Things are a bit chaotic in Minnesota’s cannabis industry in regards to social equity applicants (“SEA”), so I want to provide some highlights of where things are today:
- Last month, approximately ten SEAs, whose applications were rejected by the Office of Cannabis Management’s (“OCM”) pre-approval process, filed lawsuits in district court, trying to get the lottery stopped and to be given an opportunity to correct application errors. The district court did pause the pre-approval lottery but did not give the plaintiffs an opportunity to correct their errors. You can read more about it here.
- Today, a group of a SEAs whose applications were not rejected and would have been in the pre-approval lottery (the “pro-lottery group”) filed for a writ of prohibition with the Court of Appeals. A writ of prohibition is used when a party is trying to get the government to stop doing something. In this case, the pro-lottery group sought a writ of prohibition to prevent the district court from enforcing the district court’s order staying the lottery. Procedurally, the pro-lottery group had to go this route, because they were not parties to the lawsuits in the district court.
- OCM had a press conference and issued a press release this morning announcing that, due to the district court stopping the lottery, OCM is exercising its discretion and ending the pre-approval process altogether. If you submitted an application for the pre-approval process, here’s your potential avenues on next steps:
- If you were admitted to the pre-approval lottery, you don’t have to do anything more. You’ll be in the lottery for the SEA in the regular license period, if you were applying for a type of license that is capped (i.e. mezzobusiness, retail licenses.) If you were applying for a type of license that is not capped (i.e. microbusiness, delivery), you will automatically move forward in the application process.
- If your application for the preapproval lottery was rejected, you can:
- Terminate your application and get your application fee refunded if requested by Jan. 10, 2025; OR
- Continue on to the regular licensing period, correct any mistakes on your application, and have your application for the pre-approval process applied to the regular licensing application.
- If you continue with the licensing process after being rejected, OCM will reach out to you sometime in February 2025, requesting more information, and provide an opportunity to correct errors. Please note that not all reasons for being rejected can be corrected. If your application was rejected due to the conflict for the true party of interest, it’s possible the issues cannot be corrected.
Because the pre-approval process is being scrapped, there will be only one SEA lottery for each of the capped licenses. This SEA lottery will include those applicants who made it through the pre-approval process, those SEAs who corrected errors in their applications, and SEAs who are applying for licensing for the first time. (If you were supposed to be part of the pre-approval lottery, I’m sorry to say your odds of winning just went down.) Any SEAs who were not selected in the SEA lottery will have their names put in the general lottery which will be open to non-SEAs as well.
Besides the disappointment of those who made it to the pre-approval lottery, this puts Minnesota’s cannabis industry in further turmoil because of the changing timelines. As of now, here is the timeline as outlined by OCM today:
We are now looking at the lotteries for capped licenses to take place until May or June 2025. Even after that, a winning applicant must still pass a background check, secure a physical location and conduct needed build-out, updated application to reflected secured location, obtain city zoning approval, and pass OCM’s final inspection of physical location.
- What about the pending lawsuits? Given OCM’s recent announcement that the pre-approval process has been terminated, the lawsuits filed last month are probably moot, meaning they have no point anymore. They stopped the lottery, and are now unable to join the pre-approval process. In addition, the petition for the writ of prohibition brought by the pro-lottery group is probably also moot.
There are a lot of moving parts, and things continue to remain fluid. We will, of course, continue to monitor and try to spread information as it comes in. If you have any questions, please don’t hesitate to contact me.
