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Minnesota House approves bill allowing early cannabis licenses for businesses to get head start, changes to how they will be rolled out

Minnesota legislators refine new state cannabis laws
Minnesota legislators refine new state cannabis laws 01:57

ST. PAUL, Minn. — The Minnesota House on Thursday approved legislation making changes to the state's new law legalizing cannabis for recreational use, including a pre-approval process for businesses to get a head start as regulators plan for market launch next year and contentious revisions to how those licenses will be issued.

Supporters say giving the green light to early — "pre-approved" — licenses for businesses to get a head start, which will position them well for the target market launch of next year. It was part of the request from new state regulators who will oversee the new legal industry. 

Rep. Zack Stephenson, DFL-Coon Rapids, who is the lead author on cannabis legislation in the chamber said the change "will allow those people to take the steps necessary to line up capital, secure real estate do all of those things knowing that they will have a license down the road, which will effectuate a faster startup once those licenses actually issue."

Only people who meet the criteria for a "social equity" applicant would qualify for what's been described as the "early mover advantage" and there would be a finite number of these licenses available. Stephenson and others have stressed that those licenses will not mean business operations will begin any sooner — like opening retail dispensaries or putting seeds in the ground. 

That is drawing concern from some in the industry and Rep. Nolan West, R-Blaine, who tried and failed to amend the bill Thursday to allow early cultivation. Right now the target launch is for 2025, but West argued that could be delayed even further if the state waits until the rulemaking process is complete without allowing early growing of plants.

"We need to grow immediately, as immediately as possible, because again the point is a safe and regulated place. You're not taking it seriously, I would argue," West said during debate.

"What I see is we're going to run into an awful launch as it stands now," he added.

The legislation also includes an update to the process by which licenses will be issued that's sparking fierce debate. It scraps the merit points-based system weighing a number of qualifications — including someone's social equity applicant status—to issue business license to cultivate, manufacture and sell cannabis in retail stores for a lottery system instead. Those seeking a license would still have to meet certain criteria before entering that pool, but then licensees would be chosen at random.

Charlene Briner, the interim cannabis office director, has told lawmakers she fears the points system under current law makes the process too subjective and that it could attract lawsuits seen in other states with similar programs. 

House Speaker Melissa Hortman told reporters Thursday that she endorses the switch.

"At a certain point in time when you're forwarding certain applications to go forward ahead of schedule than others, the most fair way is random," she said. 

But some Minnesotans looking to cash in on cannabis believe just the opposite: that a "vetted lottery," as it's been described, will not achieve the law's social equity goals.

In a letter to DFL leaders, small business owners looking to get a license suggested that the proposed system would "jeopardize the market's integrity and the prospects of those most harmed by past drug policies."

"When we ask our members who are trying to get into the cannabis industry, they're not afraid of competing on the merit – what they want is a fair chance at winning a license. And they feel that the merit-based system is the way to do that," said Nathan Young, the cannabis policy lead for the Minnesota Black Chamber of Commerce, in an interview.

The Minnesota Senate is also putting together its own legislation with modifications and there will be a joint panel of lawmakers from both chambers that will sort out differences before session ends.

"I look forward to the conference committee discussions and continued work on this bill, particularly the provisions surrounding the proposed changes to the lottery, which I know a lot of people are thinking about working on," Stephenson said. "We're still very open to conversation on that provision."

Other changes in the bill approved Thursday would expand the medical cannabis program.  Health care providers could certify a patient for medical cannabis without prior approval from state regulators. And patients could designate a caregiver to grow up to eight plants at home on their behalf if they are unable to on their own — a scaled-back version of an earlier bill this session.

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