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As the nation’s marijuana industry anticipates federal legalization under President-elect Donald Trump, the emerging cannabis sector in Minnesota is expressing concerns about what such a change could mean for their business prospects. While Trump’s promise to lift federal restrictions on marijuana is seen as a win for many states that have yet to legalize recreational cannabis, Minnesota’s industry faces unique challenges that could make competition with established markets difficult.
The Competition Dilemma
Currently, 26 states have yet to legalize recreational cannabis, but the federal government’s stance on marijuana may soon change. During his campaign, Trump voiced support for reclassifying marijuana from a Schedule I substance—an illegal drug under federal law—to a Schedule III substance, like anabolic steroids. This would acknowledge marijuana’s medical value, ease business tax burdens, and, most importantly for Minnesota, open the door to interstate commerce.
For states like Minnesota, which is just beginning to regulate cannabis, such changes could be detrimental. Shawn Weber, president of the Minnesota Cannabis Growers Cooperative, warns that legalizing marijuana at the federal level would flood the state’s immature market with more established growers from other regions who would be able to sell across state lines. This influx of competition could severely impact Minnesota’s efforts to develop its local cannabis industry.
“We’re still in the process of building this industry,” Weber explains. “Federal legalization would be a huge blow to our local growers, as they’d have to compete with suppliers from more established markets who could offer lower prices due to economies of scale.”
As Weber notes, the consumer benefits of such a change would include lower prices, but the ripple effect could harm Minnesota’s local businesses that are just getting started.
The Potential Benefits of Federal Legalization
On the other side of the debate, Carol Moss, a lawyer with Hellmuth & Johnson who works with the cannabis industry, argues that federal legalization could bring significant benefits. According to Moss, lifting restrictions on banking and taxes would have a positive impact, opening doors for easier access to loans and tax deductions that are currently denied due to marijuana’s status as an illicit substance.
For many in the cannabis industry, these financial hurdles are major obstacles to growth. In fact, some businesses are unable to declare bankruptcy or discharge their debts due to the federal government’s stance. Federal legalization would provide a clearer path to financial stability and growth, even as Minnesota’s cannabis industry navigates its own regulatory challenges.
However, Moss remains cautious about Trump’s ability to make such sweeping changes. She points out that Trump has flip-flopped on the issue, and the specifics of his administration’s stance remain uncertain. “We’ve seen Trump go back and forth on this issue,” she says, stressing the importance of waiting for concrete policy actions before making predictions.
Navigating the Path to Legalization
While federal legalization remains uncertain, one of Trump’s key proposals is the reclassification of marijuana to a Schedule III drug. This shift could pave the way for greater federal involvement in the cannabis sector, but significant hurdles remain. Trump has indicated support for making marijuana accessible to consumers and has even backed a Florida ballot initiative that sought to legalize recreational use. However, despite his support, that initiative ultimately failed.
Trump’s appointees, such as Pam Bondi for Attorney General, have expressed opposition to legalization, while others, including former Rep. Matt Gaetz, have championed it. These mixed signals have left many unsure of the path forward.
The U.S. Cannabis Council, recognizing the political complexities, has enlisted former Trump communications director Bryan Lanza to lobby the administration, hoping to turn Trump’s campaign promise into reality. At the same time, marijuana advocates are gaining momentum through growing public support. According to a Gallup poll from October 2023, 70% of Americans support the legalization of marijuana, a significant increase from 2000.
Minnesota’s Delicate Regulatory Dance
For now, Minnesota is continuing to move forward with its plans to develop a cannabis industry that emphasizes social equity. This includes granting “social equity licenses” to individuals who have been disproportionately affected by marijuana prohibition. Yet, as Josh Collins from the Minnesota Office of Cannabis Management points out, Minnesota’s regulatory framework is designed to create a “craft industry,” focusing on social equity issues rather than scaling up for mass production.
Minnesota’s efforts to build a well-regulated, local cannabis market are likely to continue, even as federal changes loom large. While federal law typically supersedes state law, Collins suggests that Minnesota’s state-specific control over the industry could remain intact, with certain regulatory measures persisting despite federal shifts.
Looking Ahead
As federal legalization of marijuana moves from possibility to potential reality, Minnesota’s nascent industry remains in a delicate balancing act. While some celebrate the prospects of a nationwide marijuana market, others fear the impact of increased competition. Minnesota’s cannabis industry will have to adapt to new federal rules, but the state’s unique regulatory approach may offer some protection against market disruption.
For now, Minnesota’s regulators continue to focus on building a framework that prioritizes equity and local development. The future of the state’s cannabis market will depend not only on federal policy changes but also on the ability of local entrepreneurs to carve out a sustainable, fair market in a rapidly evolving industry.
Credit: Ana Radelat, MinnPost’s Washington, D.C. correspondent, contributed to this report.
“]] Minnesota’s cannabis industry faces challenges as federal legalization looms. Competition from established markets threatens local growth and equity. Read More
