As of today, recreational marijuana is legal to possess and use in Minnesota. But, with the exception of a recreational dispensary on the Red Lake Nation reservation up north, it will still be a long time before marijuana is widely available for purchase in the state.

In the meanwhile, early business owners can get a leg up by taking time to understand the law and build community connections, Minnesota’s Office of Cannabis Management implementation manager Charlene Briner said in an interview with TCB.

In her interim role with the office, Briner said three main things are needed to build out the new state agency: First, she’s guiding the search for the office’s new director. Gov. Tim Walz will name the new position in early September. Second, the office is working to help the governor fill out a new 51-member cannabis advisory council. Those applications are posted. Lastly, the office has started launching its rule-making process, which must be completed before businesses can open in the state.

That all means that the state likely won’t even start issuing business licenses until 2025.

“The rule-making process gives us the business rules and guidance about how this actually happens for people interested in cultivating, growing, distributing, manufacturing, or operating a retail or medical dispensary,” Briner said. “There’s a lot of work to be done between signing the law, legalization, and the rule-making process over the next year to year and a half to make it possible to issue licenses by 2025 for the retail sales people are expecting.”

It’s important to keep in mind the law addresses three distinct and separate industries: recreational marijuana, medical marijuana, and hemp-derived edibles. While, by and large, all three of these markets sell THC, regulations vary around who can buy products and product potency. That’s also true for regulations around licensure, vertical integration, and where certain products can or cannot be sold. In May, TCB published a breakdown of the various business licenses outlined in the law.

The Red Lake Nation recreational dispensary that opened Aug. 1 is only possible because Red Lake Nation passed its own recreational marijuana law as a sovereign nation. Most recreational marijuana businesses will not be able to open for another 12-18 months because guidelines and license infrastructure will need to be built out by the Office of Cannabis Management.

In the meantime, for businesses looking to understand each part of this nascent industry, here are some key elements of the law to keep in mind:

The state aims to keep adult-use businesses local

The law passed this year was written with the intent to keep large multi-state operators (MSOs) out of Minnesota, Leili Fatehi of Blunt Strategies told TCB. 

Blunt Strategies, a Minnesota-based full-service cannabis public affairs and consulting company, launched five years ago shortly after the original campaign to legalize recreational marijuana began here. The company worked with the campaign–originally named Minnesotans for Responsible Marijuana Regulation and later renamed MN is Ready–to provide education on the complexities within the cannabis market.

Minnesota’s law was crafted to prioritize small, local businesses, and it does that by addressing supply and demand. What other states across the country have largely done when legalizing marijuana is placing caps on the number of licenses attainable by business owners and putting restrictions on various combinations of business licenses to address vertical integration. Minnesota’s law offers a slightly different approach. Instead of capping the number of licenses, Minnesota’s law capped canopy size, or the amount of square feet where licensees can grow marijuana. Micro businesses are capped at 5,000 square feet, mezzo businesses at 15,000 square feet, and bulk cultivators are capped at 30,000 square feet.

“That is significantly below the kind of canopy that would make this a profitable or interesting marketplace for MSOs to want to come into,” Fatehi said. “That was very much intentional. It is a feature not a bug of the bill.”

Moving into the next year as the licensing programs are established, it will be important for communities to work with local businesses to make sure enough businesses seek licenses to cultivate enough supply to keep the market small and local while meeting demand. “If our local businesses are not able to do that, that’s when the law gets changed and the MSOs come in,” she warned. “So we’re really focused on continuing to build out the capacity for our local industry to be successful once licensing happens.”

The state of medical marijuana

Many states that have legalized recreational marijuana lean on their preexisting medical marijuana businesses to help supplement the recreational supply, especially in the early launch of an adult-use program. Minnesota, however, is in an odd position on this front because the state’s medical program has been notoriously restrictive and dominated by only two multi-state operators, one of which is based in Illinois.

Canopy restrictions outlined in the law will apply to these medical companies, as well. Once they’ve satisfied the needed supply for the medical program, medical companies can obtain a license that allows them to sell half of what their canopy was a year before for recreational sale. Mezzo business licensees can also hold an endorsement to grow and manufacture for the medical program. Those license holders can also hold a medical cannabis retail license.

“The idea was that we make the flow bi-directional, that the medical program is going to be providing into the adult-use market, and we create an avenue for our mezzo businesses to also provide into the medical market,” Fatehi said. “It’ll be interesting to see how that develops. The medical companies are MSOs. They will be looking at what their prospects in this state look like versus other states. But I know that the policymakers really engaged directly with the medical companies, as well. For us, it was exceedingly important that the medical program continue to be able to provide product to patients.”

She added: “We got this into the bill to create that balance so that the medical companies can’t just dominate and so that the adult-use market can also help lower the prices in the medical programs as it’s already so restrictive and expensive.”

The state of low-dose hemp-derived edibles 

Establishments that sell lower-potency hemp products containing THC, CBD, or both, must register with the Minnesota Department of Health by Oct. 1. There is no cost to register, but once licensure guidelines are established through the Office of Cannabis Management, businesses will have to pay for a license.

When the 2018 Farm Bill cracked open the door for the hemp industry, “we realized that a lot of these businesses that were beginning in hemp would be looking to expand into that legalized adult use market and that they needed support,” Fatehi said.

In a small portion of an omnibus health bill passed in 2022, the Minnesota legislature addressed hemp-derived edible products. The bill was not what legalized hemp-derived THC, rather it placed regulatory criteria around products that were already being sold at many head shops and gas stations across the country after the 2018 Farm Bill passed. Regardless, under Minnesota’s law, the edible and “cannabeverage” market became a national leader in the hemp market. A wide variety of these products are now offered and produced in the state. This growing industry was addressed in the final version of the MN is Ready bill.

This boom in the state’s hemp market set the tone for the state’s eventual legalization of recreational marijuana. The cannabis bill that passed this year strongly focused on small, boutique hyper-local businesses.

“These businesses have started establishing themselves. They’ve been able to make money… It shows you can have success if you are a small business, a craft business, or a business owned by someone that may come from a community of color when, largely because of prohibition, you’ve been disenfranchised from the opportunity to generate the kind of capital that is needed to start an adult use business,” Fatehi said.