure of ownership and control
• The disclosure of whether the applicant or, if the applicant is a business, any officer, director, manager, and general partner of the business has ever filed for bankruptcy
• The address and legal property description of the business 
• Documentation showing legal possession of the premises where the business will operate
• A diagram of the premises, including a security drawing
• A copy of the security plan
• Proof of trade name registration
• A copy of the applicant’s business plan showing:
  • The expected size of the business
  • The anticipated growth of the business
  • The intended methods of record keeping for the business
  • The knowledge and experience of the applicant and any officer, director, manager, and general partner of the business
  • The environmental plan
  • Other relevant financial and operational components
• An attestation signed by a bona fide labor organization stating that the applicant has entered into a labor peace agreement
• Certification that the applicant will comply with Minnesota cannabis business laws relating to the ownership and operation of a cannabis business
• Identification of one or more controlling persons or managerial employees as agents who will be responsible for dealing with the Office of Cannabis Management on all matters
• A statement that the applicant agrees to respond to the Office of Cannabis Management’s supplemental requests for information

To participate in Minnesota cannabis licensing, applicants must be at least 21 years of age, complete the state’s cannabis business application, and pay the applicable licensing fee. Applicants must also reside in the state, or if a business entity, be incorporated in the state or
otherwise formed or organized under the laws of the state with at least 75 percent of the business owned by Minnesota residents.

Current Minnesota cannabis law prohibits licensure to applicants that are employed by the Office of Cannabis Management or any state agency with regulatory authority over adult-use cannabis, as well as applicants that serve as licensed peace officers. Applications will also not be accepted for those with a previously revoked Minnesota cannabis business license, those who have filed any previously required tax returns for a cannabis business, or those who have paid and remitted any business taxes, gross receipts taxes, interest, or penalties due relating to the operation of a cannabis business.

Applicants are required to fully and truthfully comply with all information requests from the Office of Cannabis Management relating to license application and renewal and must not have any disqualifying criminal convictions on their record. Additionally, cannabis businesses are prohibited from employing individuals with disqualifying criminal convictions.

Minnesota Cannabis Licensing: Limitations

The Office of Cannabis Management will determine the amount of licenses necessary to meet consumer demand and provide market stability, as well as limit the sale of unregulated cannabis flower and cannabinoid products. 

Within the cannabis business licensing process, the state has placed prioritization on microbusiness licenses. Unless the Office of Cannabis Management determines that the issuance of bulk cultivator licenses is necessary to ensure a sufficient supply of cannabis flower and cannabinoid products to the marketplace, bulk cultivator licenses will not be issued before July 1, 2028. This gives Minnesota microbusinesses the first opportunity to cultivate cannabis in the state. 

Additionally, unless the Office of Cannabis Management determines that the issuance of multiple licenses resulting in a single applicant being vertically-integrated is necessary to ensure a sufficient supply of cannabis, licenses will not be issued to a single applicant that would result in the applicant being a vertically-integrated operation.

Minnesota Cannabis Licensing: Selection Criteria

The Office of Cannabis Management will issue licenses in each license category, giving priority to applicants who receive the highest score. If there are insufficient licenses available for entities that receive identical scores, the Office of Cannabis Management will utilize a lottery to randomly select license recipients from among those entities.

Cannabis business licensing guidelines will be made available to the public regarding the number of points available in each category and the basis for awarding those points. Status as a social equity applicant will account for at least 20 percent of the total available points, and in determining the number of points to award to a cooperative or business applying as a social equity applicant, the Office of Cannabis Management will consider the number or ownership percentage of cooperative members, officers, directors, managers, and general partners who qualify as social equity applicants.

The Office of Cannabis Management will award points to each completed application in the following categories:

• Status as a social equity applicant or as an applicant who is substantially similar to
  a social equity applicant
• Status as a veteran applicant
• Security and record keeping
• Employee training plan
• Business plan and financial situation
• Diversity plan
• Labor and employment practices
• Knowledge and experience
• Environmental plan

Individuals will be eligible for the social equity program if they meet the following criteria:

• A military veteran who lost honorable status due to a cannabis-related offense
• A resident for the last five years of one or more subareas, such as census tracts or neighborhoods, that experienced a disproportionately large amount of cannabis enforcement as determined by the study conducted by the Office of Cannabis Management
• A resident for the last five years of one or more census tracts where, as reported in the most recently completed decennial census published by the United States Bureau of the Census, either:
  • The poverty rate was 20 percent or more
  • The median family income did not exceed 80 percent of statewide median family income or, if in a metropolitan area, did not exceed the greater of 80 percent of the statewide median family income or 80 percent of the median family income for that metropolitan area

Application materials will also be available to allow individual applicants to demonstrate the impact that cannabis prohibition has had on that applicant including but not limited to the arrest or imprisonment of the applicant or a member of the applicant’s immediate family, and the Office of Cannabis Management may award points to such applicants in the same manner as points are awarded to social equity applicants. The Office of Cannabis Management may also give license priority to an application if the license issuance would expand service to an underrepresented market including but not limited to participation in the medical cannabis program.