Marijuana is legal in Minnesota Aug. 1, here’s what you need to know

Christopher Magan, Pioneer Press
·12 min read
25

In less than a decade, Minnesota has gone from complete prohibition of cannabis to being on the cusp of having three distinct markets — low-dose hemp, medical and adult-use.

It is the latest example of how states are now embracing as medicine and a recreational intoxicant something that is still considered illicit by the federal government. By the end of this decade, cannabis in Minnesota is expected to be a more than $1.5 billion a year industry.

There’s still a lot of work to do to make that a reality.

On Tuesday, Aug. 1, Minnesota will become the 23rd state where cannabis possession and recreational use for residents 21 and older is legal under state law. Yet Minnesotans won’t be able to buy things like full-fledged cannabis flower or gummies for another year and a half because state officials need to create the oversight apparatus to issue licenses so dispensaries can open.

Charlene Briner is helping to get the new state Office of Cannabis Management up and running while Gov. Tim Walz decides on who will be the permanent director. Briner says the rules and regulations the state will put in place over the next 18 months will focus on insuring medical patients can continue to get the medicine they need and that communities most harmed by prohibition will be a priority in the new legal market.

“There’s been disproportionate harm to certain communities from prohibition,” Briner said of why the Legislature decided to make possession legal well before a sales system was in place. “The sooner we end those harms, the better.”

Lingering questions

Already there has been a flurry of action by local governments to put new guardrails in place ahead of cannabis possession becoming legal. They include temporary moratoriums on cannabis retailers and laws against public consumption.

There are also lingering questions about how the three markets will coexist and whether some types of cannabis businesses will have an unfair advantage over others.

Despite the uncertainty and work ahead, Sen. Lindsey Port, DFL-Burnsville, and Rep. Zack Stephenson, DFL-Coon Rapids, who were the lead sponsors of the legalization bill, say it’s long overdue that Minnesota will begin correcting the inequitable harms caused by prohibition.

“There were a lot of people who worked on it before me. Their work was just as important, if not more important than mine,” said Stephenson, who likened himself to part of a relay race. “I’m gratified we got it done.”

Port agreed that passage was a monumental win. She acknowledged that there will be needed changes as issues continue to emerge.

“Alcohol prohibition ended almost 100 years ago and we still have a liquor bill almost every year,” Port said.

Same plant, different uses

To better understand how the different cannabis markets will interact, it’s important to know the basics.

Cannabis, or marijuana, is a plant that contains tetrahydrocannabinol, or THC, a compound that gives users a feeling of relaxation and euphoria. Cannabis is legal in more than 20 states, but the federal government still considers it a schedule one drug, the most dangerous classification, with no accepted medical uses.

Hemp is nearly identical to cannabis, but it contains much less THC. Under the 2018 Farm Bill, the cultivation of hemp and sale of hemp products became legal, as long as they contain less than 0.3 percent of THC by weight.

Minnesota plans to regulate the sale of these different plants and products under three basic categories, all eventually overseen by the state Office of Cannabis Management.

Medical marijuana: First legalized in 2014, the Minnesota Legislature initially set up a restrictive system for using cannabis as medicine to treat a limited number of maladies. In the last few years, state officials have loosened rules around who can use medical marijuana as well as the products they can buy.

There are only two medical cannabis producers in the state, both of which have ties to larger out-of-state corporations, and it’s been a tough market to make a profit. Many states have seen their medical marijuana markets shrink dramatically after full legalization even though it is not subject to taxes.

The cannabis bill allows for up to five medical producers that also will be able to participate in the adult-use market. Medical providers will be limited to no more than 50 percent of what they grow for patients with a cap of 30,000 square feet of canopy for adult use and 60,000 square feet for medical clients.

Low-dose hemp-derived: Hemp-derived gummies, drinks and topicals all became federally legal with the passage of the 2018 Farm Bill. But lawmakers had to tweak the state’s oversight laws in 2022 before the hemp business took off in Minnesota.

Different types of Cannabidiol, or CBD, is extracted from hemp plants and some of those extracts can also be used to make low-dose THC products. Since hemp is legal under federal law, these businesses have access to banking and tax breaks that cannabis businesses do not.

In Minnesota, low-dose hemp products with 5 milligrams or less of THC can be sold at places like liquor stores and hemp shops. Those retailers have to start registering with the state Aug. 1.

The new law requires more testing and better labeling and eventually puts limits on how much CBD can be in products. There is also a 10 percent tax on hemp products except for topicals like balms and lotions that began July 1.

There remains consternation among some business owners about why hemp products are subject to the same tax as full-strength cannabis. They note that medicinal CBD products without THC are not intoxicating and question why they are subject to a so-called “sin tax.”

Low-dose hemp-derived THC products are probably the way many Minnesotans will experience cannabis until dispensaries open.

Adult-use cannabis: Possession of up to 2 ounces in public and 2 pounds at home becomes legal Aug. 1. Minnesotans will be able to consume cannabis at home, at licensed facilities and in some public places.

Legal sales in dispensaries will not begin until after a licensing and oversight system is in place in early 2025.

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An exception is the Red Lake Nation dispensary that plans to begin selling adult-use cannabis Aug. 1 because it is not subject to the same oversight laws. It is unclear whether other Native American tribes will do the same.

Cannabis remains federally restricted, so many banks and credit card companies will not work with cannabis businesses. They also don’t have the same access to tax breaks that legal hemp businesses do.

Under the licensing framework set up in the new law, there will be 16 different types of cannabis licenses. Smaller micro- and mezzo-sized businesses will be able to be “vertically integrated” to produce and sell cannabis products with limits on the amount they can grow.

Businesses focused on cultivating, manufacturing, wholesaling and other categories will have their own licenses.

