Minnesota’s soon-to-be law allowing recreational marijuana, explained

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Minnesota is on the verge of becoming the 23rd state in the U.S. to allow the production, sale and use of marijuana for recreational uses.

A House-Senate conference committee Tuesday made the final changes and gave its approval for a bill to bring about a new market for a drug that remains illegal on the federal level. After the last version of the 320-page bill is drafted by legislative staff, it will move first to the House floor for approval — probably Thursday. The Senate will take up the measure after that and send it to Gov. Tim Walz, who promises to sign it.

The prime sponsors — Sen. Lindsey Port of Burnsville and Rep. Zack Stephenson of Coon Rapids — on Tuesday celebrated the completion of a bill that took nearly five months and more than 30 committee hearings to get to the finish.

Port said the work has gone on for years, not just the months of this session. DFL sponsorship succeeded in getting a version passed by the DFL-House in 2021 but could not break through when the GOP controlled the Senate. Winning control of both bodies last November set the bill up for success this year.

“Minnesota will be better because of it,” Stephenson said of the journey to legalize recreational marijuana.

Both Stephenson and Port said they think they still have enough DFL votes to approve the final bill, and both said they expect some Republicans to support it.

“I’ve had Republicans come up and tell me they like the bill better with the changes that have been made and that they’d be more inclined to support it,” Stephenson said. “Whether that translates to more votes from them on the floor, I guess we’ll have to wait and see.”

Port said she’s had similar conversations with GOP senators “but I have the votes regardless.” If there is not bipartisan support, the Legislature will be the only place in the state where both DFLers and Republicans aren’t in support of legalization.

“Minnesotans want this bill,” she said. A recent KSTP poll showed that 64% of Minnesotans support legalization, though Republicans are nearly evenly split.

Minnesota’s soon-to-be recreational marijuana law at a glance

• Effective date: The law takes effect July 1, though the elimination of criminal penalties — even for possession of small amounts — won’t kick in until Aug. 1. 
• Home grow: Starting Aug. 1, home growing of limited numbers of plants will be legal, opening the chances for the first legal supply to be available around Halloween. People who grow at home can use what they grow and give some away but they can’t sell it.
• Regulation: A new Office of Cannabis Management will be created, and other agencies with jurisdiction over the new law will staff up and draft rules. This could take up to 18 months.
• Retail licenses: People who want to sell marijuana legally will need to get licenses, and applicants from high-poverty areas and those living with criminal convictions for possession and sale of marijuana will be given preference. The purpose for such “social equity” bonuses for applicants is to ensure the legal market helps the communities that bore the brunt of anti-marijuana law enforcement.
• Expungement: People with minor convictions for marijuana will have their records expunged automatically, though the process is complex and is expected to take time. A system will also be set up to review more serious offenses for possible expungement.
• Medical marijuana and hemp edibles: Minnesota’s medical marijuana program would continue, and hemp-derived edibles and drinks would remain legal but would face more regulations than before. Both medical marijuana and hemp-derived edibles and drinks will be regulated by the newly created Office of Cannabis Management.

