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Serving Northern St. Louis County, Minnesota

Lawmakers find pot legalization a heavy lift

David Colburn
Posted 4/12/23

REGIONAL- The legislative path to approving recreational marijuana for Minnesota has been a long and winding road, as companion bills in the House and the Senate have snaked their way through more …

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Lawmakers find pot legalization a heavy lift

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REGIONAL- The legislative path to approving recreational marijuana for Minnesota has been a long and winding road, as companion bills in the House and the Senate have snaked their way through more than 20 legislative committees since being introduced in January.
What’s become clear through the parade of cannabis industry experts and others testifying at committee hearings is that the original “one size fits all” approach of the original proposals wasn’t a suitable, comprehensive fit for the two-pronged world of hemp-based cannabis-infused edibles and recreational marijuana. A number of other issues have also cropped up, and all of the corresponding revisions to the bills have significantly altered the authors’ original plans.
“You’re seeing the cannabis bill being rewritten in real time, committee-by-committee, which is what people have been asking for, to not do things in the dark of night,” said Rep. Zack Stephenson, the Coon Rapids DFLer who is the sponsor of the primary House bill, HF 100. “We have a lot of great hemp businesses out there that are doing great things, and we do not want to shut them down.”
The Legislature authorized the sale of edibles and beverages infused with hemp-derived THC, the primary psychoactive compound in cannabis, last summer, but failed to provide a robust regulatory framework for producers and vendors. Had the original provisions of the recreational marijuana bill not been changed, they would have threatened the viability of the hemp-derived edibles business sector.
“The way that this bill is written is confusing,” Glenn McElfresh, co-founder of Plift Beverages, the state’s first-ever THC drink packaging and distribution center, said in early March. “The way this bill is written is bad for all the businesses who have invested in these low-dose THC products.”
Legislators took note, adopting major amendments to deal with regulatory and licensing objections. The 142-page amendment adopted for SF 73, the Senate version of the bill, was almost half the size of the original 300-page proposal. A similar amendment was recently adopted in the House.
An ongoing challenge for legislators has been that while recreational marijuana is illegal under federal law, hemp-derived THC products are not. Sellers of the latter have been concerned that their businesses would be disadvantaged by being too closely tied to recreational marijuana. The intent of changes to the regulatory provisions is to more clearly separate those licensed to sell hemp-based products from those dealing in recreational marijuana, thereby preserving business advantages hemp-based product distributors have for taking business-related tax exemptions and obtaining financing.
An original provision of the legislation gave a newly created Office of Cannabis Management the authority to issue business licenses, and the phrasing was such that it appears the office could have imposed a cap on the number of hemp-derived businesses, something that wasn’t part of last year’s enabling legislation. Changes to the licensing sections, such as the addition of a license for businesses that sell “lower-potency edible products” have reportedly addressed these concerns, as have comments by advocates that the intent is to formally license and regulate the hemp-products segment but not limit the number of businesses.
The bill also takes aim at the practice of vertical integration of marijuana and cannabis businesses. Vertical integration refers to the practice of one company controlling multiple parts of the supply chain. That could give rise to a few large businesses controlling most of the industry, which is directly opposed to the authors’ intent that there will be widespread economic opportunities for small entrepreneurs through the bill.
Yet, some proponents argue that vertical integration leads to better regulatory oversight and allows for shared costs.
But those who wish to limit the practice point due to its potentially detrimental effect on small businesses entering the marketplace, with less ability to raise capital. Large vertically-integrated corporations that have controlled the cannabis market in other states have engaged in practices that ultimately caused those markets to collapse.
Making up for the ill-effects of legal prohibition that fell hardest on the low-income and communities of color, the bill hopes to provide access via loans and training to people from those communities. Limits on single businesses having licenses up and down the supply chain is a way to help those communities with smaller businesses. These “social equity” applicant communities include military veterans who lost honorable status due to a cannabis-related offense, a resident for the last five years of a census tract or neighborhood that experienced a disproportionate amount of enforcement, a resident of a census tract with 20 percent or more poverty, or a tract where the median family income did not exceed the greater of 80 percent of statewide or metro area median family income. Such status will earn additional points on the scoring of applications. Added to the list by the amendment are people who have been convicted of a cannabis-related offense and socially disadvantaged farmers.
The bill also authorizes negotiations with Native Tribes for medical marijuana and adult use marijuana.
Additional portions of the bill address:
• The creation of more than a dozen types of licenses for growing, selling, transporting and testing cannabis.
• The creation of the Office of Cannabis Management to regulate cannabis and take enforcement actions.
• Taxing cannabis retail sales at eight percent, in addition to any already imposed local or state taxes.
• Creating and funding programs to combat cannabis abuse.
• Creating grants to assist individuals entering the legal cannabis market.
• Eliminating criminal penalties for cannabis possession.
• Expunging the criminal records of people previously convicted of low-level cannabis offenses.
• Giving communities additional leeway for local regulation while prohibiting them from banning cannabis-related businesses.
While the regulatory sections of the bills received extensive attention in the House and Senate amendments, the directives for personal recreational use have not been as radically revised.
Legislators did agree to reduce the amount of cannabis flower a person can possess in a private dwelling from five pounds to 1.5 pounds, while two ounces may be possessed in a public place.