When will more dispensaries start opening in Minnesota? A cannabis business explainer

It’s been 18 months since Minnesota legalized cannabis use, and many residents and aspiring business owners are wondering when dispensaries will begin to open up.

A few dispensaries on tribal land have already opened, but others are still going through the complex state approval process.

Applicants could be at one of a few steps. Some in the state’s social equity program have already applied and been approved for a license. Others were denied and must now attempt to resubmit.

The most recent phase for general businesses is the state’s open application window, allowing prospective business owners to file for one of 13 license types, such as cultivation, retail or microbusiness.

Some businesses have voiced concerns about the state’s licensing process following lawsuits in the fall against the Office of Cannabis Management (OCM). Others have said they think the process will go smoothly from here on.

But when could applicants get licensed and receive final approval? Here’s what to know.

It’s complicated.

Minnesota’s 11 tribal nations, which already operate dispensaries on tribal land, could open new off-reservation locations before the broader cannabis marketplace is up and running.

The state has been working with the tribes to finalize compacts for operating cannabis stores off tribal land. One of those shops, in Moorhead, plans to open later this month.

In a February interview, OCM Interim Director Eric Taubel said he anticipates the tribal agreements being completed in “the next month or two.”

Separate from the tribal compacts, a couple hundred applicants were approved last year for uncapped social equity licenses, and they could start opening businesses in late spring or early summer, OCM spokesman Josh Collins said, depending on how quickly they finish their last steps.

The final requirements include a third-party background check, getting a labor peace agreement, and having a site location approved by the local municipal government. They must also have the site inspected and approved by OCM.

That application window for prospective businesses opened Feb. 17 and closes March 14. It’s open for general applicants and social equity applicants who had submissions rejected in the fall. OCM will hold two rounds of lotteries to determine who gets a license.

OCM tentatively plans to hold those lotteries in May and June. The first lottery is reserved for only social equity applicants.

If an applicant isn’t picked in the social equity lottery, they will get a second chance in the second, general lottery for all other applicants.

If there’s a huge amount of applicants for certain license types, the state may decide to stage the lotteries by type instead of holding them all at once, Collins said.

“We’ll have to wait to make that decision until we see the volume,” Collins said.

Licenses in nine uncapped categories, which include microbusinesses, will not be awarded via lottery and will be issued to all applicants who pass. Jen Reise, founder of North Star Cannabis Consulting, said many of her clients applied for a microbusiness license because it allows them to dodge the lottery process.

Reise added that she’s worried there won’t be enough funding and investors for all microbusinesses that apply.

“It’s creating this dynamic where I think OCM is going to get a lot of micro applications and then there’s going to be a lot of micros which won’t have the capital to open,” Reise said.

A total of 324 licenses will be given out in this spring’s lotteries. Here is a breakdown of the licenses by type. Half of the licenses for each type are reserved for social equity applicants.

On Feb. 17 when the application window opened, OCM also sent feedback to social equity applicants who were denied in the fall, explaining what they needed to fix for resubmission. The state’s social equity program is intended to help people negatively affected by past cannabis prohibition, veterans and people who live in high-poverty areas to compete with better-funded entrepreneurs.

In November, 1,169 of 1,817 social equity applications were denied, leading to criticism that the state should have allowed applicants to fix what they believe were minor paperwork errors. This led to lawsuits against the state, which decided to cancel a lottery in the fall that would have allowed for some licenses to be issued sooner.

Collins defended the process, saying the state’s cannabis laws were designed with the intention to fast-track those who could correctly complete their applications.

“We know that process was complex, but really the vision was that the most prepared could get that early cultivation going,” Collins said.

Edina cannabis attorney Carol Moss said she is particularly frustrated by OCM’s decision to cancel the fall lottery because it worsened the odds for prospective business owners.

The fall lottery would have included a smaller pool of social equity applicants, but they will be up against a much larger group in this spring’s lottery.

“There’s a lot of frustration especially for those applicants who were applying for the capped licenses and made it through the preapproval process,” Moss said. “They were harmed in all of this, because the ones that made it through would have been in a much smaller pool for the lottery.”

The 211 social equity applicants in “uncapped” categories are still on track to get a head start, Collins said. Those businesses would receive a license after the state adopts its official rules on cannabis sales, which Collins said is expected by the end of March.