The Economic Boom: How Minnesota’s Cannabis Legalization COULD Transform the Business Landscape
The Minnesota state legislature made several attention-drawing legal changes in its most recent session. Perhaps the most noteworthy such legislation for current and prospective entrepreneurs was the state’s decriminalization of recreational marijuana. The state’s decriminalization of certain marijuana usages does not mean that it issued a blank check for immediate establishment of facilities to grow and sell it. Prospective business owners looking to enter this field should start their inquiry with a baseline understanding of the complex regulatory framework the state has created.
Minnesota Cannabis Licensing
First and foremost, all businesses growing, selling, or distributing marijuana will be required to carry a license issued by the newly-created Office of Cannabis Management (OCM). OCM will process applications for and issue numerous license types depending on factors like the business’s 1) size (for example, a single-location retailer will require a different license than a multi-facility medical cannabis grower); and 2) nature (for example, OCM issues different licenses for manufacturers, transporters, and retailers; though one business may hold multiple licenses under certain circumstances). OCM will require all businesses to provide certain organizational and financial documents as part of its license application process. Business owners must understand what type of marijuana operation they intend to run before establishing a new business.
Financing Marijuna Businesses
The types of available financing poses another factor to consider before starting any marijuana business. Marijuana remains illegal under federal law, which makes many banks apprehensive about providing loans or managing accounts for marijuana businesses. No clear regulations currently provide banks with straightforward rules to shield them from civil or criminal exposure for associating with businesses engaged in the manufacture, transport, or sale of marijuana. This leads to inconsistent and occasionally frustrating policies between different banks (and even sometimes within the same bank). Marijuana entrepreneurs need to know how they will finance their businesses, like the purchase of real estate or equipment, with the understanding that they may not be able to rely on credit from a large banking institution.
Minnesota’s Marijuana law and FDA regulations
Finally, entrepreneurs will still have to ensure that the products they intend to sell comply with federal regulations. The Food and Drug Administration (FDA) retains authority to regulate the composition of edibles and THC-infused beverages. Beverages in particular have proved immensely profitable; but also tricky to navigate with respect compliance with FDA regulations on THC content, permitted marketing, and shifting licensure requirements. Newly-established businesses seeking to sell edible products therefore require a detailed plan to secure compliance with state and federal law.
Starting a marijuana business in Minnesota
Between staffing and rulemaking processes, the state does not anticipate that the Office of Cannabis Management will begin issuing licenses until the Spring or Summer of 2024. That provides entrepreneurs ample time to develop a plan before submitting a license application. If you are considering starting a new business or amending a current one to enter this potentially lucrative new market, contact Jeddeloh Snyder Stommes to schedule a consultation for your particular circumstances.
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