On June 5, 2025, the Minnesota Office of Cannabis Management (“OCM”) held its first lottery for applicants seeking cannabis business license types that are available in limited quantities. This marks the first grant of potential licenses to 249 applicants for cultivator, manufacturer, retailer, and mezzobusiness licenses. A second lottery for retail licenses is scheduled for late July. In addition, over the coming weeks, applicants for “uncapped” license types—such as the popular microbusiness license—will continue to receive word about preliminary license approval.
These lotteries mark the most significant milestones to date for aspiring cannabis entrepreneurs seeking to become legitimate licensed cannabis businesses. However, additional regulatory and operational hurdles loom, even after preliminary licenses are awarded. Retail licensees and endorsement holders must now tackle zoning compliance, secure suitable property, and navigate local municipal regulations before passing a state inspection and ultimately opening their doors to their cannabis business—all of which must be completed in 18 months.
Securing Property
Acquiring property for a new business is already difficult, but for licensees with retail privileges, Minnesota’s regulations require an additional layer of regulation and complications.
First, preliminary licensees need to determine where they will be allowed to operate. Although municipalities cannot wholly prohibit cannabis businesses in their respective jurisdictions, local governments do have the authority to limit the time, place, and manner of cannabis business operations via ordinance.
Next, preliminary licensees need to pay close attention to all lease provisions they sign. Due to the federal illegality of cannabis, standard contract clauses that would be acceptable in other industries could be problematic for a cannabis business. Many template leases were drafted to prohibit the type of behavior cannabis businesses now require—including, for example, provisions limiting odor and prohibiting (federally) illegal activity.
Lastly, cannabis entrepreneurs need to be aware of the many statutory and regulatory requirements that impact whether a space will be suitable for their retail or cultivation needs. Minnesota law contains express requirements regarding security enhancements, lighting, display limitations, and delivery and customer entry points, in addition to other standard building codes. Such necessary leasehold improvements may require hefty investment by licensees to ensure compliance, and tenants should be aware of lease terms that may impact their ability to make essential improvements to the space they are renting.
Municipal Approval
Once a licensee has secured a property, the next step requires thoughtful planning and intentional collaboration with local government. Retail cannabis businesses must register with the city, town, or county in which the business is located. However, Minnesota law allows municipalities to limit retail cannabis businesses to “no fewer than one registrations for every 12,500 residents,” which, in many parts of Minnesota, effectively limits retail businesses to only one active registration per town.
In addition to municipal registrations, licensees may need to obtain conditional use permits (CUPs) to establish that their intended operation is permissible in the chosen location. This process may involve public hearings, city council meetings, and other close coordination with city planners and zoning officials.
Thus, in order to swiftly navigate a patchwork of varying municipal processes, licensees will require positive, collaborative relationships with municipal governments to understand and navigate any hurdles posed by local ordinances and state regulations. The attorneys at Winthrop & Weinstine, P.A. understand the complex intersection of real estate, regulation, and municipal government relations, and are prepared to guide preliminary licensees through the process of becoming licensed cannabis businesses—from site selection to business opening and beyond.
On June 5, 2025, the Minnesota Office of Cannabis Management (“OCM”) held its first lottery for applicants seeking cannabis business license types that are available in limited quantities. This… Read More
