The 243 pages plus appendices of the Minnesota marijuana legalization bill. While relying on a dozen already-existing state agencies, it also establishes a new one with broad jurisdiction and somewhat impractical directives.
Since the first states took action ten years ago, Minnesota would become the 22nd state to follow their example. Furthermore, it is anticipated to be approved before this Legislature adjourns in May, according to its sponsors. Here is a summary of its provisions as they were presented earlier this month. It is House File 100.
When Could the Program Take Effect?
Isn’t that what people interested in Minnesota joining the other states that allow marijuana to be grown and sold for uses other than medical marijuana ask about the most? The solution isn’t as clear-cut as people may hope. First and foremost, it depends on when and whether it passes. The majority of House File 100’s provisions go into effect on July 1 of this year.
The process of creating new governmental agencies, appointing officials, and formulating regulations may start at that time. But former state representative Ryan Winkler, the main proponent of the 2021 measure that this one is modeled after, said he believes it will take at least a year for everything to happen. Minimum.
The growth season comes next. Before they could start cultivating a crop that can take up to nine months to mature, they would need to get licenses. Following would be processing, examination, testing, and distribution. The items will most likely be accessible some time in 2025, Winkler said during a meeting held by bill drafters on Wednesday.
He said on Friday that it is possible to advance the supply by enabling the two current medicinal marijuana farmers to offer goods for the recreational market while the final guidelines are being drafted and before new growers are able to harvest a crop. Supporter and governor Tim Walz claimed that he had instructed the agencies that would play a part in the new judicial system to be ready to act promptly.
Included in it would be the Departments of Public Safety, Employment and Economic Development, and Agriculture. A total of 13 different current agencies participate in the initiative. The program for hemp-based edibles that was implemented last summer is included in the law. The measure calls for guidelines and permits governing such “low-dose” drugs to be issued more quickly, which most likely means they would be available much before that under a stricter regulatory framework.
Although some opponents of the measure stated that the age limit should be at least 25, given the manner that young minds develop and mature, the bill establishes the same age limit as the hemp-based edibles law, which is 21.
Administration and Regulation
The Office of Cannabis Management will be a new state agency that will be established, according to the bill’s authors. In addition to managing the new recreational marijuana program, it would also take over the Department of Health’s current medical cannabis program and, to the extent applicable, the state Board of Pharmacy’s regulation of hemp-based products.
The regulations that would control licensing, regulation, and enforcement would be written by this agency. To administer and manage the program, it would set potency requirements and restrictions and collaborate with other organizations and a cannabis advisory board. It would establish the appropriate supply and supplier numbers. Reports would be created for the Legislature.
It is a major job, and the governor’s appointee would be in charge of hiring people and negotiating contracts and agreements. This agency would receive $15 million out of the $100 million in allocations for the first two years. Winkler believes it would take a year due to all of this, among other things. There are 14 separate license categories, including ones for delivery services as well as cultivation, processing, and retail sales.
Licenses and Taxes
Low taxation and fees are a basic concept of supporters. $250 one-time application fees wouldn’t be followed by yearly renewal fees. With an additional 8% tax on top of the present retail sales tax, the taxes would be among the lowest in the nation. Due to the program’s high expenditures, it would hardly generate enough revenue to fund other state government initiatives.
Low license fees won’t give the state enough money up front to implement the regulation, thus the general budget would have to pay for it. One estimate places the startup costs at $60 million. Two things should be noted: They desire a system that allows participants with various levels of wealth or investment, and they want pricing to starve the black market as much as possible.
Eliminating the “illicit market for cannabis flower and cannabinoid products” is one of the new agency’s mandates. That’s a difficult task that hasn’t been completed in the other recreational states, but it is the reason for the low taxation.
HF 100 would permit residents over the age of 21 to cultivate their own marijuana in a private residence or yard that is off-limits to the general public, with a maximum of eight plants and four flowering plants. They are only allowed to carry two ounces of flowers in public and five pounds of flowers in their houses. Concentrates and edibles have various restrictions. Additionally, it permits marijuana growers to share up to two ounces of their crop with others—but not to sell it.
People would be permitted to use marijuana, whether it was grown at home or purchased from a store, in their home or yard, on privately owned, publicly inaccessible property, and at events or establishments when a license has been granted. They cannot use marijuana where smoking cigarettes is prohibited, including in autos, schools, prisons, and other public places.
Well, not much, and that has displeased counties and cities all around the state. Local governments cannot regulate or tax the new industry, according to the measure. They cannot specifically forbid it within their borders. Rep. Zack Stephenson, DFL-Coon Rapids, said sponsors worry that every city that forbids or restricts the new enterprise will foster regions where illicit providers may proliferate.
And any additional expenses brought on by regional laws and taxes can have a similar effect. It does permit what are known as “time, place, and manner regulations,” such as limitations on site near schools, churches, daycare centers, or nursing homes and hours of operation.
According to local officials, that is insufficient. According to the group that represents cities in the seven-county metro area, “Metro Cities supports cities keeping the right to license adult-use cannabis stores, including the authority of cities to opt out of approving the sale of products in their local jurisdiction.” “Local licensing and regulation are essential for ensuring public safety and managing local enforcement of state legislation.”
The law does make an effort to favor state-based and smaller firms, though. Businesses must have Minnesotans as at least 75% of the ownership. The federal government views marijuana as an illicit drug, making its growth, sale, and use prohibited.
