MINNEAPOLIS— State regulators have denied two-thirds of applications for one of the initially “pre-approved” licenses to operate a cannabis business in Minnesota, a spokesperson for the Office of Cannabis Management said by email.
The applicants rejected emails received on Monday and Tuesday. Failure to meet regulatory requirements, inconsistencies in documentation and lack of required information were among the reasons why the agency denied 1,169 of 1,800 applications. social equity applicants seeking the roughly 280 initial permits to be issued.
Others failed to meet ownership requirements – a verified social equity applicant must own 65% of the company – and some submitted ‘fraudulent applications that were inconsistent with legal protections designed to prevent predatory practices’ or attempted to game the system to to obtain an unfair advantage. Interim Director of the Office of Cannabis Management Charlene Briner said in a statement.
“Informing applicants of their status is an important step in Minnesota’s journey to launch its new adult-use cannabis industry, and to do so in a way that sets us apart from the pitfalls and setbacks that have hindered other states,” said Briner. “The clear requirements in the law for a robust vetting process, conducted by the Office of Cannabis Management, have resulted in a significant number of applications not entering the lottery.”
Veted applicants will be selected for licenses from a lottery at a date yet to be determined, although Briner previously told WCCO that would happen before the end of the year.
With two-thirds of applicants rejected, this improves the fortunes of those who have been approved and are applying for a permit. But some of those who have been rejected believe their applications were wrongly rejected on technicalities or by mistake. And others anticipate legal action.
Chad Olson is a veteran — one of the social equity criteria — who has applied to become a cannabis transporter, a license that allows him to, for example, move products from manufacturing facilities to retail dispensaries. He said there were initially some “glitches” with his application and he was notified by the cannabis agency of the deficiencies to address them, which regulators did for several applicants.
But he eventually received a notice that he wouldn’t be included in the lottery because he didn’t provide information he said wasn’t clear he needed: the square footage of a space he would use for his business.
‘I’m a little confused. “I mean, to be honest, that was never asked for in the beginning,” he said. “We were asked to send us a rendering of what your garage would look like, showing where the vehicles we parked, where a maintenance area would be, offices and storage. So that’s what I did.’
This first lottery is for the ‘pre-approved’ or early licenses designed to give people a head start in building their businesses, with the assurance that they will have a license to operate when the regulations are completed early next year. However, growers who have a prior permit can was allowed to plant early to have the offering ready for market introduction.
There will be additional license lotteries next year for social share applicants and anyone else who doesn’t meet those criteria, so there will be another chance to apply.
“We understand that applicants who have not passed application review will be disappointed,” Briner said. “However, we are confident that there will be a robust pool of qualified candidates entering the lottery, and that those selected will be well positioned to pursue the next steps toward opening their businesses.”
Calandra Revering, an attorney who has worked with social equity applicants and advocated for that provision in the capital, praised the Office of Cannabis Management for its work to ensure there are no “straw applicants,” or operators who don’t really meet the requirements. the social equality criteria, in an attempt to obtain a license.
The same scenario has played out in other states, such as Missouri, where regulators recently denied some permits and previously warned of predatory practices to game the system, according to local news station Missouri Independent.
Revering said she believes OCM has learned the lessons of other state cannabis programs to “level the playing field.”
“I think it is the right thing to do to thoroughly investigate all these applications to make sure that the person applying for a social equality permit is the real applicant, and not a large company, and not groups of individuals who are actually trying to hijack the lottery to hijack the efforts of minority businesses and thwart potential generational wealth for many communities that have suffered from cannabis enforcement,” Revering said.
She hopes lawmakers consider adding penalties to the cannabis law to punish bad actors who try this tactic.
A spokesperson for OCM said that individuals who have not received a denial notice should not be assumed to participate in the lottery. The office is still working on the final assessments.
Caroline Cummings
