Most who have applied for licenses hope to start retail, microbusiness and mezzobusiness enterprises.
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Military veterans and those with prior marijuana convictions make up the largest number of those qualifying for social equity status ahead of getting into the business under Minnesota’s legal cannabis law.
As Minnesota’s Office of Cannabis Management prepares for its first lottery to distribute licenses to grow, process and sell cannabis, it finally has data on how many people want to get into the new industry and what type of work they want to do. The numbers come via the first round of social equity approvals ahead of the first license lottery that bill sponsors and OCM hope will take place this fall.
By the time the deadline for preapproval license applicants came and went Monday at 11:59 p.m., there were 1,817 applicants for 280 licenses. The OCM will now make sure those applicants meet minimum requirements before sending them into the lottery. How long that review takes is the primary factor on the timing of the lottery, OCM says.
First dibs on licenses go to those who can prove what the state law terms social equity status. These are people who suffered from the policing and prosecution of marijuana crimes when it was illegal, veterans and people who lived in neighborhoods where enforcement was more aggressive.
Of the 3,144 people who asked between June 24 and July 10 to have their social equity status verified, about three quarters (2,307) were given certificates to show they meet the criteria in the law.
One explanation for why there were no certifications for military veterans who left the military with a less-than-honorable discharge due to a marijuana violation is the law was expanded this past session to include all veterans. It is easier to prove veteran status than to provide documents regarding discharge.
Minnesota’s law does not have a residency requirement, something bill sponsors worried could delay the rollout because of legal challenges. As such, just over 50% (50.4%) had an address on the verification request that is inside Minnesota.
With a social equity status certificate in hand, people could then apply to enter the license lottery. The cannabis retailer and micro- and mezzobusiness categories were the most popular and will be the hardest to get in the lottery.
Of these applicants, 44.1% gave an in-state address but OCM stresses that the applications do not yet require a specific location of a planned business. That will be required later and only of lottery winners who must still show that they have a location, local approvals, adequate funding and that the primary investors have social equity status.
The three categories where there are fewer applicants than licenses available mean no lottery will be needed. However, those gaps for cannabis wholesaler, cannabis transporter and cannabis testing facility suggest some problems in meeting the needs of the industry at rollout. That is, products must be tested by independent labs before sale. Those gaps could be cured in the second license lottery later in the year.
The Legislature capped the number of licenses in the social equity lottery and in a second lottery for all applicants to be conducted sometime in late 2024 or early 2025. It also placed temporary caps on some licenses in the initial phase of the industry rollout — microbusinesses, testing facilities and delivery services — that will become unccapped once the industry rolls out. The microbusiness, for example, is considered by bill sponsors to be the easiest and least-expensive way to get into the cannabis business. OCM can, however, limit the number of these licenses if it determines at a later time that the market demand is being met with existing licensees.
With one significant exception, lottery winners will be able to prepare to enter the new business when final state rules are adopted sometime in the fall. This preapproval was meant to give social equity applicants a leg up to have financing, business structures and locations in place when the rollout happens in the spring.
The exceptions are for those with licenses that include growing of cannabis. Small microbusinesses that can grow and sell with one license could put plants in the ground once their preapproved license is issued later this year. Mezzobusinesses are also allowed to both grow and sell at retail but with larger plant capacity than microbusinesses. Early cultivation rights are also available for large cultivators. The purpose for early cultivation — a major change in the law that passed in May — is to make sure there is some product ready for sale when other dispensaries open in the spring. Bringing cannabis from seed to harvest takes in the range of 10 weeks.
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