With another blog post, there is another opportunity to touch on the recent changes to cannabis law in Minnesota. Check out Part 1 at the link here. With the introduction aside, we can turn to some changes from the Cannibus Bill (SF 4401) to the licensing rules that seem to address some practical issues around licenses and how they change over time.

Use It or Lose It: Qualified Applicant Status Now Expires

Every cannabis licensee must complete an initial application process to determine if they are qualified to hold a cannabis license. Once their application passes initial review, they are a “qualified applicant.” The qualified applicant then receives preliminary approval if there are fewer applicants than available licenses, or there are more applicants than licenses, a lottery. The law originally did not specify how long someone could remain a qualified applicant. The Cannibus Bill specifies that the qualified applicant status can now last up to 6 months. At first blush, it might seem like this 6-month window is a hindrance. However, the stated policy goals seem to be setting clearer expectations. It sets a deadline for which the qualified applicant can move to preliminary approval and provides more certainty for OCM on whether they are dealing with stale or inactive qualified applicants.

More Breathing Room After Preliminary Approval

Under Minnesota’s cannabis licensing framework, receiving preliminary approval from OCM is an important milestone pas qualified applicant status, but it is not the finish line. Before obtaining final license approval, businesses still need to secure locations, complete buildouts, obtain financing, satisfy regulatory requirements, and (oftentimes) navigate local approvals. Applicants have historically had 18 months to complete this process, but some applicants have also been learning the steps in the process do not always happen on schedule. The Cannibus Bill addresses this by allowing applicants to make up to 2 6-month extensions. By making this change, the legislature seemed to recognize that getting operational is important, but so is recognizing the realities of establishing a cannabis business in a new market.

Businesses Can Evolve Without Starting Over

Like other businesses, cannabis businesses grow and mature. Under prior law, any conversion or other changes in legal entity type would trigger the requirement for the applicant to apply for a new cannabis license. This meant that a licensee could maintain the same ownership percentages, but if they converted from an LLC to a corporation, they would have to start back at the beginning by obtaining a new license. Under the Cannibus Bill, the legislature struck that requirement. That still leaves open the possibility that licensees go through conversions that effectively result in license transfers (which still require prior approval of OCM) but at least avoid scenarios that would inevitably result in new license applications.

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