Would you like to open one of the first adult-use cannabis businesses in Minnesota’s billion-dollar market? Governor Tim Walz just signed the bill into law!
In the article below, you’ll find a step-by-step guide with ten steps you can take now to win a license. But first, let’s look at the broader scope of the Minnesota cannabis program, including the application process.
Minnesota Cannabis Business Consultants
Laws and Regulations
Firstly, our Minnesota cannabis business consultants recommend that you thoroughly read the bill that was signed into law.
In addition to the bill, you should familiarize yourself with the recently created Office of Cannabis Management (“the office”). It will regulate cannabis, take enforcement actions, and promulgate the rules for your adult-use cannabis business application. Therefore, familiarize yourself with its website, news releases, and notifications.
Next, our Minnesota marijuana business consultants discuss the timeline of the adult-use program.
Governor Tim Walz signed the adult-use cannabis bill into law on May 30, 2003. The office will develop the regulatory framework over the coming months, and establish processes and timelines to apply for licenses. Thereafter, retail sales are anticipated to begin the first quarter of 2025.
In addition, Minnesota will continue to operate its Medical Cannabis Program. The Medical Cannabis Program will move from under the control of the Department of Health to the Division of Medical Cannabis which will be housed in the office, effective March 1, 2025. Lower potency hemp businesses currently in operation will need to register with the Department of Health by Oct. 1, 2023, and eventually get licensed under the office.
Types of Marijuana Business Licenses in Minnesota
First of all, Minnesota is offering ten (10) main types of adult-use cannabis licenses, as well as four (4) medical cannabis business licenses:
- Testing Facility
- Event Organizer
- Delivery Service
- Medical Cannabis Cultivator
- Medical Cannabis Processor
- Medical Cannabis Retailer, and
- Medical Cannabis Combination Business
In addition, the legislation offers lower-potency hemp edible manufacturer and retailer licenses. Refer to the appendix below for details on the permitted activities of the various Minnesota adult-use cannabis license types.
Next, let’s take a look at the proposed application process.
Application Process for a Cannabis Business License in Minnesota
Applications will be scored. The office will award points to each completed application for a license to operate a cannabis business in each of 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 ore retired national guard applicant who does not meet the definition of a social equity applicant;
- security and record keeping;
- employee training plan;
- business plan and financial situation;
- labor and employment practices;
- knowledge and experience; and
- environmental plan.
The office may award additional points if the license holder would expand service to an underrepresented market, including but not limited to participation in the medical cannabis program. In addition, the office will establish application materials permitting applicants to demonstrate the impact that cannabis prohibition has had on the applicant, including but not limited to arrest or imprisonment of the applicant or of a member of the applicant’s immediate family. The office may award points to such applicants in the same manner as it awards points to social equity applicants.
The office will issue licenses in each licenses category, giving priority to applicants who receive the highest score under categories one through eight above, and if the license holder would expand service to an underrepresented market (including but not limited to participation in the medical cannabis program).
Application and Licensing Fees
The office will charge a nonrefundable application fee to cover the administrative costs of reviewing and processing applications. Licenses must be renewed annually. In addition, licenses may not be transferred.
- Microbusiness License (application fee $500; no initial license fee; renewal license fee $2,000)
- Mezzobusiness License (application fee $5,000; initial license fee $5,000; renewal license fee $10,000)
- Cultivator (application fee $10,000; initial license fee $20,000; renewal license fee $30,000)
- Manufacturer (application fee $10,000; initial license fee $10,000; renewal license fee $20,000)
- Retailer (application fee $2,500; initial license fee $2,500; renewal license fee $5,000)
- Wholesaler (application fee $5,000; initial license fee $5,000; renewal license fee $10,000)
- Transporter (application fee $250; initial license fee $500; renewal license fee $1,000)
- Testing Facility (application fee $10,000; initial license fee $10,000; renewal license fee $20,000)
- Event Organizer (application fee $750; initial license fee $750)
- Delivery Service (application fee $250; initial license fee $500; renewal license fee $1,000)
Now, let’s look at priority applicants, since the Minnesota cannabis business license applications will be scored and merit-based.
