While most Americans live in states where cannabis is legal in some form, marijuana is still listed as a Schedule 1 controlled substance and remains illegal under federal law. This federal prohibition, however, has not stopped states from legalizing adult use. The results of the 2020 election may tip several more states toward legalizing adult-use cannabis. Other than the states with adult-use on the ballot—Arizona, Montana, New Jersey and South Dakota—another key state to watch is Minnesota, where a Republican-controlled Senate is the only known roadblock to legalization.
Minnesota House Majority Leader Ryan Winkler introduced a bill calling for the legalization of recreational cannabis, HF 4632, to the Minnesota House of Representatives on May 5, 2020, and it has been stuck in the House’s Commerce Committee due to the Republican Senate’s refusal to hear the bill. Democrats need to flip two seats in the Senate to gain control of both chambers. No other barrier appears to stand in the way of Minnesota legalizing adult-use cannabis. Minnesota Gov. Tim Walz has repeatedly said he is ready to sign a legalization bill the moment it is approved by the legislature. He has also tasked his administration and agencies to create the necessary infrastructure to host an adult-use cannabis market, including taxation and public health. However, this agency work is likely on pause or substantially reduced after Minnesota’s government re-tasked certain resources to handle the COVID-19 pandemic.
Rep. Winkler consistently refers to the Minnesota bill as “the best legalization bill in the country” and has received support from several industry organizers. Given the regulatory structure in HF 4632, the bill is meant to take a holistic and expansive approach to regulating adult-use cannabis in comparison to other states’ regulatory regimes. The Minnesota bill creates a Cannabis Management Board with the power to regulate both medical cannabis and adult-use cannabis.
Minnesota legalized medical marijuana in 2014, and while the program continues to evolve, it is still considered one of the most restrictive programs in the country. However, Gov. Walz did institute an executive order to improve patient access as a result of the pandemic, including permitting curbside pickup, extending patient enrollment expiration dates, and allowing patients to use telehealth appointments to get approval from medical professionals for qualifying conditions.
Membership of the Cannabis Management Board would include stakeholders throughout industry, government and community, including people experienced in the oversight of the production of agriculture, industry management, public health and social equity. In addition to the Cannabis Management Board, a special advisory council with 25 members appointed by the governor or the municipalities and counties of Minnesota would be created with the task of reviewing policy and making recommendations to the board.
The following are some general highlights found in Minnesota’s proposed adult-use legalization bill:
Licensing. Licenses will be required for cultivators, manufacturers, retailers, wholesalers, transporters, testing facilities, microbusinesses, event organizers, delivery services and medical cannabis businesses. License priority is on a points system that gives preference to those with experience and detailed plans, and also on social equity and veteran status. License applicants will need to have a diversity plan and will frequently report on diversity in management and control of the business. Social equity applicants include military veterans who lost honorable status due to cannabis-related offenses and residents who have lived within the last five years in areas where the poverty rate was 20% or more, or the median family income did not exceed 80% of the statewide or metropolitan median family income.Cannabis Microbusinesses, Event Organizers and Delivery. The Minnesota bill authorizes cannabis microbusinesses. Cannabis microbusinesses can grow, extract, manufacture (including edible cannabis products), and sell cannabis for off-site and on-site consumption. On-site consumption is only for edible cannabis products, and does not include smoking or vaporizing, in a distinct, segregated area that may also sell food or beverages in compliance with state and local laws. Cannabis event organizers can host cannabis events where cannabis retailers and microbusiness can sell products at places where the local government has approved. Delivery services are permitted where at least two employees staff each vehicle. Certain Regulatory Requirements. Mandatory testing will be conducted by licensed cannabis testing facilities. The standards will be established by the Cannabis Management Board and the Department of Health (standards for contaminants). Packaging, labeling and advertisement requirements are strict and also prohibit any design, package or advertisement that would appeal to persons under the age of 21.Tax. A 10% tax will be imposed on gross receipts from retail and on-site sales of recreational cannabis.Grants and Social Justice. Community renewal grants will be issued by the Cannabis Management Board to communities where residents would qualify as social equity applicants. In addition, there will be industry grants awarded to startups and growers. Minnesota would also automatically expunge certain cannabis crimes and permit expungement of others.While all eyes are certainly on Arizona, Montana, New Jersey and South Dakota in the upcoming election, Minnesota is worth watching as the results of Election Day continue to change the landscape of the state-legal cannabis industry.
Ranelle Leier and JT Schuweiler are attorneys at Fox Rothschild LLP and can be reached at [email protected] and [email protected], respectively.
