Minnesota Office of Cannabis Management Reopens Cannabis Business License Applications After Lawsuit Setback

The path to Minnesota’s legal cannabis market has been anything but straightforward. Yesterday, the Minnesota Office of Cannabis Management (OCM) reopened its licensing process, marking a new chapter in the state’s cannabis industry. After lawsuits disrupted the initial attempt last year, this fresh round of applications comes with adjustments aimed at creating a fairer and more inclusive process.

Why the First Cannabis License Lottery Was Canceled

Minnesota’s initial cannabis licensing effort aimed to prioritize social equity. Social equity applicants—those disproportionately impacted by past cannabis prohibition laws—were slated to receive early access to licenses through a lottery system. But this process quickly became the subject of controversy.

Numerous applicants challenged their disqualification, arguing that they were unfairly excluded. Lawsuits alleged violations of state law and procedural missteps that dashed the hopes of many aspiring business owners. The courts stepped in, issuing a stay that halted the lottery mere weeks before it was scheduled.

Faced with mounting legal challenges, OCM canceled the lottery entirely. “Our path forward ensures we remain on track to launch Minnesota’s new cannabis market while preserving some of the social equity benefits at the heart of the preapproval process,” former Interim Director Charlene Briner stated at the time. This decision was deemed necessary by lawmakers in an effort what they called to uphold a fair and equal licensing process.

What’s Different in This Minnesota Cannabis Business Licensing Round?

Fast forward to February 2025—OCM is now accepting applications once again. This time, the process has been redesigned to address past criticisms and ensure a smoother rollout. Here’s what’s new per a press release from the Minnesota OCM:

Second Chance for All Applicants

Both verified social equity applicants and general applicants can now submit applications for the available license types. This marks a shift from the earlier process, which had initially limited social equity applicants to preapproval.

Expanded License Opportunities

This round covers 10 types of cannabis licenses, from microbusinesses to cultivators and testing facilities. Notably, four license types (cultivator, mezzobusiness, manufacturer, and retailer) will be capped and distributed through a two-part lottery. Half of these licenses are reserved for social equity applicants, who will have the advantage of participating in two rounds of lottery draws.

Applications for six other license types—microbusiness, wholesaler, transporter, testing facility, delivery service, and medical cannabis combination business—are uncapped. Qualified applicants here won’t face a lottery and can move forward soon after their applications are reviewed.

Ample Time for Appeal

Applicants who were previously denied under the stricter preapproval process have the chance to appeal or amend their applications with additional documentation. This added flexibility gives them an opportunity to address past issues and improve their eligibility.

Guardrails for Market Integrity

Minnesota’s new licensing framework adds stringent rules to prevent gaming of the system. Applicants must disclose all “true parties of interest” to combat the risks of hidden ownership or predatory business practices. Violations could result in a five-year prohibition on obtaining a cannabis license.

Available Licenses During This Cycle

The OCM has announced specific numbers for capped licenses available in this cycle, as well as unlimited categories for other license types:

Additionally, municipal governments can now apply for single retail licenses to open and operate cannabis stores in their communities. These applications won’t be subject to the lottery system.

The lottery for capped licenses is expected to take place between May and June, with the timeline largely dependent on application volume.

What This Means for the Cannabis Industry in Minnesota

The reopening of Minnesota’s cannabis licensing process signifies progress toward establishing the state’s recreational cannabis market. While this marks the second attempt to distribute these licenses, officials are optimistic that lessons learned from the initial missteps will lead to a more equitable and efficient system.

“This is about more than just business licenses—this is about building a market that works for Minnesotans,” said Eric Taubel, OCM’s interim director. “We’re committed to ensuring that everyone who wants a place in this industry has a fair shot.”

Key highlights from this round include a continued focus on social equity, with OCM allowing verified applicants to participate in two lottery rounds, reinforcing its commitment to leveling the playing field. Municipal involvement is also a key aspect, as cities and counties now have the opportunity to directly operate cannabis businesses, fostering community-driven economic growth. Additionally, retail sales remain on track for 2025. Despite earlier concerns about potential market delays, Governor Walz and OCM leadership have confirmed that the state is progressing steadily toward its legalization timeline.

For business hopefuls, this second application round offers new hope to stake a claim in Minnesota’s cannabis market. Beyond cultivation and retail, the diversity of license types—including delivery services, testing facilities, and more—provides many opportunities to contribute to the upcoming Minnesota cannabis industry.

Whether you’re an aspiring entrepreneur or a curious observer, one thing is certain—the road to a fully realized cannabis market in Minnesota is finally within reach.