Minnesota Medical Marijuana Business Law – Cannabis Business FAQ

Considering a medical marijuana business in Minnesota? Cannabis can be big business. However, a cannabis business is not without its risks. Learn answers to common questions in our Minnesota Cannabis Business FAQ.

Cannabis: A Frontier of Opportunity for Some Entrepreneurs

Some entrepreneurs see the legalization of cannabis in any form as a huge business opportunity. In each state where cannabis is legalized, there is a new product on the market. A new product generally means less competition and a level playing field for competitors.

Former market leaders dominated because of their illegal operations, which have very little in common with a legitimate business enterprise. The largest sellers of marijuana before legalization typically have criminal records, illegal connections, and habits of operating in an entirely different marketplace. Without legal recourse, the largest sellers of cannabis were common drug dealers, who maintained their operations with illegal methods and sometimes violent tactics. Underground operations are not subjected to government regulation nor broad consumer accountability. However, Marijuana legalization creates new opportunities for traditional entrepreneurs who can apply their business savvy in this new market.

In addition to a new environment, the stigma of cannabis will likely keep some entrepreneurs out of the marketplace, leaving a larger piece of the proverbial pie for entrepreneurs who launch marijuana production, processing, or retailing businesses. In fact, in other states where legalization occurs, entrepreneurs without any history of drug involvement have entered the market merely to seize the business opportunities.

Selling medical marijuana is not without its risks. Even in states that legalize cannabis sales, federal law continues to prohibit the production, sale, use, and possession of marijuana. For entrepreneurs who want to operate in compliance with the law, this FAQ will provide some guidance.

Minnesota Cannabis Business FAQ

Is it legal to grow, possess, sell, or use marijuana in Minnesota?

Not yet. Currently, Minnesota state law prohibits marijuana use in any form. However, possession of a small amount of weed is a petty misdemeanor, which is technically not a crime in Minnesota. In May 2014, Governor Mark Dayton signed a new Minnesota law that will permit limited production and sale of medical marijuana to certain individuals for medical purposes.

Is medicinal use of marijuana legal in Minnesota?

Not yet. A 2014 Minnesota law permits cannabis to be grown and sold for medicinal purposes, but the new law has not yet gone into effect.

What is the language of Minnesota’s new medical marijuana law?

You can read the text of Minnesota new MMJ law here: Minnesota’s 2014 Medical Marijuana Law.

What types of marijuana will the new Minnesota law permit to be sold?

Oil, pill and vapor. Minnesota’s new medical marijuana law will permit the production and sale of cannabis in oil, pill and vapor form. Smoking marijuana will remain illegal, even for medical purposes.

How many sites can grow, produce, and distribute medical marijuana under the new Minnesota law?

Two grow houses and eight distribution sites. Minnesota’s new law severely restricted growth and distribution of marijuana to oil, pill and vapor form

  • produced at two grow houses
  • sold through eight retail locations

These will all require state licenses and be highly regulated by the government. These will also have an advantage in the marketplace if the state law is expanded later, which thought leaders believe is likely to occur.

How can I get approval and a license to be one of the few manufacturers or distributors of medical marijuana in Minnesota?

Hire a professional. To say there is competition to become the first of the manufacturers or distributors in Minnesota is an understatement. Investors and entrepreneurs across the nation are interested in being the first to get a foothold in this new market. You should hire attorneys (1) experienced in business law, (2) with knowledge of cannabis law, (3) who are directly engaged in this industry in Minnesota.

What are the requirements for cannabis growers in Minnesota?

Visit this link to learn more about Minnesota Marijuana Grower Requirements.

What duties do medical marijuana companies have in Minnesota?

Minnesota state law lists a number of duties imposed on medical marijuana businesses. Learn more: Duties of a MMJ Business.

If Minnesota legalizes marijuana, would a cannabis business still violate federal law?

Yes. Like Colorado, state legalization of marijuana has allowed entrepreneurs to open all sorts of marijuana businesses, but these operations are still illegal under federal law. Under the Obama administration, law enforcement has been very limited, allowing marijuana businesses to operate without interference in states that have legalized their operations.

How can I prepare to operate a marijuana business in Minnesota?

Some entrepreneurs expect marijuana to be legalized and want to get a head start preparing business operations. Until Minnesota law changes, you cannot operate a cannabis business legally in Minnesota. However, you can learn about the business by reading about the cannabis industry or attending training, such as the Cannabis Career Institute‘s business training for the cannabis industry.

What are the municipal issues for a cannabis business?

In states where cannabis has been legalized, city and municipal government officials have questioned how ordinances and zoning rules may govern a cannabis business:

  • whether state law preempts local zoning ordinances that would usually govern buying, using, and growing, medical cannabis
  • whether cities can require a cannabis business to be a minimum distance from schools, churches, or residential homes (this approach is commonly used with strip clubs)
  • whether a special use permit (SUP) is required
  • whether a cannabis business is subject to agricultural laws

There is no clear answer to many of these issues. Resolution often requires negotiation with municipal officials to avoid costly litigation.

Can a business attorney represent a cannabis business without violating federal law?

It depends. An attorney cannot advise people to engage in illegal activity. Rule 1.2(d) of the Minnesota Rules of Professional Conduct states “A lawyer shall not counsel a client to engage, or assist a client, in conduct that the lawyer knows is criminal . . . .” Our business attorneys have taken the position that we can advise a cannabis business on general business law, compliance with state medical marijuana regulations, and risks of violating federal cannabis laws.

Will your attorneys advise cannabis business clients?

Yes. Our business attorneys help all companies operate legally and prudently, regardless of what they sell. We don’t judge the merits of their products or services nor how they sell them.

Where can I learn about the criminal aspects of cannabis in Minnesota?

Learn more on our page about Minnesota drug offenses.

Where can I find a list of other professionals who represent cannabis companies in the United States?

See this business directory.

What are the costs of starting a cannabis business in Minnesota?

To become one of the two manufacturers or eight distributors permitted by the new law, companies will likely pay

  • over $30,000 in attorney fees for lobbying services to seek the coveted state licenses,
  • $10,000 to $20,000 for government license fees and related government filing fees, and
  • $5,000 in attorney’s fees to get the business operating a full capacity with all the policies, procedures, contracts, and forms needed to comply with Minnesota state law.

How can a medical marijuana business attorney help me?

An attorney can help you

  1. seek being granted one of the two state licenses issued to manufacturer marijuana,
  2. seek being granted one of the eight state licenses issued to distribute marijuana,
  3. create a business entity (S corporation, C corporation, LLC, or nonprofit organization),
  4. draft employee policies, procedures, and an employee handbook to comply with state law,
  5. draft contracts, documents, invoices, and business forms to protect your company, and
  6. advise your company on compliance with state and local laws regarding employment, zoning, and more.

Can I hire you to represent our business in Minnesota?

Perhaps. We are careful to ensure we have no conflicts of interest when accepting new clients. You are welcome to contact attorney Aaron Hall at ahall@jux.law.

Where can I learn more about medical cannabis in Minnesota?

See our Medical Cannabis Business Resource Guide.