Social Equity Status | Priority Applicants
Firstly, the bills establish a Division of Social Equity within the OCM to promote development, stability, and safety in communities that have experienced a disproportionately negative impact from cannabis prohibition.
Secondly, social equity applicants will be scored higher. All things considered, status as a social equity applicant must account for at least 20 percent of the total available points. The office will determine the points awarded by considering the number or ownership percentage of cooperative members, officers, directors, managers, and general partners who qualify as social equity applicants.
In sum, an individual qualifies as a social equity priority applicant if the individual is:
- 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; or
- 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:
- poverty rate 20% or more, or,
- 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.
Also, the bills create grants to assist individuals to enter the legal cannabis market, as well as funding cannabis industry training grants and start-up assistance funds.
Next, let’s look at the subject of local control.
Local Control in Minnesota
The proposed state laws ban local municipalities from opting out from allowing cannabis businesses to locate within their jurisdictions, although they are allowed to review for compliance, and also can set limits on times of operations.
Tips for Winning Licenses (Steps 1-10) from our Minnesota Marijuana Business Consultants
Step 1: Read the Laws and Regulations
First, to win a cannabis business license in Minnesota, you should acquaint yourself with the current law, the 12th engrossment of HF0100. Moreover, doing so will help you understand the types of licenses available, as well as the application process and operational requirements.
Secondly, to become a successful marijuana business owner, we suggest you regularly visit the Office of Cannabis Management. This state agency will license and regulate all Minnesota adult-use cannabis businesses, as well as the Minnesota Medical Cannabis Program (beginning by March 2025).
Finally, contact our Minnesota cannabis consultants and we’ll keep you informed with the latest.
Step 2: Choose a license type
The legislation creates more than a dozen types of licenses for growing, selling, transporting and testing cannabis. In addition, special event and on-site consumption licenses will be offered. Read summaries below for authorized activities for the different types of adult-use marijuana business licenses in Minnesota.
Step 3: Engage our Minnesota cannabis business consultants
Allow us to manage your project from pre-licensure to fully approved and operational. Our cannabis business consultants in Minnesota can manage all aspects of your application, including:
- Team recruitment,
- Raising capital,
- Real estate selection,
- Facility design,
- Technical writing,
- Operational support,
- Employee education and training, and more.
In any event, reach out for our consulting services to learn more.
Step 4: Form a business entity
At this beginning stage, you should form a business entity, such as an LLC or an S-corp.
You can learn more about forming a business entity in Minnesota by visiting the Minnesota Department of Employment and Economic Development. If you are unsure what type of business entity would work best for your proposed cannabis operations, engage our consultants or work with an attorney to choose the best structure for your business plans.
Next, let’s look at the importance of building a strong team.
Step 5: Build a team with the help of our Minnesota cannabis business consultants
The office will scrutinize the background and qualifications of each member of your team in order to ensure proper safety and compliance. Your team should expertise related to both business management and the wide variety of cannabis business specific operations.
With our talent acquisition services, our Minnesota cannabis business consultants provide you a deep network of industry-leading experts and help you put together the ideal team for the approval of your business license.
Reach out today for more information about our personalized business applications and consulting services.
Step 6: Develop a business plan with the help of our Minnesota marijuana business consultants
Firstly, a comprehensive business plan is critical for you to raise capital for your cannabis business application in Minnesota. The application process will be highly competitive.
Your business plans should show, at a minimum:
- the expected size of the business,
- anticipated growth,
- methods of record keeping,
- knowledge and experience of the applicant and any officer, director, manager, and general partner,
- environmental plan, and
- all other relevant financial and operational components.
Above all, make sure you have crafted a viable business model. It shows the office that your business is well-planned and sustainable. Plus, it will help you to raise capital. Engage our Minnesota cannabis business planning services. We’ll help you write the best business plan that aligns with your mission statements, lines out your strategies and budget projections, and provides your market analysis and pro forma financial statements.
