Cannabis zoning begins

In 2023, Minnesota passed laws allowing legalized cannabis use in the state. With this change in law, New Ulm has different options for how to regulate or participate with the new laws.

Community Development Director John Knisley said the planning commissions role will be to provide guidance for types of cannabis uses should be permitted in New Ulm and where.

Knisley clarified the city had different options for how to regulate cannabis business, but they do not have the authority to issue a ban on cannabis businesses in the city.

State law requires at least one cannabis license be granted for every 12,500 in a community. Since New Ulm’s population is 14,000 the city must grant at least one cannabis sales license, but this is the minimum.

This map of New Ulm shows areas of the community in which cannabis businesses could potentially be permitted. The red shaded sections are zoned commercial. The blue shaded section is are zoned industrial. The purple section at the center of the map is the downtown business district not in a buffer zone prohibiting cannabis businesses.

Knisley said when this topic came before the city council during their Jan. 21 meeting, the councilors were leaning towards allowing two or three cannabis business licenses. However, the planning commission is not being tasked with determining the proper licenses, but recommending zoning regulations. The question is what type of cannabis businesses should be permitted.

Knisley listed the different types of cannabis businesses. A micro business allows for cultivating, product manufacturing, packaging and sale of cannabis through a single retail location. Knisley compared this to a microbrewery.

A mezzo business allowed for the cultivation, manufacturing, packaging and sale of cannabis but may operate up to three retail locations. Some businesses are strictly cultivation and others are only retail.

The state does offer buffer guidelines for zoning. A city could prohibit the operation of a cannabis business within 1,000 feet of a school or a 500 feet of a day care, residential treatment facility or public park.

Knisley provided the commission with a city map showing all the areas impacted by one of these buffers. The majority of New Ulm is located within a buffer.

“That covers a fairly large portion of the city of New Ulm when you start to add those buffers up,” Knisley said.

Commissioner Bobbi Fuhr asked what would happen if a cannabis business opened a location and then a day care tried to move next door.

Knisley said in that scenario the day care would likely need to relocate. The cannabis business would not be forced to move.

A second map showed the different zone areas where a cannabis business could potential open. There commercial districts on the north west and south east of town were out of the buffer zones. There were a few industrial section on the east side of New Ulm. Downtown New Ulm was mostly located in a buffer zone due to proximity to German Park and Kiesling Park, however a portion of downtown near the intersection of Center and Minnesota Street was outside of the buffer.

Knisley said the Office of Cannabis Management (OCM) recommends city’s zone cannabis similar to alcohol production and sales. In general, New Ulm allows for sales of alcohol in all business districts, production in industrial, and production with sales as a conditional use in the industrial district. Knisley said the city could use this system for cannabis.

Staff is working to create a draft ordinance for cannabis zoning that will be presented during a special planning commission meeting on Thursday, Feb. 13. Ahead of that meeting, staff was looking for some direction on the types of permitting.

“Since this is new, the planning commission could considered a Conditional Use Permit (CUP) instead of a permit,” Knisley said. The CUP is similar to a normal permit except it allows the city to set extra condition on the business and gives extra opportunity to review the business before permitting it.

Commissioner Bill Turnblad favored the CUP approach because cannabis businesses were new and it gave extra flexibility for review. Approval of a CUP also required a public hearing.

“It’s in an infancy and there is a lot of information that might not be correct,” Turnblad said. “A public hearing is probably not a bad thing.”

Commissioner Larry Mack suggested an Interim Use Permit (IUP) as a possibility. The IUP is a temporary permit. After a set period, the permit could lapse if not renewed by the city. It also does not stay with the property for the life of the building.

Knisley favored a CUP over a IUP. Since the IUP was only a temporary permit, it could create a hurdle for potential businesses. If a cannabis retailer was uncertain the permit would be renewed, they might not be able to commit to starting the businesses

Commissioner Anne Earl asked if the city require a CUP for all cannabis business, but later change it to a regular permit without any conditions?

Community Development Director David Schnobrich confirmed the city had an option of changing a conditional permit to regular permit by passing an ordinance.

Earl was concerned the conditional status of the permit could also hurt a business starting up. She felt granting regular permits might be the better option.

During the report Knisley was asked if there were any potential cannabis businesses inquiring into zoning regulations. He confirmed staff had received a few inquiries. The meeting was also attended by Glenn Hauser of Lafayette.

Hauser stated he and his business partners planned to start a cannabis retail business in New Ulm, with cultivation happening in Lafayette.

“We would like to be part of downtown, but we want to be on-brand with New Ulm,” Hauser said. Throughout the discussion, Hauser answered questions from the commissioners on the business.

Hauser said there would be an area at their store to consume products, but there would be no smoking cannabis. Products would be limited to edibles like gummies, chocolates and drinks. He said the store would have a mix of on-sale and off-sale products.

Hauser also confirmed all cannabis products require testing.

“Each plant is tracked all the way to sale,” Hauser said. “The testing is pretty intensive.”

Commissioner Fuhr asked Hauser if there was enough interest in New Ulm to cover the cost of a cannabis retail business.

Hauser believed a cannabis business in New Ulm could make over $50,000 a week in sales.

The commission asked what the timeline was for approving an ordinance for cannabis zoning.

Knisley believed it was unlikely to have an ordinance in place before the end of March. Even if the city council approved an ordinance during their Feb. 18 meeting, a second reading of the ordinance would be required in March. Another 30 days would need to pass before the ordinance went into effect.

The first draft of the ordinance is expected to come before the planning commission during a special meeting at 5 p.m. Thursday Feb. 13.