Happy May!

Lots of news for you today, from new application data from OCM to news on testing and events (and some spicy commentary from me). To my new readers: this newsletter is for and about the Minnesota craft cannabis industry, and this is a pivotal time!

Minnesota Cannabis News

Licensing Update

TL;DR: OCM is making progress on reviewing the 3,500 applications it received for Minnesota cannabis licenses, and a few businesses are getting the green light to move to the next step towards licensure. That means businesses could start opening this summer, depending on how quickly they can secure property, get approval from their municipality, and update their license paperwork.

Breaking: Just this afternoon, in response to my requests, OCM publicly released this “progress chart” showing the applicant numbers and how many applicants they have reviewed, denied, and moved on to the next step.

So far, OCM reports, they have approved 333/1,850 micros as qualified applicants (all social equity applicants) and an additional 207 (all SEA) have moved on to be preliminarily approved. OCM has also been fast-tracking testing applicants, as they said they would, with 10 testing facilities already qualified applicants and 2 all the way to preliminarily approved.

Capped license types (Mezzobusiness, Cultivator, Manufacturer, Retailer*) are waiting for a lottery process that OCM still plans to hold in “late May or the first half of June”. Social equity applicants in these categories all have an advantage (see my probability statistics and explanation here) but nothing is guaranteed. A social equity mezzobusiness applicant has a 38% chance of being picked in that lottery to move forward with licensing. (*Retailers will have to wait a bit longer for their lottery, according to OCM.)

• Those who applied in March, be watching for emails from OCM as they are emailing applicants to tell them that their application has preliminary approval (and is in the lottery), is denied, or that an applicant has 14 days to fix certain issues OCM identifies in that email. Be ready to move quickly to fix whatever problems they point out, or you’re out of the process.

Uncapped license types (MICRO [the largest group by far], wholesaler, transporter, testing, delivery, and medical combination business) are receiving emails from OCM on a rolling basis (that is, as each application is reviewed.) The 1,322 new micro applications are being reviewed in the order they were received.

• 207 of the social equity micros have received the “Step 3 letter” - that is, the email that says that they have 18 months to open, and can now proceed to revising their paperwork to reflect their actual location. There are also a couple of testing applicants already at this stage.

• Many more applicants have received the “Step 2 letter”, which directs them to go get a background check and a labor peace agreement.

• Watch carefully for emails from OCM offering that 14-day correction period!

OCM Interim Director Eric Taubel sat for this revealing interview on 4/20: https://m.youtube.com/watch?v=jPwgQmlD42w 

Learn more about the next steps in the licensing process at OCM’s website or by watching the replay of the webinar I did yesterday. (I haven’t edited it yet but hope to have it up on my website by end of day Monday, and will email the link directly to everyone who registered!)

Want help with a correction or determining your next step? Grab 15 minutes with me here to get a quote.

Cannabis Event Licenses and Public Consumption

OCM will begin accepting applications for Cannabis Event licenses this summer. This new webpage gives guidance on their stance on cannabis and food; sale and gifting of cannabis at events; and consumption.

Jen’s take: This webpage repeats the 3 places that cannabis can definitely be used under state law by those 21+ under Minn. Stat. 342.09: at a private residence, on private property where allowed by the property owner; and on the premises of an establishment or event allowed to permit on-site consumption (of which there are currently zero).

However, those are not the ONLY places we can consume in Minnesota. Otherwise, why would Minneapolis have added a ban on smoking cannabis in its public parks?

We have public consumption in Minnesota, limited by the rights of property owners, ordinances, and a strong Clean Indoor Air Act. We may need to fight with OCM about consumption areas, especially once it gets cold again. LMK if you want my help thinking about creative ways to design your business’ offerings for the patchwork of laws.