Step 7: Raise Capital with the help of our Minnesota marijuana business consultants
Although the license application fees themselves may seem minor in comparison to other states, starting a cannabis business in Minnesota is a costly endeavor. In addition to annual license fees, the start-up costs alone can easily run you and your team into the millions.
Now is a good time to get your financials in order. You’ll have to show the sources and structure for all your financing in the license application. Plus, you need to show that your financial plans can carry your newly licensed cannabis business to sustainable and productive fruition.
Finally, choosing the right location may be crucial to ensuring your capital raising is put to the best use.
Step 8: Choose a location with the help of our Minnesota cannabis business consultants
As you’re raising capital, research locations for your cannabis business. It can take months to secure a location, and you want to make sure it’s the right location for your proposed operations.
Additionally, check with the municipality and make sure your proposed location is compliant and zoned correctly.
Remember, municipalities in Minnesota cannot opt-out after the new law, although they can control operational hours and locations to a certain extent. Still, when you’ve submitted your license application to the office, the agency will send a copy to the municipality for affirmation that you are compliant with local zoning, as well as fire and building codes.
So, be sure to do your facility location research well in advance. If you are unsure of the best location, reach out to our Minnesota cannabis business consultants.
Next, seek letters of support from appropriate local authorities and community organizations.
Step 9: Garner local support
Most important, showing proof of local support will make your application stick out from the multitude and help you win a license. Do your best to obtain a letter of support from the municipality and any local organizations.
Enlist our Minnesota cannabis business consultants for building local connections in your prospective location. Also, we can guide the technical writing of your application from start to finish.
Step 10: Write and submit an application with our Minnesota Marijuana Business Consultants
At last, you can begin writing and compiling portions of your Minnesota cannabis license application. Above, we listed some of the sections of the application that you will have to submit, where we have also detailed the sections that are priority scored.
In addition, you will need to include your:
- applicant information, including:
- name, address, date(s) of birth of applicant(s),
- disclosure of ownership and control,
- bankruptcy filing history for any officer, director, manager, and general partner of the applicant business,
- diagram of premises, including security,
- address and legal property description of the business, and
- proof of trade name registration.
Also, the application includes requirements for the following:
- criminal history check,
- operation plan to ensure compliance,
- labor peace agreement signed attestation by a bona fide labor organization,
- commitments made including how you will maintain your labor peace agreement,
- certification of compliance with the cannabis business ownership and operation requirements,
- identification of controlling persons or managerial employees as responsible agent to the office,
- statement of agreement to respond to the office’s supplemental requests, and
- disclosure of ownership and control.
Another key point, the office will score your application based on merit and compliance. You can easily end up writing hundreds of pages of technical narratives.
Lastly, allow our Minnesota cannabis business consultants to write your application for you. We have one of the highest success rates in the industry for winning licenses (90.12%). We thrive in extremely competitive markets, which will certainly be the case for adult-use cannabis business licenses in Minnesota.
Contact our consulting firm in Minnesota for more information about our cannabis license application services.
Conclusions from our Minnesota Cannabis Business Consultants
Lastly, if you want to open a cannabis business in Minnesota, understand that you will be competing against multi-state operators. In addition, multiple cannabis and legal experts will vie fiercely for these limited licensing opportunities.
In conclusion, our Minnesota cannabis business consultants are highly experienced at winning cannabis licenses in extremely competitive markets, such as Minnesota’s adult-use license market. We have a track record to prove it, as shown in this video. Save yourself some time and money and engage our services. Reach out to the cannabis consultants at Quantum 9 for a free consultation.
APPENDIX | SUPPLEMENTAL INFORMATION
Below is supplemental information that our Minnesota cannabis business consultants included for your reference. In addition, follow this link if you want to learn about the economic benefits of regulating cannabis in Minnesota.
Description of each Minnesota cannabis business license
Below are descriptions of each of the business license types and their authorized activities.
Cannabis Cultivator License
Firstly, a cannabis cultivator license in Minnesota allows the licensee to grow cannabis within an approved amount of space.