One of the two existing medical marijuana providers in the state has questioned this as a potential violation of the interstate commerce clause of the U.S. Constitution. Since HF 100 forbids the importation of cannabis, all cultivation and processing would take place within the state. A single entity may occasionally have more than one of the 14 licenses, but this is rare.
Leili Fatehi, a lawyer and lobbyist who assisted in the creation of the bill, claimed that the only circumstance in which you may have complete vertical integration is in the case of a micro business. Microbusiness licenses allow a single operator to cultivate, process, and sell cannabis products; however, the scale of these firms is constrained, much like a small brewery.
The measure prohibits employers from requiring job candidates to submit to drug testing as a condition of employment, with some exceptions for situations when such testing is mandated by other state or federal laws. Additionally, an employer cannot make employees submit to random drug testing.
When an employer suspects that an employee has “violated written work rules prohibiting cannabis use, possession, impairment, sale, or transfer” of cannabis or that the employee does not have “clearness of intellect and control of self the employee otherwise would have,” the employer may demand to test. Testing is also permitted if a person was hurt while on the job or contributed to an accident that happened there.
The new proposal would end the current medicinal program and include a new Office of Cannabis Management in its place. The majority of the existing law governing the medical program is included in the proposed legislation, but it would discontinue the arrangement where two businesses, LeafLine and Green Goods, have contracts to grow marijuana, produce tinctures, vapes, and flowers infused with THC, and then sell them to patients who have been granted program approval.
On July 1, 2024, their contracts would be up. The new law mostly forbids such vertical integration, which involves a single business producing, distributing, and selling marijuana, in an effort to prevent a few major businesses from controlling the market. These businesses could apply to participate in the new system at either the growing and processing level or the retailing level, but not all three.
The bill forbids out-of-state ownership, thus the new owners of the two medical marijuana businesses as they are currently incorporated would not be permitted. In a letter to the House Commerce Committee, LeafLine stated that it thought such would be against the law.
Dina Rollman, the company’s senior vice president of government affairs, wrote: “While we appreciate the intention to ensure state residents receive the majority of the economic benefits of the legalized cannabis industry, the residency requirement is legally invalid because it conflicts with the dormant Commerce Clause of the U.S. Constitution.
Instead, those with power would buy their marijuana from the new merchants authorized under the new legislation. Patients who gave testimony at a hearing last week said they were okay with the loss of a two-company monopoly. Patrick McClellan, who suffers from muscular dystrophy and was an early supporter of medical marijuana, claimed that prices had remained high due to a lack of competition.
Even the legalization of smokable flower, which he said the two businesses assured him would slash prices due to the lack of processing required, has not had an impact on pricing. Only more supply and more market entrants could do that, he claimed. However, there are worries that there would be a lag between when the two businesses close and when the same things are available elsewhere.
Sponsors suggest that the contracts with the two corporations may need to be extended. In order to ensure supply, the law proposes a temporary exception from prohibitions on vertical integration, in which one corporation controls every part of the business. Finally, medicinal marijuana activists have urged the present measure to be amended to provide access to medical marijuana for kids with seizure disorders.
The bill aims to expunge convictions for crimes that would no longer be punishable under the law. Some less serious transgressions, or non-felonies, would be immediately erased. The state would review the records and inform the courts and law enforcement of the court-ordered expungement.
A new Cannabis Expungement Board, comprised of the chief justice of the Minnesota Supreme Court, the attorney general, the leaders of different state agencies, a public defender, and a member of the public, would handle the processing of felonies.
The board would examine the documentation to decide if the crime would now be a lesser one or not at all. Supporters predict that 50,000 residents would benefit from expungement. These expungements would not be allowed if the crime involves the use of a hazardous weapon, the intent to cause harm to another person, or the intent to terrorize or kill.
The proposed legislation maintains the existing framework but transfers enforcement from the Minnesota Board of Pharmacy to a new Office of Cannabis Management. Additionally, it enables temporary regulation so that the current market can continue to operate while long-term regulations are being written.
For those products, it generates licensing with minimal potential. Sponsors predict that as cannabis becomes more accessible, the market for hemp-based beverages and snacks will change. For instance, because it is unnecessary to artificially extract the intoxicating components, items made from cannabis will be less expensive to produce.
However, unlike cannabis, hemp products are not subject to the same banking and import limitations because they are recognized as legal under federal law. In light of this, companies that sell hemp-based foods and beverages will now need to obtain licenses and start collecting the new taxes.
A further tenet of the legislation is to ensure that those who suffered the most from cannabis prohibition are given the opportunity to benefit from its legalization. The phrase “social equity” appears 41 times throughout the measure. A lot of the licenses are designed to be inexpensive and simple to obtain. Additionally, the bill includes a number of initiatives aimed at educating individuals about the industry and offering incentives to aid in business startups.
Because marijuana remains illegal on a federal level, many banks are concerned that lending money to or managing accounts for these companies could result in criminal charges. To “promote development, stability, and safety in places that have seen a disproportionate, negative impact from cannabis prohibition,” the Office of Cannabis Management would establish a section on social justice.
License and grant applications for social fairness are given preference. They are characterized as veterans, those who live in communities where cannabis-related offenses have historically been heavily policed, and people who live in impoverished communities.