Into the weeds on the weed law

• Taxes: Sales of cannabis products would be taxed at 10%, with the state getting 80% and local governments getting 20%. States tax marijuana in different ways but Minnesota would still be at the lower end. 
• Government revenue: Once the market is up and running, the cannabis tax is expected to raise $120 million every two years on top of the $75 million state and local sales taxes expected to be raised every two years from existing sales tax rates. 
• Medical marijuana businesses: LeafLine Labs and Green Goods, the two existing medical marijuana businesses in Minnesota, can continue operating as they have since 2014. In addition, they will be allowed to grow some marijuana for the recreational market, and the law would allow for full vertical integration with stores statewide – up to one in each of the eight congressional districts. Stephenson said existing medical providers are not being counted on to provide marijuana to the legal market until other growers can be licensed and produce a crop. To meet the expected market, he said, there would need to be 60 current medical providers, not just two. “This is not the way we’re going to do the adult-use market, not even close,” he said. 
• Medical marijuana patients: The existing program serves about 40,000 residents, and Stephenson said he always wanted to preserve the program. “In every state that has legalized adult-use cannabis that had a medical program, the medical program shrank significantly — 40%-plus loss of patients,” he said. “Our medical market is already pretty small. We risk losing a medical industry altogether.” Unlike recreational marijuana, medical sales will not be subject to new taxes. Allowing the medical marijuana businesses to join the recreational market on a limited basis is meant to “replace the lost medical patients so they can continue to operate in Minnesota,” Stephenson said.
• Local control: Local governments can control the location of retailers, but they can’t keep stores out of their jurisdictions as cities and counties can in other states. The bill sponsors wanted to prevent illicit sales from continuing. Local governments can pull licenses of businesses that violate the law, subject to review by the state cannabis office. They can also restrict locations of stores to keep them away from schools, parks, treatment centers and attractions that draw children.
• Local retail caps: Local governments can cap the number of stores selling marijuana to one for each 12,500 residents, but they don’t have to. For example, if the city of Minneapolis were to institute that cap, the number of stores in the city would be 33. A city with fewer than 12,500 people would have to allow at least one store. Hemp edibles that became legal last year aren’t part of this provision.
• Expungement for convicted sellers: While automatic expungement will happen for possession, people with past convictions for illegal sales of marijuana were not initially included in the criminal expungement section of the bill. The new version opens that possibility.
• Social equity bonus points: The bill gives more specific descriptions of the types of people who could get social equity bonus points when seeking any of the 16 different licenses. Benefits could apply to people convicted of possession or sale prior to May 1 of this year but also to people who had a parent, guardian, child, spouse or dependent with convictions. Social equity points can also help veterans who lost honorable status due to possession or sale of marijuana and to people who live in census tracts that experienced disproportionately high cannabis enforcement actions.

Is every detail perfect? Probably not

Leili Fatehi has been pushing legalization legislation for four years as part of the MN is Ready coalition. She said the bill in final form is a good one but that changes may be needed in subsequent sessions.

“It is a bill that makes important steps towards creating a safe, regulated marketplace that will displace the illicit market,” she said. “There are still some things where next year we’ll need additional legislation.”

One of those involved criminal penalties for personal use and possession. Earlier versions of the bill allowed a home grower to possess up to five pounds of marijuana. That was reduced to two pounds after opponents noted that each pound of marijuana can produce hundreds of half-gram joints.

But the law also allows the growth of eight plants with no more than four flowering at one time. Such plants will likely produce more than the legal limit, subjecting the grower to a felony under the bill.

On what planet does this make any sense?” wrote Minnesota Hemp Growers Cooperative president Shawn Weber to the conference committee. “Four plants conservatively will yield two pounds. And realistically will yield four pounds. With proper cultivating techniques, you could harvest well over six pounds of material from four plants.

“You are allowing a fraction of the yield for possession, while legalizing cannabis, yet are creating a very low bar for felonious activity,” Weber wrote.

Fatehi said that is just one area where the bill doesn’t go far enough in decriminalizing cannabis.

“If we’re moving toward decriminalization, we need to make sure that we are approaching the penalties in a way that achieves the outcome we want, which is to ensure that racial disparities don’t continue,” Fatehi said. Other states that kept some possession penalties found that while offenses fell, the disparities between white offenders and people of color grew.

Port said she expects annual updates to the legalization program.

“It’s been almost 100 years since Prohibition for alcohol ended, and we have a liquor bill almost every year,” she said. “This is a brand new, huge industry. There are going to be fixes and there are going to be tweeks forever. That’s just a reality of launching a new industry in any state.”

Sen. Jordan Rasmussen, R-Fergus Falls, tried to delay reductions in criminal penalties for illegal sales. They change Aug. 1, but Rasmussen said he worried that the illicit market will grow in the time between then and when legal cannabis will hit the market.

“In the time between this bill getting passed and the criminal penalties for possession and sales going down, we’ll actually be encouraging the illegal market to fill that void, Rasmussen said. He preferred keeping the stiffer penalties in place until August of 2024. “We’ve heard it will take well over a year, perhaps 18 months, before we’ll be issuing licenses to allow legal sales. Law enforcement has come to me to say we don’t want to lose our tools to go after illegal gun sales in this in-between period.”