Getting your Trinity Audio player ready...

By Peter Callaghan, Minn Post

The lead sponsors of 2023’s recreational cannabis law are sensitive to suggestions that the sweeping law needs “fixing.” Such a word might be interpreted as endorsing Republican talking points that the bill — along with much of the work of the 2023 session — was rushed and that mistakes were made.
Instead, top sponsors of House File 100 say changes they are both proposing, as well others filed by other lawmakers, are expected and routine. The law will be “modified,” not fixed.

“As I said many times last year, it won’t be the last time the Legislature hears a cannabis bill,” said Sen. Lindsey Port, the Burnsville DFLer who was the lead sponsor in the Senate. “Prohibition of alcohol ended nearly 100 years ago and we still have a liquor bill nearly every year.”

That said, what is being proposed to change the law at the midpoint between legalization and retail sales? Both Port and Rep. Zack Stephenson, DFL-Coon Rapids, have said they expect to have an omnibus cannabis bill that will contain all changes in one package.

The Office of Cannabis Management’s 100-page proposal — Senate File 4782/House File 4757 — is the stage setter. Even though these bills show Port and Stephenson as sponsors, they put their name on top as a courtesy to the Office of Cannabis Management. Their own work will likely be affixed to the OCM bill.

The long list of changes would adjust how so-called social equity licenses are distributed, change the ownership ratios for such license holders, bring the hemp-derived market regulation under the Office of Cannabis Management sooner and put numerical caps on each type of license rather than let OCM decide how many the market requires. Many of the changes were suggested as ways to get to the same end point as HF 100 but with less risk of litigation.

Primary among the OCM proposals is a plan to replace a points-driven system for distributing licenses to enter the new market with what the agency called a “vetted lottery.” Only applicants who meet the social equity criteria and demonstrate that they have the knowledge and wherewithal to run a business would be entered into the first lottery. Later in the process, other applicants would enter a different lottery for remaining licenses.

All of these factors would be considered in the “vetted lottery,” interim OCM director Charlene Briner said. The lottery would eliminate potential subjective judgments by staff that could expose the law to litigation. Briner said the current law based on the accumulation of points would likely benefit the “well-capitalized and politically savvy” and expose the state to lawsuits that could delay the roll out of retail sales next spring.

But what Briner sees as a way of enhancing opportunities for people and communities — defined in the law as social equity applicants — was viewed as hostile to those same applicants during testimony last week.

“The proposed lottery system is a cause for alarm from our members who have worked the last 10 months to prepare for a merit-based scoring system,” said

John Bartee, president of Cannabis Retailers and Manufacturers Association of Minnesota. Big companies, he said, might be able to put in more applications, or what he called “more tickets to play,” to increase their odds of winning.

Many testifiers said it harmed social equity applicants by introducing chance into license awards and might give big companies the opportunity to “flood the zone” with dozens of applicants to increase their odds.

Others worried that changing the ownership ratios — something OCM saw as a way to help underfunded social equity applicants get investors — would expose those same applicants to financial predators. Current law says social equity applicants must provide 100% of the investment needed. The OCM proposal drops that to 65% as a way of helping those applicants find capital when traditional bank borrowing isn’t an option for cannabis.

Calandra Revering, founder of Minnesota Association of Black Cannabis Professionals, said the lottery and change in ownership percentages “has created a path for multi-state operators to come in and expand their footprint in Minnesota.” She said other states have seen big businesses partner with social equity applicants to win licenses, only to move them out of the business.

“As one of my colleagues who has opened cannabis operations in other states told me, this is called Rent a Minority” and it is on its way to Minnesota thanks to OCM’s proposal, she said.

Social equity is a pillar of the law, meant to assure that people and communities harmed by the war on drugs can now benefit from legalization. Race is not mentioned in the current law, but having been from neighborhoods, communities or even families that faced higher levels of arrests and prosecution would give applicants more points. Being a veteran who faced a less-than-honorable discharge due to marijuana use is another way to get points.