- Indoor facility: You may cultivate up to 30,000 square feet of plant canopy. The office may adjust the canopy limits upward to meet market demand and as consistent with the goals of the program.
- Outdoor location: You may cultivate up to two acres of mature, flowering plants. The office may increase the limit to no more than four acres if the office determines that expansion is consistent with the goals of the program.
If you want a smaller amount of plant canopy, a microbusiness license may be the perfect option for you.
With the cultivator license type, you can conduct the following activities:
- Grow from seed or immature plant to mature plant,
- Harvest cannabis from a mature plant,
- Package and label cannabis for sale to other cannabis businesses,
- Transport cannabis to cannabis manufacturers that are located on the same premises, and
- Perform other actions approved by the board.
Secondly, a person, cooperative, or business holding a cultivator license may also hold a cannabis manufacturing license, medical cannabis cultivator license, medical cannabis manufacturing license, license to grow industrial hemp, and cannabis event organizer license. They may not own or operate any other type of cannabis business.
Cannabis Manufacturer License
A cannabis manufacturer license allows the licensee to purchase cannabis, cannabis products, hemp, and hemp products from cultivators, other manufacturers, microbusinesses, and industrial hemp growers. Additionally, with this license type, you can:
- Extract THC and other raw materials from cannabis,
- Concentrate THC,
- Manufacture products for public consumption,
- Package and label cannabis products for sale to other cannabis businesses, and
- Lastly, perform any actions that are approved by the board.
A person, cooperative, or business holding a cannabis manufacturer license may also hold a cannabis cultivator license, a medical cannabis cultivator license, a medical cannabis processor license, and a cannabis event organizer license. They may not own or operate any other type of cannabis business.
Cannabis Retailer License in Minnesota
Next, if you have a cannabis retailer license in Minnesota, you are able to sell immature cannabis plants and seedlings, adult-use cannabis, adult-use cannabis products, and other products authorized by law to customers. One license allows you to operate up to five retail locations.
Additionally, a cannabis retailer can only sell cannabis and cannabis products to those who are 21 and older. All immature cannabis plants and seedlings, adult-use cannabis, and adult-use cannabis products must:
- Be obtained from a licensed Minnesota cannabis cultivator, cannabis manufacturer, microbusiness, or wholesaler, and
- Meet all applicable packaging and labeling requirements.
Additionally, a cannabis retailer can sell up to two ounces of adult-use cannabis, eight grams of adult-use cannabis concentrate, and edible cannabis products infused with 800 milligrams of THC during a single transaction to a customer.
A cannabis retailer in Minnesota can also sell the following products:
- Drinks that do not contain alcohol,
- Books and videos about the cultivation and use of cannabis products,
- Magazines and other publications about cannabis,
- Multiple-use bags designated to carry purchased items,
- Clothing with the specific name, brand, the logo of the cannabis retailer, and
- Hemp products.
A person, cooperative, or business holding a cannabis retailer license may also hold a cannabis delivery service license, a medical cannabis retailer license, and a cannabis event organizer license. They may not own or operate any other type of cannabis business.
Cannabis Wholesaler License in Minnesota
Next, a cannabis wholesaler license in Minnesota allows for the licensee to purchase immature cannabis plants and seedlings, cannabis, cannabis products, hemp, and hemp products from cannabis cultivators, cannabis manufacturers, cannabis microbusinesses, and industrial hemp growers.
Additionally, this license allows you to sell immature cannabis plants and seedlings, cannabis, cannabis products, hemp, and hemp products to manufacturers and retailers.
In regards to the limitation on licenses, a cannabis wholesaler in Minnesota can also hold a cannabis transporter license, a cannabis delivery service license, and a cannabis event organizer license. They may not own or operate any other type of cannabis business.
Cannabis Transporter License in Minnesota
A cannabis transporter license in Minnesota allows the licensee to transport immature cannabis plants and seedlings, cannabis, cannabis products, hemp, and hemp products.
The license allows the transporter to transport from cultivators, manufacturers, wholesalers, microbusinesses, medical marijuana businesses, and industrial hemp growers to manufacturers, testing facilities, wholesalers, retailers, and medical marijuana businesses.