Medical providers who also want to sell to adult-use customers will need a special license. State officials say strict canopy limits will help smaller businesses compete with larger providers.

Three markets collide?

Advocates who worked on the bill, which passed the Democratic-Farmer-Labor Party-controlled House and Senate with just a few Republican votes, say they created a framework that prioritizes small, local cannabis businesses. They promise a focus on equity and helping those most harmed by prohibition.

They’re confident all three markets can thrive in Minnesota.

“I think it is nation-leading,” said Leili Fatehi, a lawyer and lobbyist who spent years working on the legalization bill through her firm Blunt Strategies. “We pushed to create a bill that prioritized smaller, craft businesses.”

Not everyone sees it that way. There are some in the state’s hemp industry who argue new taxes on their products are there to help to subsidize the creation of the state’s new regulatory office. They say new limits on concentrations in CBD and similar products will force them to stop selling popular items.

Finally, they contend the state risks large out-of-state marijuana companies with deep pockets being able to corner the market and drive locals out of business.

“I thought Minnesota was going to be different, but we are going to be just like the other states,” said Brock Friesen, director of sales for Carpe Diem, a CBD company. “It could crush a lot of small businesses.”

Others working in hemp businesses with an eye on expanding into the adult-use market say these fears are overblown. They agree the law needs some changes, but say the overall intent is positive and historic.

“I’m taking all this stuff with a grain of salt until the dust settles,” said Shawn Weber, who runs Crested River Cannabis Co., which grows and produces hemp products.

Moratoriums and bans

Many cities, counties and other municipalities spent much of the early summer scrambling to put in place restrictions on where cannabis can be used in public places. Cities are also implementing temporary bans on cannabis businesses so they can decide the best places to allow the businesses in their communities.

The legalization bill gives municipal governments local control to dictate where adult-use cannabis can be sold and used. They can also put limits on the number of stores, based on population size, but municipalities cannot ban it outright.

Kyle Hartnett, an attorney with the League of Minnesota Cities, said temporary moratoriums are a tool in the new law that allows cities time to study where it is best for various cannabis businesses to locate under their zoning codes. The temporary bans must end by January 2025.

Erin DuPree, an entrepreneur who lives in St. Paul, opened Loonacy in Apple Valley in February to sell low-dose hemp products. DuPree says that after spending $45,000 in startup costs, she plans to close her storefront in the coming days because she worries if she doesn’t, she will end up in an expensive legal fight with Apple Valley.

Apple Valley’s City Council approved an ordinance Thursday banning cannabis businesses until January 2025 and studying where to allow them under the city’s zoning in the future.

“I don’t think people understand the implications,” DuPree said of local officials putting tight controls on cannabis sales. “It is going to hurt access.”

Legalization backers say access to legal markets at reasonable prices is key to eliminating the illicit market.

Cities are also dictating whether or not people can smoke or vaporize cannabis products in public spaces like a city park. The new law restricts, but doesn’t prohibit, public consumption, leaving the final rules up to local jurisdictions.

Many Minnesota cities already ban smoking in public places and in a lot of cases cannabis use will fall under that prohibition. A flood of others have passed ordinances in recent weeks making public use a petty misdemeanor.

There also is another caveat. The legalization bill prohibits cannabis smoking and vaporizing in multifamily dwellings, so residents of municipalities where it is also banned in public places could end up with nowhere to legally smoke it.

Port and Stephenson, the primary sponsors of the legalization bill, both noted that without the local-control exceptions in the law, it likely wouldn’t have passed.

Grow your own, bring it here?

Minnesotans won’t be able to purchase adult-use cannabis products until dispensaries are up and running in early 2025. It’s also illegal to import cannabis products into the state to sell and there isn’t a way to legally transport cannabis from another legal state to Minnesota for personal use.

But residents can grow their own bud from seed starting on Aug. 1. Minnesota has a more than 100-year-old law that requires a permit-holder to test, package and label seeds for sale, according to the state Department of Agriculture.

A retailer does not need a license to sell seeds that are already packaged by a seed labeler with a permit. Minnesotans could also order seeds through the mail because all cannabis seeds contain less than 0.3 percent THC by weight and are legal under federal law.

Minnesotans can cultivate up to eight plants for personal use, four of which can be mature flowering plants at any one time.

Expungement and enforcement

Legal cannabis is not the only thing that begins Aug. 1. The state will also start expunging misdemeanor and felony cannabis convictions.

Most misdemeanor convictions for things like possession will be wiped away automatically. There will be a Cannabis Expungement Board that looks at other convictions to see if someone qualifies for expungement, resentencing or neither.

The law also prohibits employers from barring cannabis users from employment except for certain types of “safety-sensitive” jobs, including police, teachers, child care, truck drivers and jobs funded through federal grants.

There are still prohibitions on using cannabis in many public places and in a vehicle. Local police departments will get some funding to train officers to spot intoxicated drivers.

A pilot program will explore if there is a feasible way to do a breathalyzer-type test.

What’s next?

Briner and other state officials are already working to get the Office of Cannabis Management up and running. Gov. Walz is expected to name the first head of the office in September.

Leaders are expected to hire more than 100 workers in the coming months to flesh out the various departments of the cannabis office.

Rule-making is also expected to begin later this year. That’s essentially when the state drafts all the rules and regulations to oversee the new adult-use market.

Rule-making can take a while and typically involves a lot of public input on the best way to oversee a new state system.

“We need these rules to work and for that to happen, people need to be able to understand and navigate them,” Briner said. “For something this big with this must public scrutiny, we need to have a firm rationale for how we regulate it.”

Once rules are in place, license applications will begin being accepted. The first dispensaries are expected to open in early 2025.

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