Whether you are thinking about applying for a social equity or a general license, there is plenty you can do right now to put yourself in a leading position to win a Minnesota cannabis license.
Social Equity License Applicants:
Minnesota’s Office of Cannabis Management (OCM), which is responsible for licensing cannabis businesses in the state, is planning the launch of license preapprovals this summer for social equity applicants. The eligible license types for social equity applicants are cannabis microbusiness, cannabis mezzobusiness, cannabis cultivator, cannabis manufacturer, cannabis retailer, cannabis wholesaler, cannabis transporter, cannabis testing facility, and cannabis delivery service–all of which will be available during the preapproval process. The process will begin with the verification of applicants who meet qualifications for social equity applicant status. Following that, those verified through this process will submit an application for a business license, go through a review and vetting process, and if qualified, be entered into a lottery. Applicants selected through the lottery will be awarded license preapproval and be able to finalize business operations in anticipation of market launch after the adoption of rules, giving them a valuable head start. See the following for a more detailed look at the process.
Step 1: Verify Social Equity Applicant Eligibility
Verification is the process where OCM confirms an applicant’s social equity eligibility. This service is free. Applicants must submit documents through an online system linked on OCM’s website to verify their eligibility. According to Minnesota’s cannabis law, someone qualifies as a social equity applicant if the person meets at least one of the following criteria:
- was convicted of an offense involving the possession or sale of cannabis prior to May 1, 2023;
- had a parent, guardian, child, spouse, or dependent convicted of an offense involving the possession or sale of cannabis prior to May 1, 2023;
- was a dependent of someone convicted of an offense involving the possession or sale of cannabis prior to May 1, 2023;
- is a military veteran, including service-disabled veterans, or current/former members of the National Guard;
- is a military veteran or National Guard member who lost honorable status due to an offense involving the possession or sale of cannabis;
- has been a resident for the past five years in areas with: high cannabis enforcement rates as determined by federal or state studies or data; poverty rate of 20% or more; median family income not exceeding 80% of the statewide median family income (or if in metropolitan area median, did not exceed the greater of 80% of the statewide median family income or 80% of the median family income for the metropolitan area); or populations that experienced a high level of vulnerability, according to the CDC’s Social Vulnerability Index; or
- has participated in farm operations for at least three years, providing the majority of day-to-day labor and management on a farm with gross sales between $5,000 and $100,000 in the previous year.
If you have any interest at all in a social equity license, it is recommended that you go through the verification process. If you intend to complete step 2 and apply for license preapproval, you must first receive verification through step 1 before proceeding with the license application. Note that social equity licenses must be owned by at least 65% social equity applicants, which can include one person or multiple individuals, but every person who makes up the 65% ownership must be verified to proceed to applying for license preapproval. The social equity applicant verification system will open on June 24, 2024, and close on July 10, 2024, at 11:59 p.m. However, future verification opportunities will be available for subsequent rounds of licensing.
Step 2: Apply for License Preapproval
The license preapproval process is designed for social equity applicants interested in early access to the cannabis market. This process includes submitting an application on OCM’s online application system, along with all the required documentation. Required documentation includes: proposed business plan; security plan; business capitalization table; and standard operating procedures for: quality assurance; inventory control, storage, and diversion prevention; and accounting and tax compliance. Guidance about the full list of application requirements will be announced prior to when the application window opens. Applicants must meet the necessary criteria to be eligible for the lottery for available cannabis business licenses. This step also includes paying the application fee for the license being sought. The social equity license preapproval system will open on July 24, 2024, and close on August 12, 2024, at 11:59 p.m. However, there will be additional windows for social equity applicants to apply for a cannabis business license, which will be announced at a later time.
Applicants convert their preapproval into a full cannabis license once rules are adopted and in force and all required steps have been taken. Notably, preapproval does not guarantee a license if the applicant fails to meet the requirements for full licensure.
Step 3: OCM Conducts Lottery
OCM will conduct a lottery for social equity applicants seeking license preapproval. Following the completion of the lottery, OCM will notify each applicant whether or not they were selected. The date for the first lottery has not yet been announced, but we expect it to occur in Fall 2024.
General License Applicants:
The process for general licenses will be announced soon. In the meantime, it is recommended that you begin preparing your proposed business plan, security plan, and business capitalization table, as well as standard operating procedures for: quality assurance; inventory control, storage, and diversion prevention; and accounting and tax compliance. This will help you be ready when the application period for general licenses open, which we expect to happen in 2025.
If you are interested in applying for a license in Minnesota, please feel free to contact us to speak with one of our application specialists.
