Minnesota’s recreational cannabis market is one step closer to becoming a reality

[MUSIC PLAYING] NINA MOINI: It's our top story today. The state's taken a huge step toward creating a recreational marijuana industry. The Office of Cannabis Management has announced that a judge has approved the rules that will govern the marijuana market. Joining us now to talk about the new regulations and how soon we could see dispensaries selling recreational marijuana is Kurtis Hanna, the Director of Government Relations and Public Policy at Blunt Strategies, a cannabis consulting firm. Thanks for being here, Kurtis.

KURTIS HANNA: Thanks for having me.

NINA MOINI: Blunt Strategies-- I get it. [LAUGHS] I know that you really took the time to read through all of these rules. I know it's been really long and a really long process. What is your first reaction to the approval of all these rules? And can you let folks know what it means, why it's important to have them approved?

KURTIS HANNA: My first reaction is finally. This has been an extremely long process. And it is a humongous situation where we're finally getting to the spot where all the rules are in place so that licenses can be issued, and shortly after that, retail establishments can be opened.

NINA MOINI: What's your understanding, Kurtis, of why things have taken a long time? Because, if I remember correctly, the goal with the recreational legalization and the industry was to have dispensaries open, like, right now, early 2025, correct?

KURTIS HANNA: Yeah, that's true. There was an issue that the Office of Cannabis Management had not existed yet when HF 100 was passed into law two years ago. And so they needed to stand up a brand-new state agency. And then that agency needed to write all of these rules. And then they had to be approved by the administrative law judge. And so there is some reason to-- it does make some sense that it took some time for this to finally come to fruition. And also the legislature put a [AUDIO OUT].

NINA MOINI: Oh. Did we lose Kurtis there? Kurtis, can you hear me?

KURTIS HANNA: Yeah, I'm here. Can you hear me?

NINA MOINI: OK, yeah. You cut out for just a moment.

KURTIS HANNA: Oh, apologies.

NINA MOINI: But you had been saying that they had to stand up this new agency. Things were taking longer than they thought. Can you talk a little bit-- I'll just move us along to other stakeholders that were at the table. What was your perspective on who all was involved in this, making these rules?

KURTIS HANNA: Yeah, I'd love to. So there was multiple instances where the Office of Cannabis Management asked the public to weigh in on the proposed rules. They actually had initial rounds of public input before any draft rules were submitted. And then they published some draft rules that they solicited feedback on.

And then they started the formal rulemaking process, where they submitted these rules into the state register and had another 30-day period of feedback. So there was a fair bit of feedback solicited by the public in this process, more than was statutorily required. So that was a welcome situation that OCM engaged in.

NINA MOINI: Sure. And what is your overall-- I know it's a lot of rules to get things rolling here-- but what's your overall sense. Are you pleased with what the state has come up with?

KURTIS HANNA: I'm pleased in certain aspects of it. I still am of the opinion that cannabis is a safer product than alcohol. And, in my mind, in a perfect world, we would see the regulations on cannabis companies that are manufacturing and processing and selling this product to be on par, or a little bit less rigorous, than those on the alcohol companies.

But, at the same time, this is still federally illegal. We have a lot of states surrounding Minnesota that do not have legal cannabis markets. And so there is concern about diversion and things of that sort. And so there are arguments to be made that this should be more tightly regulated. But hopefully, we'll see this as the first step in becoming less regulated over time.

NINA MOINI: What are some of the rules or regulations here that stuck out to you?

KURTIS HANNA: Well, one of the biggest rules that people commented upon was the rule that THC products in Minnesota cannot have more than 70% THC in any of the products. OCM ended up changing that, after getting a lot of feedback on that topic, to being 80% maximum THC. But that takes a lot of products out of contention. The concentrates that people tend to use via vaporization are actually just not going to be able to be bought and sold in Minnesota, unfortunately.

NINA MOINI: Because they're higher than the 80-- you're saying 80%?

KURTIS HANNA: Yeah. Well, there's just a lot of products that have more than 80% THC in them that just won't be able to be available on the shelves in Minnesota. And I think there's only two states that have made that decision to completely prohibit products that have that high of THC.

NINA MOINI: OK. What about some of these rules around video surveillance and how to manage the plants? What are your thoughts around those?

KURTIS HANNA: In a distillery, which my former roommate used to work at, there was not a robust amount of video surveillance required when people are distilling alcohol. However, in the proposed rules that soon to have the effect of law, for cannabis, there are robust requirements for video surveillance to occur.

And that just, once again, goes back to what I was saying earlier about how this is a newly regulated industry. And it seems as though, out of the gate, there's maybe a bit of preference to have more security and more rules around surveillance than there are for alcohol. But hopefully, we'll see that end up leveling off over time. And the legislature always has the ability to go back and ask OCM to make these regulations less than they are currently.

NINA MOINI: Overall, do you see this as a win for people trying to start up new businesses and dispensaries, and particularly in the area of social equity? And the state has said that that's a really big priority. What do you think about that?

KURTIS HANNA: This was a critical step in getting to licensing any cannabis company in Minnesota. It was a requirement that the legislature put on the Office of Cannabis Management that, prior to any formal licenses going out, that the rules had to be completed. So we're now going to be in a completely new paradigm here, where the Office of Cannabis Management can imminently start issuing licenses to social equity businesses that had applied last year. Applications have already been reviewed, and everything's ready to go. So once these rules are [AUDIO OUT].

NINA MOINI: Oh, I think we might have lost Kurtis again. Oh, I think we lost you for a moment there again, Kurtis. I'm so sorry. Go ahead.

KURTIS HANNA: Yeah, right after these rules are published in the state register at the end of this month, OCM can move immediately to the next steps in getting these businesses licensed.

NINA MOINI: Great. So that includes all businesses and, again, those social equity licenses that are for people who've been historically marginalized by marijuana enforcement and those with lower incomes, veterans, so the groups of people that they wanted to be able to have, really, a fair shot as this industry comes to fruition, this recreational industry. So if things go as planned now, you're saying that businesses can get a license this month already. When do you think that we'll start to see businesses, dispensaries, open their doors?

KURTIS HANNA: So there are some businesses that can potentially get licensed this month. Those are businesses that applied last year. There was another round of applications that were submitted earlier this year. And many of those will be put into lotteries in May is what OCM is saying, to be able to get licenses, potentially, at the end of May.

But yeah, there's finally movement afoot. And it's been almost two years since the passage of HF 100 by the legislature. And so it's extremely exciting that we might see some retail outlets opening in a couple months, or two or three months, potentially. And then we'll just have to move to the new question of how they will actually find products to put on their shelves. Because it will take some time for these cannabis cultivators to actually get their first harvest.

NINA MOINI: Got it. Kurtis, thank you so much for stopping by and sharing your perspective with us. I really appreciate you.

KURTIS HANNA: Of course. Yeah, thanks for having me. I appreciate it.

NINA MOINI: Thank you. That was Kurtis Hanna, Director of Government Relations and Public Policy at Blunt Strategies, a cannabis consulting firm.