Everything Businesses Need to Know about Cannabis Laws for Minnesota

Treez Team
A sunset photo of Minneapolis is shown with a logo of Treez, the cannabis point of sale system and payments processing company

Note: We will keep this blog updated based on the changes or additions to the cannabis laws for Minnesota. 

Minnesota made history on May 30, 2023 by becoming the 23rd state to legalize recreational cannabis. This monumental policy shift opens doors to new opportunities in the emerging cannabis industry. 

The Minnesota Department of Revenue estimates that by 2027, recreational cannabis sales will generate $107 million annual tax revenue for the state and for almost $21 million for the local government. It’s clear that legalized adult use of cannabis makes a lot of business sense for the state, and certain enterprising business owners. 

However, starting a legal cannabis business means dealing with a lot of complex regulations at both state and local levels. 

This blog covers important cannabis laws for Minnesota and compliance issues for businesses. 

Whether you want to open a dispensary, become a cultivator, or offer cannabis delivery, this post will help you operate legally in Minnesota. 

General Cannabis Laws for Minnesota 

The legal framework for Minnesota's recreational cannabis industry stems from the changes made by the legislature in 2022. Here are some essential points for businesses: 

  • Legal purchase age is 21 and over. 
  • Adults can possess up to 2 ounces of cannabis flower in public. 
  • Home cultivation of up to 8 cannabis plants (4 mature) is permitted. 
  • Consumption is allowed in private residences and legal cannabis businesses. 
  • Public consumption is allowed unless restricted by local ordinances. 
  • Cannabis retail facilities must verify age at point of sale
  • Businesses cannot sell cannabis products exceeding 5mg of THC per dose and 50mg THC per package (for edibles). 
  • Cannabis business premises must have security and video surveillance as per regulations. 

The Office of Cannabis Management (OCM) oversees the regulatory framework and licensing for recreational cannabis. They will also be responsible for managing the existing medical cannabis program. 

Cannabis Business Licensing in Minnesota 

To legally participate in the cannabis industry, Minnesota businesses must obtain the appropriate cannabis business license from the OCM. 

Here are some important cannabis business license requirements: 

  • Each type of cannabis activity requires a separate license – cultivators, manufacturers, retailers, etc. 
  • Cannabis business licenses allow businesses to operate at one location only. Additional sites need separate licensing. 
  • Applicants undergo extensive vetting, including criminal background checks. 
  • Proof of sufficient capital and stringent financial disclosures are required. 
  • Businesses must outline operating plans, security protocols, and inventory tracking systems
  • Licenses must be renewed annually for a fee. Renewal can be denied for regulatory violations. 
  • Local municipalities can impose additional licensing regulations and fees. 

The OCM offers different cannabis business license types, including: 

  • Cannabis Cultivator – For growing cannabis plants.
  • Cannabis Manufacturer – For producing cannabis products.
  • Cannabis Retailer – For sales of cannabis products to consumers.
  • Cannabis Testing Facility – For testing and certifying cannabis products.
  • Cannabis Transporter – For transporting cannabis between licensees.
  • Cannabis Event Organizer – For organizing licensed cannabis events.
  • Cannabis Delivery Service – For delivery of cannabis products.

The law prioritizes social equity applicants from disproportionately impacted communities in licensing. Fee exemptions and grants are also offered to qualifying social equity businesses. 

Considering the huge potential of owning a legal cannabis business, if you fulfill all the cannabis business license requirements and have interest in the niche, you can consider applying for one. 

Cannabis Laws for Minnesota Business Premises and Location 

Apart from state licensing, local approval is required to operate legal cannabis businesses in Minnesota municipalities. Here are some key premises and location requirements: 

  • Dispensaries cannot be located within 1,000 feet of schools, playgrounds, public housing, and other sensitive areas. 
  • Minimum distancing from other cannabis retailers is set at 1,500 feet in municipalities with existing shops. 
  • Municipalities can limit the number of retailers to 1 per 7,500 residents. 
  • On-site consumption lounges need a separate license and local approval. 
  • Ventilation standards must be met to prevent odor nuisance for businesses allowing on-site consumption. 
  • 24-hour video surveillance is mandated at all licensed premises. 
  • Commercial signage rules vary based on municipality; certain types of advertising and promotions are restricted. 
  • Access to business premises is limited to employees and those 21 and older. 

Businesses must comply with any municipal zoning laws and conditional use permits pertaining to cannabis operations. Facilities must also adhere to state regulations for security, fire safety, waste disposal, etc. 

Cannabis Laws for Product Packaging, Labeling and Testing 

Stringent requirements govern cannabis product packaging, labeling and testing in Minnesota: 

  • All products require state-licensed lab testing for potency, contaminants, etc. before retail sales. 
  • Packaging must be opaque, child-resistant, and tamper-evident. 
  • No packaging can appeal to those under 21 or resemble non-cannabis products. 
  • Serving size, potency, ingredients, and other details must be prominently labeled. 
  • Packaging must contain health warnings and poison control hotline numbers. 
  • Labels cannot make unsupported health claims about benefits. 
  • QR codes linking to additional product information are mandated. 
  • Packaging must be minimal and not encourage overconsumption. 
  • Sustainable and recyclable packaging is encouraged though not required. 

These requirements aim to protect public health and product safety. Businesses must work closely with their packaging vendors and labs to ensure full compliance with cannabis business laws. 

Cannabis Retail Taxation 

Cannabis sales are subject to local and state taxes which businesses must collect and remit properly: 

  • A 10% gross receipts tax applies on recreational cannabis sales at retail. 
  • Medical cannabis purchases are exempt from the 10% recreational tax. 
  • General state and local sales taxes also apply to cannabis products. 
  • Of the 10% gross receipts tax, 1/5th goes to local governments where sales occur. 
  • Tax revenue funds the state’s regulatory efforts, public health initiatives, and substance abuse programs. 
  • Businesses must report their tax liabilities accurately and remit payments on time. 

