Cannabis Business in Minnesota

Minnesota’s Medical and Recreational Cannabis Market

Minnesota entered the recreational cannabis market in August 2023, though retail sales are not expected to begin until 2025. The state already has a well-established medical marijuana program, which has been operating since 2015, serving over 48,000 patients through 15 dispensary locations.

Minnesota’s recreational cannabis will be subject to a 10% tax on gross sales receipts. Exemptions apply to purchases made on Tribally Regulated Land, medical cannabis bought by registered patients, and products bought by retailers for resale. Retailers can secure this exemption by submitting Form ST3, a Certificate of Exemption, to their supplier. Once exempt, retailers are responsible for collecting sales tax from the final consumer when the product is sold.

The state's Office of Cannabis Management has indicated that many of the same regulations governing medical cannabis will extend to the adult-use market, with strict oversight from seed to sale and robust safety standards for cultivation. However, recreational cannabis will be subject to limits on both possession and potency, unlike the tax-free medical program.

Cannabis-Touching Businesses in Minnesota

The cannabis industry in Minnesota involves a variety of license types, covering everything from cultivation to retail. Below are the primary license types available:

1. Cannabis microbusiness
2. Cannabis mezzobusiness
3. Cannabis cultivator
4. Cannabis manufacturer
5. Cannabis retailer
6. Cannabis wholesaler
7. Cannabis transporter
8. Cannabis testing facility
9. Cannabis event organizer
10. Cannabis delivery service
11. Lower-potency hemp edible manufacturer
12. Lower-potency hemp edible retailer
13. Medical cannabis cultivator
14. Medical cannabis processor
15. Medical cannabis retailer
16. Medical cannabis combination business

Ancillary Cannabis Businesses in Minnesota

The cannabis industry in Minnesota is supported by a variety of ancillary businesses, which provide essential services to ensure the smooth operation and compliance of cannabis companies. Below are the primary types of ancillary businesses that play a critical role in the state’s cannabis ecosystem:

• Accounting
• Banking
• Insurance
• Legal Compliance
• Security
• Marketing

CBD Businesses in Minnesota

The Minnesota Department of Agriculture (MDA) is responsible for regulating the state’s hemp industry. The MDA requires businesses to obtain a license before processing industrial hemp into CBD. Applicants must go through a criminal background check and provide biometric information, such as fingerprints. Anyone with a criminal record related to controlled substances in the past 10 years will not be eligible.

Sellers of hemp-derived products, including CBD, must register with the Office of Cannabis Management. While there is no fee to register, businesses must do so before selling any products. This includes out-of-state cannabis businesses for sale that sell products online to customers in Minnesota. Once licensed under Chapter 342, the only permissible artificially derived cannabinoid in edibles is delta-9 THC.

CBD Product Testing and Labeling Requirements

The Sale of Certain Cannabinoid Products Workgroup (SCCPW) advises state legislators on regulating hemp-sourced CBD products. The MDA tests all hemp plants for THC. Hemp that tests above 0.3% total THC is subject to retesting, remediation, or destruction. Minnesota law outlines product label requirements, including:

• The name, location, contact details, and website of the product manufacturer
• Name and address of the accredited testing lab used by the manufacturer
• The percentage of CBD in each package (must be less than 0.3% THC)
• A scannable barcode or QR code linked to the manufacturer’s website
• A disclaimer that the product does not diagnose, treat, cure, or prevent any disease and that the FDA has not evaluated or approved the product unless it has done so
• The product cannot be marketed as a cure, treatment, or prevention for any disease. It also can’t be marketed to alter the body's function or structure.

Hemp Businesses in Minnesota

The Minnesota Department of Agriculture regulates hemp under Chapter 18K of Minnesota Statutes. This chapter was established in 2015 and created a pilot program for higher education institutions to grow and cultivate industrial hemp. The MDA issues two types of hemp licenses:

• Grower License: Allows licensees to grow raw hemp in Minnesota for research or commercial purposes
• Processor License: Allows licensees to obtain raw hemp materials for commercial processing

Obtaining a Hemp License

First-time applicants must consent to a background check. Applicants with felony convictions for controlled substance-related offenses within the past 10 years are ineligible for a license. Applications can be submitted online through the MDA portal or by mail.

The cost for each license is as follows:

• Hemp grower license: $150
• Hemp processor license: $250

Each cultivation or processing location is subject to a $250 fee. Therefore, the total fee for a hemp grower license with one location would be $400, and $500 for a processor license. Licenses expire on December 31st of the year they were issued. Licensees must reapply before the expiration date to continue participating in the Industrial Hemp Pilot Program (IHPP).

The MDA also charges fees for hemp crop certifications through THC testing. The fee for each sample is $100. Any inspection of a hemp sample beyond the first THC test will cost $250. Any changes made to a license after the initial application will incur a $50 fee.

The MDA prohibits growing, processing, or storing hemp inside any residential dwelling unit. Indoor growing is allowed with a license, but each indoor space must be registered as a separate grow location, even if it’s only being used to start seeds. Growers may cultivate hemp on rented land with the landowner’s consent.

Selling Hemp-Derived THC Products

Any cannabis business selling hemp-derived cannabinoid products directly to consumers must register with the Office of Cannabis Management. These products must be in the form of an edible, beverage, or topical for external use only. Retailers can only sell products that meet the state’s packaging, labeling, and testing requirements. Retailers must also verify the purchaser’s age and are prohibited from selling to anyone under 21.