“Everyone is in agreement that the sooner licensed dispensaries can open, the better.”
By Peter Callaghan, MinnPost
Minnesota Gov. Tim Walz (D), said on Tuesday that he supports the proposals of the state’s Cannabis Management Office to give more advantages to “social equity applicants” in the newly legalized marijuana market.
Last week, the Office of Cannabis Management (OCM), announced that it would request the Legislature amend the recreational marijuana law of 2023 to make it easier to enter the industry for those who have suffered the most due to prohibition. Such applicants could, for example, get temporary licenses before others who are seeking permission to set up grow operations or to sell cannabis. The state could also allow social equity applicants to include investors who are not disadvantaged as long as 65 percent of their capital is from qualified individuals (current law states 100 percent).
Contrary to what some people have read, OCM does not propose that holders of social equity retail licenses be allowed to open dispensaries earlier than other applicants.
Walz stated in an interview on Tuesday that “Philosophically, our goal was to ensure equity played a major role.” “We want to make sure we stay within the legal parameters for who can receive help. “I think that the idea was that marginalized communities were too often left on the side. “They’re left behind.”
Walz wants OCM, however, to create the proposals in order to protect the state against lawsuits which could challenge the benefits given to certain applicants. In federal court, a white farmer has challenged grants to “emerging farmers”, which are meant to help them purchase their first farms. These grants are for groups such as women and people of colour who have been discriminated against in the past.
The lawsuit asserts that the white farmer was eligible for assistance with down payment but for his race.
Walz stated, “We are in court right now about the ability to do this. We have the Agriculture Grant program.” “I believe it is legal. “We think it will stand up but if not, we’ll try to clarify [the cannabis laws].
The 2023 Cannabis Law was based on the desire to correct the harms caused in the past by the prosecution of marijuana use and sales by giving those who were harmed the opportunity to benefit from a legal business. Walz stated that the law is fundamental to the way dispensaries are funded and will be launched.
The program does not consider race. Social equity applicants include people who have been convicted of marijuana crimes, come from families with someone who has been convicted, or who live in areas with a large percentage of marijuana enforcement, or who live in areas with high levels poverty. They also include “emerging farmer” veterans or those who are less than honorably discharged because of marijuana offenses.
These applicants would receive extra points that could help them qualify for a license. Charlene Briner said last month that she didn’t believe the current laws were sufficient. Briner, however, said that her office does not propose an early start of cannabis sales for social equity retail licensees.
Briner stated in a Tuesday statement that “we anticipate OCM’s proposal could start a discussion at the Legislature on options to use temporary licences as a means to accelerate cultivation or manufacturing, or other entry points into the supply chain.” However, this is not included in OCM’s current proposal.
She wrote that the proposal was to ask legislators to “create an acceptance mechanism for applications for temporary licences for social equality applicants.” If enacted, this summer the application process will open and social equity applicants who are approved would receive temporary licenses. This proposal would allow social equity applicants to get an early start by allowing temporary licence holders to set up a business site, obtain zoning approval or planning approval from local governments, and raise capital.
She wrote that it would prevent them from purchasing, possessing, cultivating, manufacturing or selling cannabis or cannabis-related products “until the rules are promulgated in full force.” The proposed law change would allow applicants the opportunity to complete their licensing process before the completion of the rulemaking, which is currently not allowed by HF100.
Briner wrote: “Additionally under OCM’s proposed, temporary licensees will be eligible to convert into a standard license following the adoption of final regulations, provided they are in good status and have no outstanding issues with compliance.”
The current law states that all applicants must have money in hand and buildings purchased or leased prior to applying for licenses. Briner says that this burdens small businesses, who may have difficulty obtaining investors, mortgages, or leases until they obtain licenses.
OCM proposes to reverse this sequence by allowing for provisional licenses that can be given to investors, landowners and local government officials who are responsible for inspecting retailers to ensure compliance with local laws and state laws.
Briner stated that it would be easier to raise funds if social equity applicants could have some investment coming from businesses and people who do not meet the legal requirements for social equity. She said OCM was aware of the fact that “predators”, as she called them, have created straw applicants in states with non-social equity shares up to 49 percent.
