2 cannabis companies plan facilities in Itasca County as license lottery approaches

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ITASCA COUNTY — Two businesses, one in Grand Rapids and one in Cohasset, are planning cannabis grow operations less than 2 miles apart.

Both see Minnesota’s emerging cannabis industry as an opportunity. For one, it’s a great investment in an industry in which the investors have experience. For the other, it’s a longtime dream becoming reality in the owners’ local community.

HWY35 principal investor Jack Mitchell was drawn to Grand Rapids because of the Minnesota Department of Iron Range Resources and Rehabilitation.

Mitchell, a major player in Missouri’s cannabis industry, was working on a small project in South Dakota when Minnesota legalized marijuana, a move he said was unexpected to most in the industry.

So, he and his partners shifted their focus and began looking for a big warehouse for cannabis cultivation in the state.

“We determined that there might be a possibility to get support from the IRRR … and the city of Grand Rapids has been incredibly, incredibly welcoming, I guess I would say? And wanted to get that project built out,” Mitchell told KAXE in an interview earlier this month.

“They thought the capital investment and the jobs would be really good for them. So, with the IRRR and the city support, and the fact that you had that facility, those were factors we really couldn’t ignore.”

Mitchell partnered with John Hyduke, chair of Minneapolis-based marketing company Modern Climate, who has ties to the Iron Range.

HWY35 purchased the 138-acre former Ainsworth lumber mill site that’s been dormant since its closure in 2008. IRRR approved up to $20 million in loans for the project in 2023, and Grand Rapids approved a $2 million tax increment financing, or TIF, agreement — meaning the city will finance the project using the additional tax revenue created by the investment.

M.N. Technology, the Cohasset company, began around a backyard campfire.

Chief Cultivation Officer Andy Nintzel was talking with his wife, CEO Mandy Nintzel, and neighbors Jamielee Maturi, chief operations officer, and Craig Maturi, vice president of operations, about cannabis in Minnesota.

The Nintzels have been passionate about cannabis cultivation for about 25 years. Andy attended the Cannabis College in Amsterdam to improve his growing skills. When Minnesota legalized medical marijuana, the Nintzels agreed that if recreational were legalized, they’d “jump into it right away.”

A few summers ago, the Maturis wanted in on the plan, and the company named after the couples was born.

They’ve worked with the city of Cohasset to buy a 52-acre, build-ready lot in its industrial park for $1 and on a TIF agreement and tax abatement from Itasca County. They’ve tried to stay hyperlocal, working with Grand Rapids-based Hawk Construction on their facility and choosing local or at least Minnesota-based lending partners. M.N. Technology is also pursuing IRRR funding, which the owners hope to have finalized soon.

Chugging right along

Mandy Nintzel said the licensing rollout has been an emotional roller coaster.

The Minnesota Office of Cannabis Management planned to hold an early lottery for social equity applicants in December 2024 to give them more time to prepare before the full license rollout. State law said social equity applicants include those convicted of possession or sale of cannabis before legalization, veterans, farmers and those from impoverished communities.

M.N. Technology was eligible for the program because of the founders’ cannabis-related convictions and was one of the 648 applicants that made it through the preapproval process. Roughly two-thirds of applicants were denied ahead of the planned social equity lottery.

After a court put the lottery on hold to allow denied applicants a chance to appeal, the OCM announced it would delay the lottery altogether.

“That was really discouraging and frustrating, especially when we’re all ready to go. We’ve got our business ready to go. The preapproval process was made for that and for us, and we worked so hard,” she said during an interview at KAXE. “So that’s frustrating. But all in all, I guess it’s made us even more resilient.”

There will still be a separate social equity lottery, though it will happen around the same time as the general lottery for capped license types, so social equity applicants will not have the advantage of extra time as expected.

The capped license types include mezzobusiness, retailer, manufacturer and cultivator. HWY35 and M.N. Technology plan to pursue cultivator licenses, which only allow them to grow cannabis. HWY35 also plans to pursue a manufacturer license, which would allow it to make products with the cannabis.

Except for dual manufacturer-cultivator licensure, no person or business can own or operate any other cannabis or hemp business under state law.

Only 50 cultivator and 24 manufacturer licenses can be issued until at least 2026. The licenses will be equally split between social equity and all other applicants. Those not selected in the social equity lottery will also be entered in the general lottery. Social equity licenses can only be sold to other eligible social equity applicants for the first three years.

Andy Nintzel said the primary goal is to get a cultivator license. They would consider falling back on one of the uncapped license types, though that would mean more competition.

“We won’t go away, we’ll just come out in a different form,” he said.

If HWY35 is not awarded a license, Mitchell said the company would buy one from somebody who did win one. They may be more expensive than most people can afford, but he knows they’ll be able to get one.

“I know people will say, ‘How do you know they’re available [for sale]?’ Well, I know they’re available,” Mitchell said. “… But in the big picture of our capital and what we’re spending and building and everything, it’s going to make sense for us to buy one.”

Mitchell said he and his partners were very successful in winning licenses when Missouri legalized medical cannabis, allowing them to build cultivation, manufacturing and retail facilities.

But his success in the business hasn’t been without its challenges. Mitchell is in the midst of legal battles that he said stem from the pending sale of his Missouri company, with investors alleging Mitchell used the business as his “personal piggy bank” and owed money to the state Department of Revenue, among other allegations. Mitchell said the investors are trying to depress the value of the company through the lawsuits and attempts to connect him to the illegal activity of a Missouri municipal board.

Another option, if HWY35 does not win a license, is providing space for people who get licenses to lease at the Grand Rapids facility, which Mitchell said they plan to do anyway.

