Many Minnesotans rolled a legal joint on August 1, 2023. The new law was a long-time in the making and provides over 200 pages of regulatory framework for all things cannabis. This article aims to provides a 10,000-foot view of the new cannabis law and educate on how this law may affect you and your business.
Adults, 21 years and older, can now possess, grow, and use cannabis recreationally in Minnesota. And not just the “3.2 Weed” that was legalized in 2022. While this is a very exciting and significant jump forward, there are some important limitations to be aware of. Adults can now grow up to eight plants in the privacy of their home, but only four of those eight plants can be flowering and mature at any given time. Along with the plants, individuals may possess up to two pounds of cannabis flower in their home. Outside of the home, individuals may transport only two ounces or less, however, please note that driving under the influence of marijuana is prohibited and may result in a DUI. Additionally, you cannot sell marijuana without a license.
When it comes to smoking cannabis outside of the home, you should always be attentive to where you are and what the rules of your locality are. Use is only permitted in a private residence, private property, or on the premises of an establishment that is licensed and permits use. As far as public places go, and as further discussed below, local governments may limit by ordinance where use is permitted. A good general rule for thinking about smoking cannabis is, if smoking tobacco in a location is prohibited, it is likely that smoking marijuana is, as well (at least for now). In addition, consumers of cannabis should always be mindful of their employer’s and landlord’s rules – as use on the job or in a rental unit will likely still get you in trouble. And pay attention to those HOA rules, too.
With few exceptions, employers may no longer drug test for the presence of cannabis as a condition of employment. Additionally, employers cannot discriminate against employees who use cannabis outside of work. As noted, there are exceptions to these rules, including for safety-sensitive positions, law enforcement, positions funded by a federal grant, or for any position where cannabis testing is required by federal law.
While employers can no longer drug test for cannabis as a pre-condition for employment, employers can still prohibit use and possession while on the job and test for reasonable suspicion. To properly enforce any on-the-job cannabis rules, employers should update their handbooks to provide clear rules on the prohibition of marijuana use and possession while on the job, including any disciplinary action that may result if these rules are not followed.
Similar to how landlords may prohibit smoking cigarettes in a rental unit, landlords may also prohibit smoking cannabis in a unit or on the premises. Landlords may not discriminate against someone who is registered in the medical cannabis program, unless federal funding is involved. Note that nuisance enforcement may be a significant issue here. Also, this is one of the areas that the legislature may revisit in 2024, as equity concerns have been raised regarding the disparate treatment between those that own versus rent.
The most complicated portion of this new law is the cannabis business licensing regime that it created. There are 16 different types of licenses – ranging from cannabis cultivators, manufacturers, retailers, transporters, testers, etc. Additionally, vertical integration is largely prohibited (again, with certain exceptions as always), meaning that cannabis business owners cannot have licenses for two or more key stages of the cannabis supply chain within the state (for example, you cannot be a cannabis retailer and a cannabis manufacturer).
The new law also created the Office of Cannabis Management, which will establish rules and have regulatory authority over the cannabis industry. Applications for licenses will be submitted to and considered by the Office of Cannabis Management – with applications likely opening in the summer of 2024. When applying for a license, there are many requirements that will be included in the application, including the requirement that the property where the cannabis business will be located must be secured at the time of the application. A letter of intent to purchase a property will likely meet this requirement, however, it is still unclear. Additionally, with the complex licensing requirements, there are many rules that apply to the different types of licenses, including how many locations each business may have.
*Note to local businesses already selling low-potency hemp edibles (the existing THC/CBD seltzers and edibles that were legal before this law passed), you must register with the State of Minnesota by October 1, 2023, to be able to continue selling these products. The registration form is available on the Minnesota Department of Health’s website.
Generally, a local government may not prohibit the possession, transportation, or any use of cannabis authorized under the new law, nor may it prohibit the establishment or operation of a properly licensed cannabis business. With limits, a local government may adopt an ordinance reasonably limiting the time, place, and manner of any cannabis business within its jurisdiction (e.g., where a cannabis business may be located, when its hours of operation can be, etc.) To conduct a study to determine reasonable restrictions on the time, place, and manner of cannabis businesses, a local government may adopt an interim ordinance regulating, restricting, or prohibiting the operation of a cannabis business until January 1, 2025. Additionally, local governments may adopt an ordinance limiting where cannabis may be used in public places.
Local governments are prohibited from imposing a tax solely on the sale of taxable cannabis products. The State of Minnesota is imposing a 10% tax on any taxable cannabis product sold by a retailer, with 80% of this tax going to the general fund, and 20% to a local government cannabis aid account.
Finally, the new law allows for a municipal cannabis retail store. However, as in all decisions relating to cannabis, local governments should still consider the legality of operation in light of federal law and potential conflicts with federal funding (marijuana is still federally prohibited).
All in all, this article covers just the tip of the iceberg when it comes to the new cannabis law. Anyone seeking to utilize their rights under this law should seek guidance before acting – whether it’s to establish rules as a landlord or employer, adopt a new ordinance, or open a new cannabis business.
Caitlin Crowl is an attorney with Fryberger, Buchanan, Smith & Frederick, P.A., practicing in the areas of Business, Real Estate, Municipal Finance and Cannabis Law. Julie Padilla is an attorney with Fryberger, Buchanan, Smith & Frederick, P.A., practicing in the areas of Environmental, Regulatory, Real Estate, Labor and Employment, and Cannabis Law. This article is not intended to provide legal advice. You should always consult with an attorney about your specific circumstances.