Minnesota Real Estate & Cannabis Regulations

Cannabis Status: Opening Early 2025

The forthcoming adult-use cannabis licensing opportunities in Minnesota represent a monumental chance for entrepreneurs to enter a burgeoning market. With licenses slated to become available in 2025, Minnesota presents a promising landscape, especially with its significantly lower tax rate of just 10%, a competitive edge compared to other states.

Moreover, the abundance of over 300 retail licenses up for grabs indicates ample room for growth and competition. What further sweetens the deal is the state’s inclusive approach, with every jurisdiction welcoming cannabis businesses and a streamlined application process thanks to more unified guidelines statewide. This cohesion promises to ease entry barriers and foster a more accessible environment for aspiring entrepreneurs to capitalize on Minnesota’s evolving cannabis industry.

Name: Minnesota
Population: 5,717,000
Household Median Income: $90,390
Cannabis Uses: Microbusiness, Mezzobusiness, Cultivator, Manufacturer, Retailer, Wholesaler, Transporter, Testing Facility, Event Organizer, Delivery Service, Low Potency Hemp Edible Manufacturer, Low Potency Hemp Retailer, Medical Cultivator, Medical Processor, Medical Retailer, Medical Cannabis Combination Business

State Cannabis Overview: The Minnesota State House and Senate recently approved a significant amendment to the state’s cannabis program, introducing major changes designed to expedite and enhance the process for social equity candidates. One of the most pivotal adjustments is the acceleration of the pre-approval process for these candidates, with the application period for pre-approval licenses now set to open from July 24 to August 12. During this period, Minnesota’s cannabis agency will begin verifying social equity applicants and assessing their financial and operational readiness to run a cannabis business. If all goes according to plan, the first lottery to distribute social equity licenses is scheduled for the fall. This adjustment allows cultivators to begin their operations in 2024, much earlier than the previously set spring 2025 timeline, which is aimed at accelerating production to meet market demands by spring 2025.

Additional reforms include a transition from a purely points-based system to a “vetted” lottery for distributing cultivation and retail licenses, and early permission for some social equity applicants to start cultivation this fall. The new rules also provide for medical cannabis patients to designate caregivers who can grow cannabis on their behalf and implement safeguards against financial exploitation of social-equity applicants by third parties. The number of licenses to be issued in the initial industry rollout next spring will be capped to ensure controlled growth.

Minnesota Cannabis & Commercial Real Estate Research

Uses: Microbusiness, Mezzobusiness, Cultivator, Manufacturer, Retailer, Wholesaler, Transporter, Testing Facility, Event Organizer, Delivery Service, Low Potency Hemp Edible Manufacturer, Low Potency Hemp Retailer, Medical Cultivator, Medical Processor, Medical Retailer, Medical Cannabis Combination Business

Caps: These have not yet been finalized, although an initial study by the OCM determined Minnesota will need a minimum of 381 retail shops to comply with state requirements.

Distance Requirement: A local unit of government may prohibit the operation of a cannabis business within 1,000 feet of a school, or 500 feet of a day care, residential treatment facility, or an attraction within a public park that is regularly used by minors, including a playground or athletic field.

Note: A local unit of government may adopt reasonable restrictions on the time, place, and manner of the operation of a cannabis business provided that such restrictions do not prohibit the establishment or operation of cannabis businesses.

Tax Rate: The Cannabis Tax is 10% of gross receipts from retail sales of taxable cannabis products.

Sales that are exempt from Cannabis Tax include:

  • Products purchased on an Indian reservation from a seller licensed by the tribe.
  • Medical cannabis, which are items purchased by or for a patient enrolled in the state’s medical cannabis registry program.
  • Retailers purchasing the product for resale. Retailers purchase products exempt from sales tax by providing their vendor with Form ST3 Certificate of Exemption claiming the “resale” exemption. Retailers sell products to the end customer and are responsible for collecting sales tax on the product.

Minnesota Application Details:

(Note: Applications for business licenses will be available once rulemaking is complete. OCM expects applications for licenses to be available in early 2025.):

  • Cannabis microbusiness (application fee $500; no initial license fee; renewal license fee $2,000)
  • Cannabis mezzobusiness (application fee $5,000; initial license fee $5,000; renewal license fee $10,000)
  • Cannabis cultivator (application fee $10,000; initial license fee $20,000; renewal license fee $30,000)
  • Cannabis manufacturer (application fee $10,000; initial license fee $10,000; renewal license fee $20,000)
  • Cannabis retailer (application fee $2,500; initial license fee $2,500; renewal license fee $5,000)
  • Cannabis wholesaler (application fee $5,000; initial license fee $5,000; renewal license fee $10,000)
  • Cannabis transporter (application fee $250; initial license fee $500; renewal license fee $1,000)
  • Cannabis testing facility (application fee $10,000; initial license fee $10,000; renewal license fee $20,000)
  • Cannabis event organizer (application fee $750; initial license fee $750)
  • Cannabis delivery service (application fee $250; initial license fee $500; renewal license fee $1,000)
  • Lower-potency hemp edible manufacturer (application fee $250; initial license fee $1,000; renewal license fee $1,000)
  • Lower-potency hemp edible retailer (application fee $250 per retail location; initial license fee $250 per retail location; renewal license fee $250 per retail location)
  • Medical cannabis cultivator (application fee $250; no initial license fee; no renewal license fee)
  • Medical cannabis processor (application fee $250; no initial license fee; no renewal license fee)
  • Medical cannabis retailer (application fee $250; no initial license fee; no renewal license fee)
  • Medical cannabis combination business (application fee $10,000; initial license fee $20,000; renewal license fee $70,000)

Application Scoring: Big Bonuses For Social Equity

Minnesota’s Office of Cannabis Management is setting up a clear and fair system for its merit-based cannabis license application process, expected to start in early 2025. They will publicly outline how points are allocated across different categories before the process begins, ensuring transparency. Importantly, being a social equity applicant will account for at least 20% of the total points, demonstrating Minnesota’s commitment to inclusivity and addressing past disparities in the cannabis industry.

Minneapolis
St. Paul
Rochester
Bloomington
Duluth
Brooklyn Park
Plymouth
Woodbury
Lakeville
Maple Grove

Visit CREC Portal for more information on Minnesota real estate.

The Office of Cannabis Management (OCM) has begun drafting rules that will complete the regulatory framework for Minnesota’s new cannabis industry. Areas that will be addressed through rulemaking include:

Licensing – license types, forms, procedures, required disclosures, felony disqualifications, limits on licenses held
Social equity considerations
Manufacturing and retail (facilities and operations)
Packaging and labeling
Testing (laboratory approval, sampling, protocols, and standards)
Expedited complaint process (for local governments)
Integrated cannabis tracking, inventory, and verification system
Environmental controls (odor limits, water use, energy use, solid waste disposal)
Use of pesticides and fertilizers
Medical cannabis and the patient registry program
Other topics as necessary

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