[[“value”:”Credit: David Joles/The Minnesota Star Tribune
Minnesota’s journey toward establishing a legal cannabis market hit another roadblock this week as a Ramsey County judge delayed the state’s first lottery for cannabis business licenses. This key step for launching the recreational marijuana market, aimed at providing opportunities for social equity applicants, is now on hold due to pending litigation.
The Office of Cannabis Management (OCM) had planned to hold the lottery on Tuesday, granting 282 applicants preapproval for cannabis business licenses. These preapproved licenses were intended to give social equity applicants — individuals disproportionately affected by cannabis prohibition — a vital head start in this emerging industry. However, the lottery is now delayed as the Minnesota Court of Appeals reviews legal challenges brought by several applicants who claim they were unfairly denied entry.
“With that, there’s no lottery tomorrow,” said Ramsey County Judge Stephen Smith, announcing the postponement on Monday.
The delay highlights the tension between the OCM’s mission to ensure fair and transparent application processes and the logistical hurdles of launching a regulated cannabis market.
Disqualifications Spark Legal Action
The OCM rejected 1,169 of the 1,817 applications submitted for the lottery. Reasons for rejection included failure to meet qualifying criteria, incomplete documentation, or unmet ownership requirements. While the OCM had sent deficiency notices to around 300 applicants in October, granting them 14 days to resolve application issues, some attorneys argued that many applicants were denied outright without such an opportunity.
“Last week, they were told, ‘You’re disqualified because you did not provide a point of contact in your operations plan.’ So, an incomplete application,” attorney David Standa said. “Instead of getting a deficiency notice for that, they were just outright denied.”
The legal complaints also allege a lack of transparency from the OCM. Attorney Courtney Ernston criticized the agency’s vague communication with applicants, citing a client whose rejection notice simply read, “fail.”
“Simply saying the word ‘fail’ is not a reason,” Ernston said. “The basis for the denial needs to be communicated to these applicants.”
Threat to Social Equity Goals
The delay threatens to derail the state’s efforts to prioritize social equity applicants in Minnesota’s budding cannabis industry. If the legal process continues to drag out, the OCM may have to abandon its separate lottery for social equity applicants and combine it with the general licensing process.
“As this process slides into the general process, there’s simply not going to be the ability to run these two processes in parallel, and we’re probably just going to have to abandon the social equity process,” Assistant Attorney General Oliver Larson warned.
This potential shift raises concerns for the hundreds of social equity applicants who followed the guidelines and submitted their applications in good faith.
Implications for Minnesota’s Cannabis Market
Minnesota legalized recreational cannabis in May 2023, targeting an early 2025 market launch. But with no licenses issued and cultivation yet to begin, the rollout remains stalled. The OCM plans to open the application process to all Minnesotans early next year, but the ongoing litigation may further delay this timeline, compounding challenges for aspiring cannabis entrepreneurs and regulators alike.
This article includes reporting from Ryan Faircloth and Matt DeLong of the Minnesota Star Tribune.
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