Proper cannabis taxation and reporting protocols are essential for legally operating retail businesses. With a robust pointof sale system, you can manage this complex compliance requirement. 

Advertising and Marketing Regulations 

Here are the cannabis laws for Minnesota that impose substantial restrictions on advertising and marketing of products: 

  • Cannabis advertisements cannot target those below 21 or promote overconsumption. 
  • Certain mediums like billboards, radio, and TV are prohibited for cannabis ads. 
  • Restrictions apply for ads in print publications, digital, and social media. 
  • Marketing via pop-up ads or sponsored social media posts is not allowed. 
  • Advertising within 1,000 feet of schools, playgrounds, libraries, and similar locations is banned. 
  • Free samples or giveaways to the public are not permitted. 
  • Strict regulations govern marketing emails, text messaging, and mailers. 
  • Public health warnings must feature prominently on ads. 
  • Marketing to out-of-state customers is illegal. 

Given the limitations, cannabis businesses must develop creative compliant advertising strategies focused on brand-building. To ensure you don’t violate any of the cannabis business laws, it’s wise to send all planned promotions to legal review. 

Cannabis Laws for Minnesota Related to Employment 

With cannabis legalization, restrictions on employee off-duty use are prohibited under Minnesota's Consumable Products Act. However, some exceptions remain: 

  • Employers can continue drug testing for safety-sensitive positions like medical jobs, transportation, operating heavy machinery, etc. 
  • Law enforcement officers and firefighters also face ongoing cannabis testing. 
  • Workers in jobs requiring commercial driver's licenses can be tested for cannabis impairment. 
  • Federal grantees and contractors can test for cannabis usage. 
  • Testing is allowed if needed to access federal benefits or avoid federal penalties. 
  • Employers can prohibit cannabis use during work hours and discipline intoxicated employees. 
  • Adverse action for failed tests is permitted only per state Drug and Alcohol Testing in the Workplace Act. 

Knowing the nuances in employment law is essential for cannabis businesses developing hiring practices and workplace policies. 

Minnesota Cannabis Laws for Inventory Tracking and Reporting 

A crystal clear inventory tracking and regulatory reporting will be mandatory for licensed Minnesota cannabis operators: 

  • Detailed inventory records must account for each plant and product from seed-to-sale. 
  • Businesses must report their transactions, sales, taxes, cultivation outputs, and inventory to the state. 
  • Radio-frequency identification (RFID) or similar technology must be used to track inventory
  • Real-time integration of tracking data with state monitoring systems will be required when implemented. 
  • Regular state audits will match physical inventory with reported figures to identify discrepancies. 
  • Significant inventory discrepancies can lead to fines or license revocation. 
  • Records must be maintained as per regulations for inspection. 

Accurate inventory tracking and transparent reporting are essential for regulatory compliance with cannabis laws for Minnesota. Therefore, cannabis businesses must invest in appropriate cannabis inventory tracking software and procedures. 

Laws for Transporting Cannabis in Minnesota 

Transporting cannabis inventory between licensed facilities involves additional regulations: 

  • Only licensed cannabis transporters can move cannabis products and cash. 
  • Transport vehicle must have a secured, locked compartment for cannabis storage. 
  • Local permissions may be needed for transport through jurisdictions banning cannabis. 
  • Drivers cannot carry firearms or stop unnecessarily during a transport. 
  • Routes must be direct; transporters cannot travel to multiple businesses. 
  • Documentation must include the origin, destination, cargo specifics, and timeline. 
  • Inventory must be accurately tracked before, during, and after transport. 
  • Security protocols like surveillance, anti-theft tech, and alarm systems are required. 

Transportation companies will emerge to offer compliant logistic services to cannabis operators. Existing businesses must develop rigorous in-house transport procedures. 

Navigating Federal Illegality 

Despite legalization of cannabis in Minnesota, it remains illegal federally in the U.S. This complicated legal landscape has implications for Minnesota businesses: 

  • Interstate transport and shipping of cannabis is prohibited under federal law. 
  • Banking services and credit card processing remain restricted for the industry. 
  • Businesses cannot claim federal tax deductions available to other legal entities. 
  • Patent and trademark protections for cannabis brands are challenging to obtain. 
  • Insurers still regard cannabis as a high-risk category for coverage eligibility. 
  • Foreign and out-of-state investment is limited as cannabis possession remains a federal crime. 
  • Companies must implement robust compliance programs and reporting to avoid scrutiny. 
  • State protections may not shield businesses from federal intervention and penalties. 

Until cannabis gains federal legality, businesses must weigh risks and incorporate mitigation strategies into their operations. In fact, cannabis businesses must also ensure that they remain fully compliant with cannabis laws for Minnesota to operate securely. 

Cannabis Laws for Minnesota: Huge Business Opportunity 

Selling cannabis in Minnesota becoming legal presents transformative social and economic opportunities throughout Minnesota. 

However, significant regulatory hurdles exist, especially in the early years. Businesses must exhibit meticulous compliance and foresight to succeed amid complex, changing policies. 

Once you get in the business, keeping track of everything manually becomes a challenging task. And if you make mistakes doing things manually, your business might come under scrutiny. 

And this is where Treez cannabis POS comes in to ensure you remain compliant with all the laws at every stage of your cannabis business. And not just with compliance, this cannabis POS system also makes payment processing and inventory management efficient for yo

Want to learn more about cannabis laws for Minnesota and business compliances? 

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