Minnesota’s Office of Cannabis Management (OCM) has cancelled its lottery for early marijuana business licenses intended to go to social equity recipients.
The cancellation follows lawsuits claiming certain applicants were unfairly excluded, leading a Ramsey County judge to halt the lottery initially scheduled for late last month. OCM explained that the intended benefits of preapproval licenses—allowing businesses to launch ahead of those with standard licenses—are no longer feasible due to the legal delays preventing timely implementation.
The cancellation could impact Minnesota’s marijuana supply, as recipients of early preapproval licenses would have been able to begin cultivation before those issued standard licenses.
“This was certainly not an outcome that we were hoping would materialize,” interim OCM Director Charlene Briner said during a virtual press conference Wednesday. “We know that today’s path forward does not provide a perfect solution, but I’m hoping that (applicants) will take some comfort in seeing that there is a clear path forward.”
Social equity licenses are intended to prioritize applicants impacted by past marijuana prohibition, along with veterans and residents of high-poverty areas. The OCM had accepted 648 applications for the preapproval social equity lottery. A new social equity lottery is expected in May or June, with a lottery for standard licenses to follow.
Despite the ongoing litigation, Briner noted that state law permits—but does not mandate—the OCM to hold a preapproval lottery for social equity applicants.
“We believe that because it’s discretionary and not a statutory mandate that we have the ability to end the process today,” Briner said.
In court filings, the OCM alleged that some applicants had engaged in a “straw applicant scheme” to gain an unfair advantage.
State Senator Lindsey Port (D), and Representative Zack Stephenson (D), who authored the legislation legalizing adult-use marijuana, expressed disappointment in a joint statement over the cancellation of the preapproval lottery.
“The few bad actors who flooded the preapproval pool with duplicate or misleading applications have delayed the process for those who followed the rules, erasing the opportunity for social equity applicants to get their head start,” Port and Stephenson said.
They added: “It was foundational to the intent of this law that those who were most harmed by prohibition get a first shot at building Minnesota’s legal cannabis industry. It is frustrating those who did not follow the rules have disrupted that commitment.”
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