Study Says Minnesota Needs to Issue 381 Adult-Use Dispensary Licenses to Comply with State Law

Minnesota regulators must issue 381 adult-use dispensary licenses to comply with state law, according to a study released Jan. 16.

The legalization bill Gov. Tim Walz signed into law last year directs regulators to license one dispensary per 12,500 residents, which led the Minnesota Office of Cannabis Management to the total of 381 retailers.

However, the study notes that “many local governments may seek to have more retail registrations than the statutory minimum,” meaning that the Legislature may consider issuing more dispensary licenses than the minimum required by law.

The study, commissioned by the Office of Cannabis Management to offer a better understanding of cannabis consumers and demand in Minnesota, also revealed that participants reported obtaining an average of 24.8 grams of cannabis within the past month—slightly higher than the national average and higher than nearby adult-use states, including Michigan and Missouri—suggesting “a robust market for cannabis-related businesses.”

In addition, the study noted that 83% of participants consumed cannabis at least once per month, and 40% consumed cannabis daily or almost daily.

The study revealed that overall cannabis consumption patterns among participants aligned with those of a national sample of past-year cannabis consumers.

Twenty-five percent of participants reported growing cannabis at home, according to the study, with an average of two plants grown at a time.

More than 50% of participants said they used at least one “alternative” cannabinoid within the past month, including CBD, delta-8 THC and delta-10 THC.

More than 17% of participants reported obtaining a majority of their cannabis from a dealer, 16.6% reported obtaining cannabis from friends and family, and 16.1% reported obtaining cannabis from an adult-use dispensary or “lower-potency hemp edible retailers.”

The Office of Cannabis Management also released an annual report to the Legislature Jan. 16, in which regulators recommended several tweaks to the application and licensing process to strengthen social equity licensing and the overall cannabis supply chain.

The report notes that while Minnesota’s adult-use cannabis market has yet to launch, the Office of Cannabis Management “continues the planning work and rulemaking process required to ensure a safe and effective retail adult-use program.”

The state’s adult-use cannabis law allows adults 21 and older to purchase up to 2 ounces of cannabis from licensed retailers, possess up to 2 pounds of cannabis in their private residences, and grow up to eight plants (four of which can be mature) at home. These provisions took effect Aug. 1, 2023, although officials are still working to roll out a business licensing process to stand up a commercial market.

The state is still short a director for the Office of Cannabis Management; Walz appointed Erin DuPree in September but days later withdrew the appointment amid allegations that DuPree’s hemp business sold multiple cannabis products that are prohibited under state law.

RELATED: Minnesota Governor Withdraws Cannabis Director Appointment: ‘We Got This Wrong’

In the Office of Cannabis Management’s report to the Legislature last week, regulators said they are “bringing forward legislative requests aimed at strengthening the social equity components of the cannabis legalization legislation” to “help ensure social equity applicants have improved access to the capital necessary to begin businesses and build generational wealth.”

One of these requests is that the Legislature replace a provision that reserves 20% of points for social equity applicants with a new license classification for such applicants.

Additional legislative recommendations outlined in the report include eliminating a requirement for applicants to secure real estate when initially applying for a business license, as well as removing local government’s input in the licensing process.

“This requirement exposes the program to potential litigation and significantly slows the licensing process,” regulators wrote in the report. “The current system, which allows local governments discretionary and subjective input on cannabis applications and increases the risk of litigation. Applicants who find themselves adversely and inconsistently impacted by this practice may pursue legal action, potentially delaying the issuance of licenses.”

Regulators also advised against the current system of two separate supply chains for Minnesota’s medical and adult-use cannabis markets.

“This dual supply chain model is burdensome and expensive for operators and poses public health and safety risks,” they wrote in the report.

Instead, Office of Cannabis Management officials recommended consolidating the two markets into one single supply chain, beginning at the point of cultivation. They argued that a unified supply chain will lower prices for both adult-use consumers and medical patients, as well as reduce the administrative burden of overseeing the programs.

Other recommendations from regulators outlined in the report include issuing temporary adult-use licenses, particularly for social equity applicants; funding and implementing educational and training programs to inform consumers on responsible cannabis consumption; and funding CanTrain, CanNavigate, CanStartup and CanGrow programs to support cannabis businesses through grants and assistance during the application process.