Quick special newsletter today with a few timely updates for those writing MN license applications! In particular, the focus of Wednesday’s Micro License Launchpad call was TPII and the cap table, and I wanted to share some takeaways with you.

And, I hope to see many of you at the Lucky Leaf Expo tomorrow and especially the Industry After-Party at Modist Brewing!

For Minnesota License Writers:

Resources for Tackling the Application

My Jump-Start Webinar is available on demand HERE ($50). National license writer Layle McFatridge and I break down how to tackle the application, give pointers what OCM is looking for, especially in the capitalization table, and talk about the broader framework of the process of launching a cannabis business in Minnesota.

In other words: we designed an informational jumpstart, and it is available on demand for $50. Working at 2 AM? No problem.

Want more help? Upgrade to the Micro License Launchpad ($2,000, join online HERE). Designed for DIY license writers, this is a collection of resources to help you understand the requirements, keep track of your process, and be able to ask questions of me in this very busy time. Group mastermind call on Wednesdays at noon with me - sign up to get the link!

Who is Listed On Your Cap Table?

I’m hearing a lot of confusion about what MN-OCM wants license applicants to put in their Capitalization Table (including folks who are fixing their applications from the summer round).

You should list all of the people on your cap table who are:

• Equity owners of the business, in any percentage

• Officers, managers, or directors (board members) of the business, even if they own 0% of the equity

• Anyone else who qualifies as a true party in interest (“TPII”) under Minnesota’s exacting rules. That includes:

  • People with rights to money: "has the right to receive some or all of the revenue, gross profit, or net profit from a cannabis business during any full or partial calendar or fiscal year;"

  • People with control rights: "has the right to exercise control over a cannabis business", and control means “the power to independently order or direct the management, managers, or policies of a cannabis business”. Statutory link (quotes are from the statute).

Why this is important:

1) Application Number Limitations! And prohibition on vertical integration

From OCM’s License Review and Qualifications Guidance document: "A person identified as a true party of interest, as defined in Minnesota Statutes, section 342.185, may not be affiliated with more than one application per license type. All applications associated with the same true party of interest of more than 10% ownership within the same license type will be disqualified."

In other words: OCM is very serious about limiting applicants to one each. That 10% exception is supposed to allow investors to invest in multiple businesses (but they have to be disclosed in any case!)

And OCM is very serious about wanting officers and managers listed on the cap table, even if they own 0%. It’s a strange meaning of cap table, but their documents and FAQs are crystal-clear. In fact, if you mention a manager or key employee elsewhere in the application, they may well think that person should have been included on the cap table.

2) Requirements for TPIIs

Caution! Since everybody listed on your cap table is a TPII, in OCM’s view, that means that:

• You will be asserting the truthfulness of various data points about them that you will need to collect, including:

  • Factual disclosures (EG their ownership in any other cannabis businesses including in other states, whether they have ever declared bankruptcy, their full legal name, their experience and qualifications)

• You will be submitting their social security numbers (on the cap table) and their photo IDs (uploaded to the portal) - so don’t leave that until the last day

• Their involvement in other applications could be disqualifying (under the prohibition on vertical integration), and

• Their involvement could be disqualifying if they are disqualified for things like their criminal history or regulatory violations, delinquent taxes or labor violations.

Want me to review your cap table before submission? Me too. I’ll be doing that for members of the Micro License Launchpad. Sign up here.

Upcoming Events

The national Lucky Leaf Convention is returning to Minneapolis! Many national and regional companies are coming to town to learn more about Minnesota’s market and meet its entrepreneurs. There’s an expo at the Minneapolis Convention Center on Friday, Feb. 28 -Saturday, March 1, plus speakers.

And our friends over at Canna Connect are throwing a Lucky Leaf after-party on Friday night! Tickets

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

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!