For this license type, there are specific operational plans for the business. Required operational plans include, but are not limited to:
- A shipping manifest that must be updated at all times,
- Records of transportation,
- Storage compartments,
- Randomized deliveries, and
- Multiple employees.
A person, cooperative, or business holding a cannabis transporter license may also hold a cannabis wholesaler license, a cannabis delivery service license, and a cannabis event organizer license.
A person, cooperative, or business holding a cannabis transporter license may also hold a cannabis wholesaler license, a cannabis delivery service license, and a cannabis event organizer license. They may not own or operate any other type of cannabis business.
Contact our Minnesota cannabis business consultants for more information on the plans required.
Cannabis Testing Facility License in Minnesota
Next, a cannabis testing facility license in Minnesota allows for the licensee to obtain and test immature cannabis plants and seedlings, cannabis, cannabis products, hemp, and hemp products from cultivators, manufacturers, microbusinesses, medical marijuana businesses, and industrial hemp growers.
Testing facility operations must comply with the following requirements:
- Proof of accreditation,
- IOS formal management systems,
- Facility layout, including ventilation and filtration systems,
- Testing services,
- Testing protocols,
- Three years of maintenance of all records,
- Disposal plans for cannabis flower and cannabinoid products, and more.
Another key point, a person, cooperative, or business holding a testing facility license may not own or operate, or be employed by, any other cannabis business.
Cannabis Microbusiness License in Minnesota
This marijuana license type is the closest that the bill gets to allowing vertical integration. This license allows the growing, process, and sale of cannabis products by a single operator, though the size of such businesses is limited with the intention to keep big players from dominating the market. The microbusiness license allows the licensee to:
- Firstly, grow cannabis from seed or immature plant to mature plant, harvest cannabis from a mature plant, package, and label cannabis for sale to other marijuana businesses in Minnesota,
- Extract THC and other raw materials from cannabis, and concentrate THC,
- Manufacture edible cannabis products for public consumption,
- Purchase concentrated THC from a cannabis manufacturer or cannabis wholesaler for use in manufacturing edible cannabis products,
- Sell immature cannabis plants and seedlings, adult-use cannabis, adult-use cannabis products, and other products authorized by law to customers, and
- Lastly, operate an establishment that permits on-site consumption of edible cannabis products.
As this is a microbusiness license, there are limitations to all activities you do. A cannabis microbusiness that cultivates at an indoor facility may cultivate up to 5,000 square feet of indoor plant canopy. A microbusiness cultivating at an outdoor location may cultivate up to one-half acre of mature, flowering plants. The office may increase the limit to no more than one acre if the office determines that expansion is consistent with the program goals.
Additionally, there are limitations to extraction and concentration, production of customer products, retail operations, and on-site consumption.
Cannabis Mezzobusiness License in Minnesota
The cannabis mezzobusiness license is similar to the microbusiness license (described above). The only difference is the size limitation and the number of retail locations you can operate.
More specifically, the Minnesota cannabis mezzobusiness license allows you to cultivate up to 15,000 square feet of indoor plant canopy and one acre of outdoor. The office may adjust plant canopy limits upward to meet market demand consistent with the goals of the program, but to no more than three acres of outdoor plants. Additionally, the mezzobusiness license allows you to operate up to three separate dispensary locations.
Cannabis Event Organizer License in Minnesota
With a cannabis event organizer license in Minnesota, you are able to organize a temporary cannabis event that lasts no more than 4 days. Also, if you want this license type you must obtain local approval, are able to charge entrance fees to the event, must have security within the event, and make sure that no one under the age of 21 enters the event.
Next, let’s look at a similar license, one that is specifically for cannabis event sales.
Cannabis Event Sales License
In addition to the above license, licensed cannabis retailers and licensed cannabis microbusinesses with endorsements to sell cannabis and cannabis products to customers, including the cannabis event organizer, can sell cannabis and cannabis products to customers at a cannabis event.