But points would also be awarded for having other tasks completed, such as a business plan, demonstrating knowledge of the cannabis business, being a veteran, having financing and having a security plan in place. While OCM is to determine how many points might be scored for each of these, at least 20% must go toward meeting social equity goals. License applicants — cultivators, manufacturers, retailers and combination businesses that could both grow and sell products — who accumulated the most points would win licenses. In the event of ties, a random drawing could be used.

Port said Friday she expects her bill to make seven Senate committee stops before returning to the Senate Commerce Committee for final action.

Stephenson posted a draft of his proposed bill Monday and will hold a hearing Wednesday in his commerce committee. It makes a few changes to the OCM bill, including some of the provisions detailed below. But for now, it retains most of the major provisions including the lottery plan.

Other bills filed:

Home grow for medical cannabis patients: Rep. Jessica Hanson, DFL-Burnsville, introduced HF3766 that would allow patients enrolled in the medical cannabis registry program to grow up to 16 cannabis plants without a license, double what non-patients can grow for personal use. It also would allow caregivers to grow cannabis for the patients though still undecided is whether a caregiver is restricted to just one patient or could grow cannabis for up to six patients. The Senate version, SF4734, is sponsored by Sen. Clare Oumou Verbeten, DFL-St. Paul.

Patient protection: HF3760 , also by Hanson, would protect medical cannabis patients from sanctions from schools, landlords or occupational licensing boards for being on the registry and using medical cannabis products.

Medical cannabis-tribal sales: Hanson’s HF4195 would set up a pilot project to allow the state’s two medical cannabis providers to sell to tribal governments and Tribal cannabis businesses. Hanson said last week she does not expect this measure to pass this session.

Medical cannabis health conditions: Rep. Kaohly Vang Her, DFL-St. Paul, introduced HF4789 that would expand the health conditions eligible for medical cannabis. Current law empowers the commissioner of the Department of Health to decide which conditions are covered, but Her’s bill would allow a patient’s doctor to determine if cannabis would be helpful.

Menthol flavors: HF4251 also by Her, would prohibit the Office of Cannabis Management from approving cannabis flower, cannabis products, and hemp-derived consumer products that contain menthol or other flavorings.

Counterfeit packaging: HF4377 by Stephenson would ban the sale of empty packaging that looks like approved products and gives the state attorney general the authority to enforce the ban. This is in response to reports of counterfeit packaging entering the state that would violate bans of packages that appeal to children if they contained hemp or marijuana products.

Low-potency hemp products: HF4629 by Rep. Nolan West, R-Blaine, would create a process to allow the sale of some lower-potency hemp products that were made illegal by HF100.

Illegal drug tax repeal: SF 3670 by Sen. Oumou Verbeten with Hanson in the House would repeal an existing tax on illegal drugs. Current law requires illegal drug dealers to purchase tax stamps and affix them to illegally sold drugs. Such stamps are rarely purchased and enforcement, while rare, usually comes as an add-on charge to criminal drug charges.

Underage possession: House and Senate bills with bipartisan sponsorship would reinstate misdemeanor criminal penalties for underage people found in possession of marijuana. The criminal penalties were removed in HF 100 though a remnant law assigns petty misdemeanor penalties for any crime without a specific penalty. The bills are HF 4635 and SF 3925 but Port said she opposes adding the penalty, preferring to go after the illegal sale to minors that is contained in HF100

DNR lands restriction: Cannabis would not be allowed on any state Department of Natural Resources land under a bill by Sen. John Hoffman, DFL-Champlin (SF 4538).

Cannabis advertising: SF 5054 and HF 5101 by Sen. Carla Nelson, R-Rochester, and Rep. Kristin Robbins, R-Maple Grove, would ban cannabis ads that make any health claims about the products. The current law prohibits only “unverified” health claims.

Health labeling: SF 5079 and HF 5103 by Nelson and Robbins would require health labeling on all cannabis products that warn of “risks to mental health, risks to the developing brain, contraindications during pregnancy and breastfeeding, addiction potential, medication interactions, interactions with preexisting medical conditions, and other health risks supported by science.”