Minnesota is getting ready for its inaugural adult-use license lottery, which will blow up a market that has only ever had two medical cannabis providers. Now, 1,817 applicants are vying for one of 217 new licenses that will be granted through lotteries.
The state is home to 15 medical dispensaries that are split between two operators, Leafline Labs, which operates as RISE, and Green Goods. They are owned by multi-state operators Green Thumb Industries and Vireo Growth, respectively.
Those operators will have the chance to apply for dual-use licenses to access the adult-use market, but the state is allowing social equity applicants to get the first crack at new licenses.
Legal possession of adult-use cannabis began in Minnesota on Aug. 1, after Gov. Tim Walz signed HF 100 into law on May 30, 2023. The new law created the Office of Cannabis Management, which will oversee the new adult-use market, as well as the existing medical market.
Currently, the only adult-use shops are four adult-use dispensaries open in tribal territories.
Lottery winners will be granted pre-approval licenses, which give the applicants up to 18 months to secure a location, arrange funding and get their business off the ground. Some businesses will be permitted to put seeds in the ground before they receive a final license in order to ensure there is available product to sell when the first adult-use dispensaries open.
Lotteries expected by the end of the year
Before that can happen, the state will have to complete the long and arduous task of vetting thousands of applications for the lottery.
“We’re in the process of reviewing all the applications. How long it takes to review those 1,800-some applications will be a driver of when the lottery is [held], but it will be this year,” said Josh Collins, OCM communications director.
Before opening the window for applications, the state conducted a social equity status verification process so applicants could see if they qualified for the status before taking the time to formally apply for a license.
In order to qualify for social equity status, applicants must either have been convicted of a cannabis-related crime, or be related to or a dependent of someone who has; be a veteran; have lived for at least five years in an area with low income rates or high cannabis enforcement rates; or has been a farmer for three years.
That verification process was completed in July.
Over 3,000 individuals applied for social equity status, of which 2,307 were approved. Just over half the qualified applicants, 1,162, are Minnesota residents, with the remainder taking advantage of the state’s lack of a residency requirement.
Veteran status is the most common qualifier among the applicants with 923, followed by 671 with prior convictions and 577 based on where they live.
The current vetting process ensures that the entire application was properly filled out and that it contains all of the required information about the prospective business, including who the stakeholders are. Once they have all been vetted, the state will schedule lotteries for each license type, unless the number of applications is lower than the available number of licenses.
The total number of applications received is 1,817.
Initially, the state allocated 282 licenses for the first round of pre-approvals, broken up into nine different types: 100 microbusinesses, 25 mezzobusinesses, 13 cultivators, six manufacturers, 38 retailers, 20 wholesalers, 20 transporters, 50 testing facilities and 10 delivery services.
However, only nine applications were received for wholesale licenses, 11 for transporters and five testing labs. So, up to 217 licenses will be awarded this round.
Microbusinesses are allowed to cultivate and sell products from a single site, while mezzobusinesses are allowed up to three retail sites, along with cultivation.
Almost all of the applicants are interested in selling directly to consumers. Retailers, micro and mezzobusinesses account for about 85% of all applications. Delivery license applications account for 8.5%.
Collins explained that it was tough to put an exact number on it, but it likely takes several hours to fully vet each individual application.
“I think our team is still determining exactly how long it’s taking them to review them. We hope to have a better estimate soon,” he said.