Specific limitations include:
- All sales of cannabis and cannabis products at a cannabis event have to take place in a retail area that is designated within your application. With that, licensed retailers and microbusinesses can only conduct sales within their specific area.
- Also, licensed retailers and microbusinesses can display one sample of each cannabis or cannabis product available for sale. These samples must be stored in ways approved by the board. The office places limitations on the potency of samples.
Lastly, this license allows for cannabis event on-site consumption if approved by the local unit of the government for a cannabis event in Minnesota. Now, let’s look at the similar on-site consumption lounge license.
On-Site Consumption Lounge with a Microbusiness License in Minnesota
As for consumption lounges, Minnesota only offers this license type as a microbusiness. This license type allows on-site consumption of edible cannabis products on a portion of its premises.
Specific rules apply. Edible cannabis products sold for on-site consumption must comply with testing, packaging, and labeling rules. Additionally, these edible cannabis products must be removed from their packaging and consumed on-site. Lastly, food and beverages sold on the site have to be compliant with state and local laws, ordinances, licensing requirements, and zoning requirements.
In addition, a cannabis consumption lounge can not:
- Sell more than one single serving of an edible cannabis product to a customer,
- Allow the sale or consumption of alcohol or tobacco on the premises,
- Sell food and drink, other than packages and labeled edible cannabis products infused with cannabis or THC, and
- It may not distribute or allow free samples.
Cannabis Delivery License in Minnesota
First, a cannabis delivery license in Minnesota allows the license holder to purchase cannabis, cannabis products, medical cannabis, and medical cannabis products from licensed retailers, microbusinesses with an endorsement to sell cannabis and cannabis products to customers, and medical cannabis businesses. The delivery business can then transport and deliver cannabis, cannabis products, medical cannabis, and medical cannabis products to customers.
A person, cooperative, or business holding a cannabis delivery service license may also hold a cannabis retailer license, a cannabis wholesaler license, a cannabis transporter license, and a cannabis event organizer license subject to the ownership limitations that apply to those licenses.
There are also specific operational requirements for a cannabis delivery license in Minnesota. This includes:
- Age and registry verification upon delivery,
- Record keeping,
- Limits on the amount of cannabis and cannabis products a cannabis delivery service may transport,
- Statewide monitoring system, and
- Storage compartment requirements.
Accordingly, be sure to include how you will comply with all operational plans within your cannabis application.
Each license type noted above allows you to perform different cannabis activities. To explore the license types in more depth, contact our Minnesota marijuana business consultants.
Basically, no requirement exists for a separate municipal submission.
However, upon receipt of your completed application and fee, the office will forward the copy to the municipality where your business intends to operate. The municipality will then send the office a form of certification of compliance with local zoning ordinance, and compliance with state fire code and building code. So, make sure you’ve chosen the correct facility location and are in compliance.
Within 90 days of receipt of a completed application, the office will issue the appropriate license or send notice of rejections with specific reasons for nonapproval.
Expungable Under the Law
The legislation call for automatic expungement of criminal records for people previously convicted of low-level cannabis offenses, as well as proactively eliminating criminal penalties for cannabis possession. The Cannabis Expungement Board will review felonies for expungement or resentencing.
Tax Rate Imposed on Cannabis
The state will impose a tax equal to ten percent (10%) of gross receipts from retail and on-site sales in Minnesota of
- adult-use cannabis flower,
- adult-use cannabinoid products,
- adult-use cannabis solution products, and
- lower potency edible products.
80% of the revenue generated will be deposited to the general fund, and 20% to the local government cannabis aid account in the special revenue fund. However, local government may not impose an additional sales tax on cannabis products.
In sum, the 10% tax rate is one of the lowest in the country for adult-use cannabis. The reason for this is that Minnesota intends that the new program will encourage people to take part from different levels of wealth and investment, but perhaps more importantly – to discourage the illegal market as much as possible by keeping the legal prices low.
Ownership limitations exist for several different license types. For example, a person, cooperative, or business holding a cannabis testing facility license may not own or operate, or be employed by, any other cannabis business. In addition, the office may limit the number of testing facility licenses a person or business may hold.