REGIONAL- Minnesota’s planned recreational cannabis market launch is facing new delays after a preapproval lottery for social equity licenses was scrapped by a court order and shifted to a standard licensing cycle for all applicants next year, the Minnesota Office of Cannabis Management announced.
The OCM had intended to hold a lottery on Tuesday, Dec. 2 with the goal of giving social equity applicants a head start to open operations early in 2025 and ahead of standard license applicants who would have been licensed later in the year. Officials now tentatively plan to conduct a licensing lottery between May and June that will involve both groups, pushing the expected market launch beyond mid-2025 and eliminating the early advantage some social equity applicants might have enjoyed.
Court-ordered halt
The change follows a Ramsey County District Court order that halted the planned social equity lottery because of lawsuits filed by people whose applications for the license lottery were rejected. At least eight legal challenges have been filed with the Minnesota Court of Appeals alleging the OCM improperly rejected applicants or failed to follow state law.
The key lawsuit that triggered the delay was from applicants that the OCM alleges were using multiple submissions to gain unfair advantages. The court’s move forced the OCM to reconsider its approach.
“This was certainly not an outcome that we were hoping would materialize,” OCM Interim Director Charlene Briner said during a virtual press conference last Wednesday. “We know that today’s path forward does not provide a perfect solution, but I’m hoping that applicants will take some comfort in seeing that there is a clear path forward.”
Griner noted that while the cannabis legislation permitted a preapproval process and an early social equity lottery, they were not specifically required, giving the OCM the leeway it needed to make changes.
Changing the process
Originally, the preapproval process was meant to give historically disadvantaged applicants a head start. Now both social equity and general applicants will enter a system that will allot the licenses reserved for social equity applicants and then for general applicants in lotteries that could possibly be held on the same day or within days of each other. The 648 social equity applicants who previously qualified will be moved into the new round without losing their status but will face additional competition under the new system. Griner said the OCM will be reaching out to rejected social equity applicants to ask for more information or clarify information with the possibility that they could be added back into the lottery. New applications will also be accepted.
Under the revised plan, applicants for uncapped license categories will advance without a lottery. For license types with more applicants than permits, social equity hopefuls will enter a lottery first. Those not selected can try again in the general lottery.
Applicants who decide to opt out and abandon the licensing process can request a refund of their fee. The agency will start verifying social equity applicants Jan. 15 and open applications to both social equity and general categories Feb. 18. This will not involve the preapproval process initially used for verifications for social equity lottery applicants, a process that resulted in nearly two-thirds of applications being declined.
Timeline
The change ensures that the cannabis market will not launch before mid-2025. Earlier plans counted on some preapproved social equity licensees to begin cultivation sooner, ensuring product availability on opening day. Without that head start, all businesses will prepare simultaneously, which could slow supply growth. However, some industry experts have said that the amount of product produced ahead of time by social equity cultivators would not have been sufficient to fulfill initial market demand and that the impact on the overall market would be small.
Reactions
Supporters of the preapproval approach say it would have helped those most harmed by cannabis prohibition secure financing, locations and permits before the market opened. Now, social equity applicants face starting at the same time as others, potentially making it harder to gain traction.
The Minnesota People of Color and Indigenous Caucus expressed disappointment, noting that the law’s intent was to give priority to communities harmed by marijuana enforcement. The caucus vowed to keep equity provisions central in future cannabis policy.
“These social equity provisions were providing priority access to the burgeoning cannabis market,” the caucus said in a press release. “It is unfortunate that recent events have cast a shadow on this well-intentioned effort.”
Two architects of the cannabis legislation, Sen. Lindsey Port, DFL-Burnsville, and Rep. Zack Stephenson, DFL-Coon Rapids, said a handful of bad actors undermined the preapproval process.
“It was foundational that those who were most harmed by prohibition get a first shot at building Minnesota’s legal cannabis industry,” they said in a joint statement. “It is frustrating those who did not follow the rules have disrupted that commitment.”
Despite setbacks, OCM officials say the core social equity goals remain. Social equity applicants will still receive some preferences, such as license set asides and access to grants intended to foster economic opportunity.