OCM said it would need to complete a complex process for writing rules for cannabis sales and growing. These rules will outline how different licenses are shaped, and also the forms and applications that go with the program. The agency will be created from scratch and the rules written, applications examined, as well as other functions behind the scenes, are all expected to take place until the early 2025. Retail stores should open in the early spring.
Advocates would however like to see the timetable advanced.
Rep. Zack Stephenson of Coon Rapids, a DFLer, who was the primary sponsor in the House for House File 100 said that anything that opened stores earlier would be a positive thing.
He said that everyone agreed that the earlier we could get licensed dispensaries opened, the better. The law’s goal is to replace an illicit market with a legitimate market. But, he says, he is skeptical about OCM’s ability to act quickly enough to move retail sales beyond the spring 2025 deadline.
Cannabis would have to be available in stores before next spring, as it would take many months for growers to set up their operations and flower the plants.
The federal and state laws prohibit the importation or sale of marijuana across state borders. Therefore, all marijuana sold in Minnesota must be grown within Minnesota. Only two providers of medical marijuana , LeafLine Labs and Vireo Health/Green Goods, could supply a legal market before new licensees.
The law currently allows them to grow enough cannabis for their medical businesses, and to also have some retail stores when recreational sales begin. The law prohibits them from selling cannabis products in wholesale quantities to other retailers, or tribal nations that want to sell marijuana. OCM proposes merging supply chains as envisioned in HF100, replacing the current law which has a license for medical cultivators with certain restrictions, and a license for recreational cultivators with different restrictions. According to the proposal, cannabis growers could sell both into the medical and recreational markets.
Walz stated, “I think it is a good thing because it’s too complex.” The two parallel supply chain didn’t make any sense.
Cannabis sales outside of reservations
Walz confirmed that tribal nations had approached the state to negotiate tribal/state compacts, which would have allowed them to sell cannabis outside reservation boundaries. This could be on land that is held in trust by the tribe. The new law envisages tribes selling and producing cannabis on reservations, and some have already opened retail stores.
Walz stated, “We made the case that we wanted this to be Minnesota-grown, homegrown and we want the Tribes to play a major role in this for their economic environment to diversify,” “These aren’t giveaways to the tribes. They are an acknowledgement of the land that we live on and a way to try to put things right. We wanted them to be as strong and powerful as possible. We wanted to put the tribes at the forefront for a lot of it.”
Walz said that some tribes have raised the issue of off-reservation marijuana sales. Red Lake Nation, for example, has a sales operation in its reservation as well as a mobile shop that is located near the tribal casino. Walz stated that the National Indian Gaming Association had objected.
He said, “That’s still a gray zone.” Due to its geographical isolation, the tribe asked about selling trust land outside of reservation. According to federal laws, trust land is property off reservation owned and controlled exclusively by tribal nations.
“So, they’ll push the limit as hard as they can.” “They’re the ones who brought it up,” he said. We have Red Lake residents in Minneapolis. They have raised this issue. Discussions have taken place, but there has been no decision.
Walz said that he receives a weekly update on the implementation of all the laws passed during the 2023 session. This includes the cannabis law. Briner also gives him a cannabis-specific briefing about every two weeks. This level of detail was prompted by two separate issues. The first was the appointment of Erin DuPree as the head of the new agency, only to accept her resignation a few days later. In a special Office of Legislative Auditor report, a flawed process was blamed for the background checks of senior appointments. Walz was also upset when he learned that the Department of Iron Range Resources and Rehabilitation had decided not to provide taxpayer assistance to an out-of state cannabis company for the construction of a Grand Rapids grow operation.
Walz’s concern with implementation is that mistakes can damage public confidence.
He said: “I believe that it is the right thing to be doing from a philosophical standpoint from an equity perspective, a health perspective, a safety viewpoint, a freedom aspect.” “But if you get it wrong, I think you will lose the trust of the public.” I also think that people need to be aware of the fact that these products and those who sell them are regulated.
He said, “It is like selling bad food or bad alcohol.” “We won’t have another chance to do this, so we must implement it properly and get the desired effect. We have a less black market and a safer product. We can see people making money off of this. We have a system in place to ensure that people don’t drive under the influence.
This article was originally published by MinnPost.
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Photo by Chris Wallis // Side Pocket Images.
The first time Marijuana Moment appeared was when Minnesota governor supports changing marijuana law to strengthen social equity but wants to avoid legal challenges.
