The Minnesota Office of Cannabis Management (OCM) is moving forward with a standard licensing cycle for all applicants—social equity and general—to “avoid further delay,” regulators announced Dec. 11. This means state regulators are abandoning plans to provide social equity licensees a leg up in the forthcoming adult-use marketplace.
The decision comes after Ramsey County District Court Judge Stephen Smith decided last month to stay the OCM’s license preapproval lottery for social equity applicants that was originally scheduled for Nov. 26. The November lottery was meant to provide a head start to those unjustly impacted by cannabis prohibition as well as military veterans and those living in poverty-defined areas.
Specifically, preapproved license awardees could have moved forward on securing the investments and real estate needed to launch their cannabis businesses ahead of non-social equity operators under OCM’s original plan.
However, state regulators had disqualified roughly two-thirds of 1,817 social equity license applicants for the early lottery in an effort to prevent individuals from taking advantage of the opportunity. In other states that have held social equity lotteries, license winners who perhaps had little intention of starting legitimate operations instead sold their licenses to big businesses.
Smith’s decision to order a stay in the preapproval lottery resulted from a group of disqualified applicants seeking legal action after the OCM denied their preapproval social equity status. At the time, OCM officials warned they could kill the early social equity-centric lottery altogether, which is what they decided on Dec. 11.
While there will still be a social equity lottery, it just won’t be until mid-2025 under that state’s new plans.
“We remain committed to launching an equitable, sustainable and responsible cannabis marketplace in Minnesota,” OCM Interim Director Charlene Briner said in a press release. “Our path forward ensures we remain on track to launch Minnesota’s new cannabis market and also preserves some of the social equity benefits that were at the heart of the preapproval process and that are foundational to the law as it was originally conceived.”
Minnesota became the 23rd state in the nation to legalize adult-use cannabis when Gov. Tim Walz signed legislation into law on May 30, 2023. The final language of a 320-page bill included 16 licensing categories with provisions for a special scoring structure to license social equity applicants.
Legislative changes in 2024 established the license preapproval process that “emphasized rigorous review and operational readiness to ensure that social equity applicants were market-ready,” according to the OCM.
However, the delays related to the court’s order to pause the November lottery eliminated the intended “early-mover” advantages offered by the expedited license preapproval process that was envisioned by state lawmakers, according to the OCM.
“Therefore, the lawsuits brought by some unsuccessful applicants necessitate moving directly to the licensing cycle for both social equity and general applicants,” according to the OCM.
The 648 applicants who initially qualified for the preapproval process will automatically move forward in Minnesota’s next licensing process: A separate social equity lottery will no longer provide for an approximately six-month head start. Applicants not selected in the social equity lottery will still be allowed to enter the general lottery.
“We recognize the disappointment of the 648 qualified social equity applicants who participated in the preapproval application process and are committed to ensuring their consideration in the next application cycle,” Briner said. “Leaving these applicants in limbo is not an acceptable outcome and would diminish their opportunity to succeed in the market.”
In February, the OCM plans to send requests for more information to the nearly 1,200 applicants who were denied preapproval status wishing to continue to the next licensing cycle. Through the requests, applicants will have the opportunity to correct a “broader range of errors” from their original preapproval applications.
The office announced Wednesday that its officials remain committed to ensuring that Minnesota’s true party of interest protections are adhered to in the upcoming licensing cycle by continuing an extensive vetting process for applications. The OCM stated it would pursue all legal recourse available to penalize those who violate the law.
Additional applicants who did not apply for preapproval status can still be verified as social equity applications next month, when the OCM’s 2025 licensing cycle begins:
Jan. 10: The deadline to request a refund of a license preapproval application feeJan. 15: The social equity applicant verification window opens (for non-preapproval applicants)Jan. 30: The social equity applicant verification window closes (for non-preapproval applicants)Feb. 18: The license application window opens for social equity and non-social equity applicantsMarch 14. The license application window closes for all applicantsMay/June: The licensing lottery is tentatively scheduled
“We have never wavered in our goal of launching a fair and prosperous cannabis market for Minnesota,” Briner said. “We will continue to provide technical assistance and additional resources, including new grant opportunities to support licensees throughout this process and at every step of the way.”
A lottery for social equity and other applicants is tentatively scheduled for May or June, pushing a potential adult-use sales launch to late 2025. Read More