Mitchell said HWY35’s construction is “going along pretty good.” He said the company was aggressive in getting the project permitted and moving construction forward so cultivation can begin when licenses are issued.

Mitchell estimated somebody — HWY35 or one of its tenants — will be growing in there by August.

“We don’t really think there will be any shortage of people who want to come to the property. There’s not any other opportunity like that that we know of in the state that’s ready to go,” he said. “… We have a lot of space up there, and our goal is to create as many cannabis operations as possible for the industry to be significantly represented in Grand Rapids.”

Tenants are an important part of the company’s plans. The IRRR approved a change in the job creation requirements at its November 2024 meeting to include counting the employees of tenants toward the goal.

HWY35 estimated it would create 400 jobs. In its loan agreement with IRRR, it would need to employ 150 after five years, 175 after 10 years and 350 after 15 years to be eligible for the full benefits.

State Sen. Justin Eichorn, R-Grand Rapids, voted against the change, pointing toward the lack of precedent and his overall concern about the nature of the project. Republican Sen. Robert Farnsworth of Hibbing and Rep. Ben Davis of Merrifield also voted no.

There is also a job requirement in the Grand Rapids TIF agreement for 300 full-time jobs within two years that pay at least $20 an hour. Rob Mattei, the city’s director of community development, said that benchmark is for the total employment on site.

“That’s not unique for a typical agreement for TIF,” he said. “It’s really more about the jobs created than who they’re actually employed by. HWY35 is still responsible for seeing that those jobs are created.”

If HWY35 failed to meet the job goal, its TIF would be pro-rated based on the number of jobs created.

M.N. Technology estimates it’ll have around 70 full-time employees with wages above $20 an hour. The company has not yet started construction on its Cohasset facility, though it has building plans and is working on scheduling with Hawk based on the anticipated license lottery in May or June.

“The plan would literally be that if we are awarded a license, we can turn around the next day and tell everybody that’s in play, ‘We have our financing in place. We have our plans done. Start digging a hole,’” Andy Nintzel said.

He estimated the buildout would take 12-16 months, with plans to begin cultivating before the facility is complete, about nine months after construction begins. That way, their first products could be out the door around the same time the building is completed.

Revitalization

In his view, Mattei said HWY35 was the first viable development project for the former Ainsworth site, and given how long the site has been dormant, it was the right move to make.

He pointed to the potential for spin-off development with the need for testing facilities and transportation partners and noted the city has issued permits for 75%-80% of the building.

“There’s a lot of potential for more, almost creating a park out there, as opposed to just one development,” he said.

A park is exactly what Mitchell has in mind.

A website, copywritten by HWY35 and listing Mitchell’s email as the contact, advertises the GR Cannabis Park.

“You won’t believe how picturesque the landscape of Grand Rapids is, and this one-stop shop facility is literally nestled in a thriving community,” the site reads.

“You’ll immediately feel you’re truly part of this exclusive Minnesotan enclave, this one-of-a-kind corner of America with its pre-approved zoning and dynamic cannabis community already in full swing. … Be part of not just the first, not just the only, but the first and only cannabis facility in Minnesota.”

The website appears to reveal a broader definition of tenant than just those sharing the mill. The high-ceilinged industrial building is an option and so are 5- to 25-acre lots, where businesses could build to suit.

It also highlights strong security, ready-to-build zoning and infrastructure, on-site workout facility and day care, the amazing labor pool (“Midwestern work ethic meets Midwestern values”) and friendly city government, noting Grand Rapids has indicated support for cannabis.

“[The city] will efficiently process building applications for permits,” it states. “They’re excited about their role in creating a new employment base in their community.”

According to the website, HWY35 also plans to build a cannabis cafe and boat launch on the Mississippi River, of which tenants would have preferential use.

Given all those plans, Andy Nintzel said HWY35 isn’t necessarily a competitor, because M.N. Technology plans to serve more of a niche market.

“They got a whole different thing going on over there,” he said. “ … If HWY35 is up and running, and we’re up and running, we’ve got a lot of people employed outside of the taconite, timber and tourism industry, which is pretty cool for Northern Minnesota.”

Nintzel expressed some skepticism at the idea of a cannabis park with the industry’s secretive culture and the fact that Minnesota bans most non-compete agreements.

Even if HWY35’s business plan was the same, Nintzel said the way the state’s license structure is designed leaves plenty of room in the market for cultivators.

They want HWY35 to also succeed, but Nintzel said they did want to stick their stake in the ground as the local folks.

“Not speaking directly about HWY35 by any means — when you’re the local, small town, really, truly just some parents that live in this community trying to launch a very large business — it sort of feels like you’re up against Goliath,” he said.

But that hasn’t stopped them from dreaming big. M.N. Technology will donate 2% of its net profits back to the community, and the Nintzels imagine being able to go in front of the Grand Rapids School Board and tell them they want to help fund more teachers.

Andy Nintzel said he’s fired up about the potential impact of $40 million or more added to the economy of a small town like Cohasset, especially with the weight of changes coming to the city’s major employer, Minnesota Power’s Boswell Energy Center, where coal operations will end by 2035.

“Our ultimate goal is to create a long-lasting legacy for people to be able to work in this industry in Cohasset,” Nintzel said “ … It’s a unique opportunity to chase a passion that we’ve had for a long time and at the same exact time, help a community thrive.”

“}]] HWY35 is planning a cannabis park at a former lumber mill site in Grand Rapids. Locally-owned M.N. Technology plans to build a cultivation facility in Cohasset’s industrial park.  Read More  

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