How to Open a Dispensary in Minnesota

Minnesota recently became the 23rd state to legalize recreational cannabis consumption. As of August 1, 2023, adults over the age of 21 can legally possess and use marijuana, however, there are currently only a handful of Minnesota dispensaries open to the public. The issue, it seems, is that the government passed the law without any regulatory framework in mind and now finds itself playing catch-up.

But there’s plenty of incentive for the state to work quickly. Medical cannabis generated an estimated $40 million in sales in 2021 and the recreational market is projected to reach $1.5 billion per year by the end of the decade. Just look at what Colorado has been up to the last few years, a total of $15 billion since sales began in 2014.

Is Recreational Cannabis Legal in Minnesota?

Yes. Under the recently passed laws, any person over the age of 21 can possess:

  • Cannabis paraphernalia
  • Up to 2 ounces (56 grams) of flower in public
  • Up to 2 pounds of cannabis in a private residence
  • Up to 8 grams of cannabis concentrate.

Note that public consumption is still illegal as is possession in certain areas such as schools, prisons, and federal property, among others. For a full breakdown of laws regarding cannabis use in Minnesota, consult the state’s website here.

A man is smoking cannabis in his home in Minnesota.

When Did Minnesota Legalize Cannabis?

In 2014, Minnesota lawmakers passed a bill allowing for the limited use of medicinal cannabis. The first medical dispensaries opened in 2015. However, this early program only allowed for non-smokable cannabis products like pills and tinctures; it wasn’t until 2021 that smokeable marijuana was allowed for medical use. The very next year, the state allowed for the recreational purchase of low-THC edibles.

On May 30, 2023, Governor Tim Walz officially signed legislation allowing for the recreational use of marijuana for adults over the age of 21 as of August 1, 2023.

How Can I Open a Minnesota Dispensary?

Opening a dispensary requires all the same forms and paperwork that any other business would require, however, it comes with its own unique set of hurdles. For one, any marijuana dispensary will need a special license from the state to operate. As of now, there are only very few details about what this license might require as the state has yet to outline the application process. However, they are making progress and have hammered out an initial fee structure for cannabis dispensaries, cultivators, and manufacturers.

As it stands, any cannabis business will need to pay an application fee (from $500 for a small startup to $10,000 for a cannabis farm), an initial license fee (from $0 to $20,000), and a license renewal fee (from $2,000 to $30,000). Note that these only apply to recreational dispensaries. For a complete breakdown of the proposed fees, please visit the Minnesota State Government website here.

As it stands, no Minnesota recreational dispensary is scheduled to open (aside from those allowed on tribal land) before 2025 as the rules that will govern them are still being written.

Someone is writing a cheque for the licensing fee to open a dispensary in Minnesota.

What Taxes Are Imposed on a Minnesota Dispensary?

Medical marijuana is sold tax-free. Recreational marijuana businesses must pay a tax of 10% on gross sales.

Can I Open a Dispensary Anywhere in Minnesota?

Yes and no. While the law as written covers the entire state, it also allows for municipalities to set their own rules regarding the sales of cannabis. So far, at least 10 cities have enacted temporary bans on all cannabis sales; at least until they can work out a detailed set of rules and regulations. As of the end of 2023, the only Minnesota dispensaries allowed to sell recreational cannabis are on tribal land as these regions are not under the jurisdiction of state or federal law.

As written, the current law allows municipalities to set limits on both the location and number of dispensaries. However, a municipality cannot outright ban dispensaries and must allow at least one dispensary per every 12,500 residents.

What Guidelines Must a Minnesota Dispensary Follow?

While the specifics of everything are still being worked out, the legislation does outline several practices that any cannabis business must follow. These include, but are not limited to:

  • Ventilation and filtration to manage odor control.
  • A detailed security plan that must be designed by the business and included in the application.
  • Adherence with an as-yet-nonexistent statewide monitoring system to track all sales.
A security camera outside a cannabis dispensary in Minnesota.

Making Your Voice Heard

To streamline the entire legalization and regulation process, the state of Minnesota has created the Office of Cannabis Management (OCM). The OCM is actively seeking feedback from interested parties to aid in drafting the final regulations that the state will enact. This feedback will shape the regulations around such things as:

  • License requirements and procedures
  • Packaging and labeling
  • Testing
  • Integrated cannabis tracking, inventory, and verification system 
  • Environmental controls, e.g. odor limits, water use, energy use, solid waste disposal
  • The use of pesticides and fertilizers

To get in touch and have your say, visit the OCM’s website here.

Navigating a Changing Landscape

Starting a new business can be a daunting task under the best of circumstances. With so much still up in the air, navigating all the still-unwritten rules provides an added level of challenge for even the savviest of business owners. Thankfully, KayaPush has extensive experience in the cannabis markets of several states and knows how to work in a shifting legal landscape.  As a people operating system, we can streamline recruitment, scheduling, and payroll, all while ensuring that you stay compliant with all the latest laws at your Minnesota dispensary. Connect with one of our best buds to get started!

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