OCM is now accepting applications for CanGrow farmer training and loan grants (due June 3)

OCM opened the grant application window for CanGrow farmer training and loan grants on April 22. CanGrow farmer training grants will fund eligible organizations to provide educational materials, training, and technical support to farmers who want to enter or expand into the legal cannabis industry. Project categories eligible for funding will be outlined in the request for proposals. CanGrow farmer loan grants will fund nonprofit corporations to assist farmers by providing low-interest loans for entering the legal cannabis industry. This initiative aims to accelerate market entry and growth for farmers ready to start or expand their farms, avoid costs and risks for farmers at all stages of readiness, and reduce compliance risks, costs, and infractions for cannabis farms.

Learn more by watching a recording of a webinar on OCM grant programs (Discussion on CanGrow begins at the 25-minute mark) or by visiting the CanGrow webpage.

If you are interested in learning more about the CanGrow grant and want to meet with OCM staff, please reach out through the OCM speaker request form.

OCM will also be hosting three informational webinars to guide prospective CanGrow grant applicants through the request for proposals process. Register at the links below:

• May 1, 3 p.m.

• May 15, 10 a.m.

• May 28, 1 p.m.

Testing Update

OCM has developed compliance testing requirements for cannabis and hemp products manufactured or sold by businesses licensed by the office.

Analytical testing of cannabis for contaminants and potency is increasingly recognized as a critical and necessary component of the industry for several reasons: 

• Laboratory testing minimizes the risk of pesticides, microbes, heavy metals, toxins, and residual solvents from being consumed. 

• Quantification of cannabinoid profiles and potency ensures consistency with labeling and aids in determining appropriate consumption for individual use.

• Laboratory testing evaluates safety and quality for consumers and medical patients. 

Download Technical Standards for Sampling and Testing Cannabis Products and check out the technical standards webpage.

Congratulations to Bloom magazine, Minnesota’s own cannabis industry magazine, on its 3rd issue! 

Bloom founders Angelique Zerillo and Lynn Wachtler at Earl Giles 4/30

I’m proud to be a contributing writer, advertiser, and advisor to Bloom. Check out my article in this issue, “Weed for Women”!

Minnesota Cannabis News

No News on Compacts with Minnesota Tribes

Still waiting on this shoe to drop.

As a reminder, we care because it is expected that the compacts will allow each tribe to open up to 5 retail locations off-reservation, and to sell to OCM-licensed businesses. Neither can happen until the compacts are final. I continue to expect to see them announced any day now.

No News on Most Recent Lawsuits

As I expected, OCM argued in the April 21 court hearing that the lawsuit that was filed by some approved SEA applicants should be dismissed as moot, because OCM is so close to running these lotteries and getting the market open.

We’re now waiting to see what the court thinks of that argument. It is possible that what comes out of that hearing will mean some restructuring of the lottery process (probably not delays) and if so, I will break it down for you next newsletter!

Minnesota Legislature Update

I’m hearing that all cannabis policy pieces that are going to move forward this year have basically been collected into the Cannabis Omnibus Bill, though the House and Senate versions differ somewhat. That bill is SF 2370 on the Senate side and HF 1615 on the House side.

It has passed the Senate, but has not yet been voted on by the House. Assuming it gets that vote in the House by the end of session in 3 weeks, the differences would be ironed out in conference committee. H/t to Maren Schroeder and Kurtis Hanna of Blunt Strategies for the intel!

Link to my 4/18 newsletter for discussion about what’s in the draft omnibus cannabis bill (affects the adult-use and hemp-derived industries in MN).

Other Cannabis News

Pres. Trump’s U.S. Attorney for the District of Columbia has sent the below letter to a licensed medical cannabis dispensary in D.C. and its owners, threatening them with serious federal charges for violating the Controlled Substances Act by being in the cannabis industry.

Resources for Municipalities:

• Updates have been made to the Local Government webpage and specifically to the OCM Local Government Guide – a Guide to support locals Adult-Use Cannabis and Lower Potency Hemp Edible Licenses (Please refer to the guide updated on 4.14.15)

• OCM hosted a local government webinar on navigating accela and cannabis licensing. Watch here: Guidance for Locals - Zoning and Local Retail Registration March 31, 2025

Guest Post

What to Know About Distribution Agreements

If you are ready to expand your hemp product business, chances are you are considering working with a distributor. Distributors serve as intermediaries, connecting your products to a broader network of retailers and extending the geographic reach of your brand. The agreement that you sign with a distributor, however, is more important than you may realize. This contract covers everything from the distributor’s territorial rights to order and payment procedures, and even the handling of product recalls.

