Editor's note: Since this article was published, the Minnesota Senate voted, 34-32, to pass the adult-use cannabis legalization bill on May 20, sending it to Gov. Tim Walz's desk. That article can be read here.
Minnesota is on the brink of legalizing adult-use cannabis following the House’s final floor vote on legislation May 18—just four days before the end of the legislative session. The bill now heads to the Senate floor, its last stop before arriving on the governor’s desk.
While the House vote, 73-57, had some cushion for passage, the Senate vote is expected to fall entirely along party lines, where the Democrats own a slim one-seat majority in the chamber. Should the Senate pass the bill, as it did via a 34-33 vote on a pre-reconciled version last month, Gov. Tim Walz has vowed to sign it.
This eleventh hour action in the session comes on the heels of Senate and House members reconciling their differences on the legislation in conference committee, a three-day process that concluded May 16.
The final language in the 320-page bill aims to allow adults 21 and older to purchase up to 2 ounces of cannabis from licensed retailers, possess up to 2 pounds in their private residences, and grow up to eight plants (four mature) at home. These provisions would be effective Aug. 1, 2023.
The bill would also establish a regulatory agency to oversee the new cannabis marketplace as well as create regulations, licensing and taxation for the state’s existing hemp market.
Rep. Zack Stephenson and Sen. Lindsey Port, both of the Democratic-Farmer-Labor Party, sponsored companion bills in their respective legislative bodies before coming together to reconcile their differences.
Stephenson addressed his chamber one final time on the bill Thursday evening.
“Today is the day that we are going to vote here in the House for the last time to legalize cannabis and bring the change that many Minnesotans have wanted for a very long time,” he said. “We had a great conference committee … I think we all contributed to this work, not just the Democrats.”
The conference committee included four Democrats and one Republican from each chamber. Among the key variances they reconciled included purchase and possession limits, a 10% excise tax rate, economic development, employment regulations, licensing, criminal penalties, expungement and appropriations of tax revenue.
Notably, the legislation’s pathway to this moment included 16 committee votes in the House and 13 committee stops in the Senate, before the vetting process led to full consideration in each chamber last month.
RELATED: Cannabis Legalization on Cusp of Reality in Minnesota After House Passage
Still, a party divide reared its head at the end of the day as House Republicans continued to vocalize their disdain, and Democrats their support, for the bill for nearly five hours before voting on the final version May 18. The opposition came despite Rep. Nolan West urging a yes vote from his Republican colleagues at the beginning of the evening.
“Republicans were included deeply in the conference committee, especially compared to an average conference committee around here,” West said. “And I appreciate [Stephenson] being willing to maybe not take all my ideas, but at least hear me out politely.”
One major change to the bill adopted during negotiations in conference committee included adjustments for local control, a contentious point in previous debates with many Republicans wanting to grant municipalities the option to ban cannabis businesses from operating within their jurisdictions.
In particular, the bicameral conferees agreed to allow cities to adopt an ordinance limiting the number of cannabis dispensaries in their community, but they cannot limit that number by any more than one retail facility for every 12,500 people.
“We preserved our stance against opt-outs, which is very important to eliminate the illicit marketplace across Minnesota,” Stephenson said. “But we did compromise and create more options for localities to choose the degree to which these businesses are in their communities.”
In addition, local governments would be allowed to reasonably regulate the time, place and manner for which cannabis businesses could operate in their jurisdictions under Minnesota’s legislation.
But cities and counties would not be allowed to ban cannabis businesses altogether—something that has allowed the illicit market to thrive throughout much of California, where hundreds of thousands of people are more than an hour away from a licensed dispensary.
What else is in the final bill?
In addition to a 2-ounce purchase limit for cannabis flower, the legislation would allow Minnesotans 21 and older to buy up to 8 grams of concentrate or 800 milligrams of THC in edible products per visit at a licensed dispensary, according to final bill’s language.
The legislation aims to establish an Office of Cannabis Management (OCM) by July 1, 2023, for regulatory oversight of a forthcoming adult-use program as well as the state’s existing medical cannabis and hemp programs. But the process of developing consumer, health and safety protections alongside a licensed infrastructure could take 12 to 18 months before adult-use dispensaries open, Stephenson said.
In addition, the bill’s enactment would establish a cannabis advisory council, require specific studies and reports on the impacts of legalization, and set up a state-wide monitoring system (Metrc is the current track-and-trace provider for the state’s medical program).
Under the bill, a 10% cannabis excise tax would apply at retail in addition to the state’s 6.875% sales tax. That excise rate aligns with the Senate’s position going into bicameral negotiations (the House’s version offered an 8% tax rate).
Twenty percent of the tax revenue from the excise tax would go toward local governments to help oversee a legalized marketplace, while the other 80% would be appropriated toward state costs, from funding the OCM to youth education, an expungement board, and employment and economic development, among other agencies and programs.
As part of the aim to undo harms caused by prohibition, the legislation provides for automatic expungement of certain cannabis offenses. The Bureau of Criminal Apprehension would be tasked with identifying eligible individuals whose records qualify for an order of expungement. This process would begin Aug. 1, 2023.
“That will enable tens of thousands of Minnesotans to get jobs, to get housing, to have full and complete lives,” Stephenson said. “And that is a good thing.”
The legislation also proposes 16 licensing categories—for adult-use, medical and hemp operators—and includes provisions for a social equity program to help ensure individuals and communities most harmed by prohibition have an opportunity to engage in the industry. A special scoring structure for licensing would be in place for applicants who meet social equity or veteran/retired National Guard criteria.
The OCM would be responsible for licensing the number of cannabis businesses necessary “in order to ensure the sufficient supply of cannabis flower and cannabis products to meet demand, provide market stability, ensure a competitive market, and limit the sale of unregulated cannabis flower and cannabis products,” according to the bill.
In addition to taxes, the state would collect revenue through application and licensing fees. For cannabis cultivators, those fees would include $10,000 for applications, $20,000 for an initial license and $30,000 to renew a license.
Similarly, those fees would be $2,500, $2,500 and $5,000 for retailers; $10,000, $10,000 and $20,000 for manufacturers; $5,000, $5,000 and $10,000 for wholesalers; and $500, $0 and $2,000 for microbusinesses. Another license type called “cannabis mezzobusiness” would allow medium size businesses to enter the market with fees of $5,000, $5,000 and $10,000.
A cannabis cultivator would be allowed to grow up to 30,000 square feet of plant canopy indoors—with the OCM having the authority to increase that limit to meet market demand—whereas cannabis mezzobusiness licensees would be allowed to grow up to 15,000 square feet and microbusiness could cultivate up to 5,000 square feet from the program onset.
The legislation also aims to establish plant propagation standards, including certification, testing and labeling requirements for methods used to grow new cannabis plants. Requirements for agricultural best practices and environmental standards are also outlined in the legislation.
Before Thursday evening’s vote, West said he believed the No. 1 public policy of legalization is to eliminate the illicit market, because the illicit market “is what makes this product dangerous.”
“It’s not inherently dangerous, but if there’s fentanyl in it, well now it’s going to get you in trouble,” he said. “But opening up to a legal market will allow these things to be tested and approved. Everything that will be sold when this bill is legal will have to be approved and tested so people know what’s in it. And that’s very important.”
Furthermore, West said ending cannabis prohibition is an issue of individual liberty and freedom.
