Minnesota’s adult-use cannabis market is only a few months old, but it already has an active market for buying and selling operator licenses.
420Property.com, an online platform that founder and CEO Ryan George describes as the “Zillow” for cannabis businesses, had 38 Minnesota listings as of Dec. 17.
“Minnesota is really not different than any other new license market,” said George. “We see it every time a new market opens up.”
George explained that cannabis licenses from a new market typically go through a cycle where the first few have high price tags. Over time, as more licenses become available, prices tend to level off.
“In Minnesota, it happened almost instantly,” said George. “We saw licenses hit the market at $1 million to $2 million, and now they’re down into the $300,000-$500,000 range.”
Minnesota adult-use just getting off the ground
This summer, Minnesota conducted a series of lotteries to select 150 retail, 50 cultivation, 24 manufacturing and 100 mezzobusiness licenses. Half of each type was reserved for social equity applicants.
The state also began accepting applications for microbusiness licenses, which do not have a cap. The state had received 1,854 microbusiness applications as of Dec. 15, according to state data.
Minnesota currently has 103 active licenses, according to the CRB Monitor database, as of Dec. 8. They include 65 microbusiness licenses that allow for a single retail location; 22 retail licenses, which allow operators to maintain up to five storefronts; and one manufacturing license. There are also six cultivation, three delivery, three wholesale distribution, two testing and one event organizer licenses.
420Property.com’s listings cover the entire supply, though most are pre-approved licenses rather than active ones. According to state data, 1,409 licenses have been preliminarily approved as of Dec. 15.
The listing prices are multiples of the fees to initially obtain a license, which range from $0 for a microbusiness to $20,000 for a cultivator license. On Dec. 17, a bundle of five social equity retail licenses were for sale for $650,000, while a landlord had a cultivation license on the market for just $1.
“For as long as Minnesota caps certain categories of cannabis licenses, we will also have a secondary market for license sales in Minnesota. You can expect that market to contract to the four “capped” license types — mezzobusiness, retailer, cultivator and manufacturer — as the program matures. Those licenses command top dollar today, and likely will through at least 2027,” cannabis attorney Vince Sliwoski of Harris Sliwoski wrote in a Nov. 5 blog post.
George explained that typical buyers are a mix of MSOs, investors, small business operators and agents, without there being a single buyer type that stands out from the rest.
“Since we have been around for almost a decade, we can capture a large amount of the cannabis business community,” he said.
Ultimately, the Office of Cannabis Management must approve any license transfer, according to state regulation. OCM did not respond to requests for comment about possible pending license transfers.
Social equity licenses cannot be sold or transferred to non-social equity applicants until after three years of operation, but they can be sold to qualified social equity applicants. Social equity status requires that at least 65% of the operator’s ownership stakes remain in the hands of individuals who qualify for the status, which includes small farmers, veterans, those with past cannabis-related convictions, and individuals who live in an economically disadvantaged area.
Several companies that specialize in brokering the cannabis business sales such as The Blunt Broker, Green Zoned Realty and Green Life Business Group were contacted for comment on the market. Green Life Business Group refused to comment, while the others did not respond.
License resales are big in many markets
Like Minnesota, George explained there’s a market for licenses in most states that have legal cannabis. He said his website regularly features businesses for sale in New York, New Jersey, Massachusetts, Michigan, Colorado, Washington and Oregon.
“In basically every legal market, as soon as licenses are issued at the state level, with about 30-40% of those licenses, they put them up for sale. They don’t even try to operate,” said George. “California is going to be our largest market, always, just because of the size of the state.”
George added, “Every now and then, we’ll see something unique like Pennsylvania, or we’ve seen a couple of ultra rare Florida licenses hit our site.”
For the most part, the listings that George sees are for entire businesses. He estimates that only about 20% of the total listings are just for licenses.
“We tend to only see the licenses alone in areas where it’s new. More-established markets don’t necessarily have licenses only,” said George. “It would be very rare, unless it’s like a new municipality that opened up licensing.”
