The frustrating delays with Minnesota’s new cannabis industry have resulted in hundreds of would-be entrepreneurs getting out of the business before it even gets off the ground.
New data obtained by 5 INVESTIGATES shows that more than 400 people requested refunds of their application fees from the state after it called off the pre-approval license lottery late last year. Those refunded fees totaled more than $1.5 million.
Matt Whittaker planned to open a cannabis testing lab.
“It’s an enormous commitment. You’re looking at multi-million dollars in infrastructure development,” he said.
Whittaker, who currently runs a boutique lab in Roseville testing amino acids, had applied for a cannabis lab license, spent hundreds of hours on a business plan, looked at property and invested at least $20,000 to get going.
But he recently decided to pull out because it no longer made business sense. Whittaker missed the deadline to request a refund from the state.
“For the first year, to year and a half, you’re going to be burning money,” Whittaker said. “And the longer this process takes to work itself out, the more money you’re burning.”
Last November, a judge told the Office of Cannabis Management (OCM) to pause its planned license lottery for applicants approved in the early social equity round. Weeks later, the agency scrapped the lottery altogether.
Although the state initially said application fees would be non-refundable, the agency reversed course after the fumbled rollout.
“The decision whether to start a new business is complicated and something that requires careful consideration and preparation by the individuals involved,” said Josh Collins, spokesman for OCM.
Last week, the agency started collecting applications for its general licensing round – meaning anyone who did not qualify for social equity. OCM reports it received 56 license applications in the first three days.
The painstakingly slow rollout of Minnesota’s cannabis market is also giving pause to some already in the business who want to expand further.
“I don’t want to say this, but we warned them,” said Steve Brown, owner of Nothing But Hemp.
Brown runs one of the very first low-dose THC companies in Minnesota. His warehouse can manufacture up to 60,000 low-dose gummies every day of the week.
The continued uncertainty in the cannabis market is impacting future business decisions, Brown said. His wife is interested in opening up a dispensary.
“I don’t know if that’s going to be the right move,” he said.
Brown believes another factor is the state-imposed caps on certain license types. He says cities should be the ones limiting the number of businesses – not the state.
“The social equity guys never actually had a true head start like they were promised. And that’s really sad,” he said.
Some of those applicants are still looking for relief in court.
In addition to the highly publicized lawsuits against the OCM late last year, 5 INVESTIGATES discovered another lawsuit filed just weeks ago from a group of applicants that invested tens of thousands of dollars in equipment and retail space, and are fuming over that canceled lottery.
“OCM’s failure to fulfill its obligations harmed the very candidates the Minnesota legislature intended to help,” the lawsuit reads.
Despite hundreds of refunds, the number of applicants still outpaces the number of limited licenses available.
OCM is still targeting a market launch sometime in 2025, but questions remain about whether it’s feasible and how it will look.
Some industry experts say if state-regulated businesses do open up this year, the supply will be limited because of how long it takes to grow the plant.
“I really would be very surprised if we had anything going on any significant basis until at least 2026,” Whittaker said.
New data shows more than 400 people requested refunds of their application fees from the state after it called off the pre-approval cannabis license lottery late last year. Those refunded fees totaled more than $1.5 million Read More