Before entering conversations with a potential distributor, it’s crucial to understand the key components of a distribution agreement, important provisions to watch for, and the terms you may want to negotiate. Here’s what you need to know:

Key Provisions in a Distribution Agreement

Products and Product Lines

The agreement should clearly define which products and product lines the distributor is authorized to sell. Will it cover only hemp products or will it cover all non-alcoholic beverages if you decide to start offering non-hemp and non-alcoholic products? Additionally, consider whether the distributor will have rights to distribute future product extensions or entirely new products as they are developed.

Territory and Exclusivity

Most distribution agreements define an exclusive territory for the distributor. You may, however, want to consider carveouts if you have already established relationships with retail accounts in the otherwise exclusive territory. Additionally, some producers sell their hemp beverages online directly to consumers – you should make sure you reserve this right in the distribution agreement.

Ordering and Payment Procedures

It’s essential to set clear processes for how orders are placed and payments are made. How much time do you need to fulfill an order after the order has been placed? And how much time after receipt of the products does the distributor have to pay off its balance? While you may not think these issues are likely to come up, cash flow in supplier–distributor–retailer relationships can be difficult and you want to be protected from late payment or non-payment scenarios.

Beware the Accidental Franchise

Be cautious with minimum purchase requirements. In some cases, imposing them can legally transform your distribution relationship into a franchise, creating additional regulatory burdens and potential liabilities. Consult with an attorney before setting any minimums.

Product Recalls and Quality Issues

Problems with product quality are inevitable in any distribution relationship. Your agreement should outline procedures for managing defective products, responsibility for the costs associated with product recalls, and methods for determining fault if quality issues arise.

Distributor Obligations

Often, distribution agreements are vague regarding distributor responsibilities, making it very difficult for suppliers to put pressure on distributors to perform. To protect your interests, you should negotiate clear, tangible requirements such as reporting obligations, marketing activities, and product storage and handling standards. This is important because if the distributor’s obligations are vague or minimal, you may not be able to terminate the agreement without paying a sizeable fee to the distributor.

Trademark License

Distributors will need to use your trademarks to market your products. Include a trademark license provision to control how your brand is used and to protect your brand’s reputation and value.

Termination

Termination provisions are essential – they may be your only way out of an otherwise sour relationship with a distributor. Many distributors, however, require the payment of a termination fee when the supplier terminates without cause, which fee can be sizeable and cost-prohibitive. This is why it’s important to have obligations on the distributor – you may be able to negotiate the right to terminate for cause if the distributor breaches the agreement. If the agreement imposes no meaningful obligations on the distributor, there may not be anything for them to breach.

Final Thoughts

When selecting a distributor and negotiating a distribution agreement, it’s vital to keep these issues in mind. Distribution relationships are often long-term commitments that can become expensive and difficult and/or costly to exit if problems arise. Consulting an experienced attorney before signing any agreement is a wise investment to ensure your interests are protected and to avoid unexpected pitfalls.

This is a guest post written by Elliot Ginsburg and Kirsten Nordstom of Garner Law. They can be reached at www.garnerlegal.com. 

Industry Classifieds

Have a property or services to offer to my readers? Or, looking for one?

I’m going to try this Classifieds Section approach and see if it helps people connect as they build their cannabis businesses in Minnesota. Contact me for more info: [email protected]

Upcoming Events

Have events you’d like to include in my next newsletter? Please email me an image and a link, as applicable, to [email protected] 

A friend said to me this week, “You know, 80% of these microlicense businesses are going to fail. They won’t open, or they’ll open but they won’t last a year.” And I said to myself, “So, the question is: How can a business make it more likely that they are the ones in the 20% that do make it?! I have a lot to offer there.”

Know someone who needs this newsletter? Please forward to them!

Received this from someone else? Subscribe here to stay in the know about the Minnesota cannabis industry and tools for entrepreneurs!