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Minnesota Adult Use Cannabis Update

We assisted multiple clients in completing and submitting their adult-use cannabis license applications to the Office of Cannabis Management (“OCM”), and we continue to monitor how and when the OCM evaluates those applications. Meanwhile, Minnesota’s rollout of its adult-use cannabis market continues—slowly but surely—with recent developments including:

  • OCM is currently processing preliminary approvals for a variety of uncapped cannabis license types, including the popular microbusiness category (i.e., smaller-scale, vertically integrated operations). Applicants who submitted during the first licensing period (February 18–March 14) have been receiving notifications of preliminary approval from OCM, which then opens an 18-month window to secure both an operational site and a state license. Some applicants are also receiving notices to correct their applications or outright rejections. If you have received preliminary approval from OCM, now is the time to act quickly to secure your operational premises in compliance with local law and to obtain an appropriate cannabis-sensitive commercial lease agreement.
  • OCM will hold the lottery for certain “capped” license types—cultivators, manufacturers, and mezzobusinesses—on June 5, 2025. The lottery will be livestreamed on OCM’s YouTube channel.
  • Also on June 5, OCM will conduct a second lottery for social equity applicants pursuing a cannabis retailer license. This lottery was originally scheduled for December 2024 but was canceled by OCM when litigation arose over the rejection of a majority of social equity applicants’ applications. A district court later ordered OCM to reinstate and conduct the lottery.
  • On May 15, Governor Tim Walz and the leadership of the Minnesota House and Senate announced the framework for a budget deal for the next biennium. Included in this bipartisan deal—which comes as the Minnesota House is tied 67-67 between both parties, the Democrats hold a one-seat majority in the Senate, and Governor Walz is a Democrat—is an increase in the cannabis tax.

At present, the cannabis tax is 10% of gross receipts from retail sales of taxable cannabis products. These products are also subject to the general sales tax rate of 6.875%, as well as applicable local sales taxes based on where the transaction takes place. Under the announced framework, the cannabis tax would increase to 15%.

Proponents of legalization have sought to keep this tax as low as possible in hopes that the legal cannabis market will take hold and suppress the legacy market. In the original 2023 legislation, the Minnesota House had proposed an 8% tax rate, but the Senate’s 10% rate prevailed in conference committee and was included in the final legislation signed into law by Governor Walz. This proposed tax increase has already sparked concern about its impact, particularly given that Minnesota’s adult-use cannabis market has not yet launched.

For questions regarding the latest developments in Minnesota’s cannabis industry, please contact Jeffrey O’Brien, Hilary Bricken, or Jonathon Duffy.

Tags: cannabis, minnesota cannabis
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Photo of Jeffrey O'Brien Jeffrey O'Brien

A corporate and transactional attorney who thinks holistically about clients’ businesses, Jeffrey often serves clients for decades.

Jeffrey began his legal career at a firm that focused on both real estate and traditional corporate transactions, and he quickly discovered that he thrived on

…

A corporate and transactional attorney who thinks holistically about clients’ businesses, Jeffrey often serves clients for decades.

Jeffrey began his legal career at a firm that focused on both real estate and traditional corporate transactions, and he quickly discovered that he thrived on closing deals. Almost a quarter century later, he still finds it exciting and rewarding to get a client’s deal across the finish line, and he loves seeing the business growth that results—especially when it’s tangible real property that can be visited in real life.

Primarily a business attorney with a focus on corporate transactions, Jeffrey regularly oversees mergers, acquisitions, joint ventures, and private securities offerings. He also frequently handles ancillary real estate deals, including commercial leasing, land acquisition, loan documentation, purchase and sale of residential and commercial property, and resolution of title matters. While Jeffrey supports clients in a variety of industries, he has built a strong niche practice in the hospitality realm, often representing restaurants, bars, and breweries. After cannabis was partially legalized in Minnesota in 2023, he began representing businesses in the burgeoning industrial hemp and cannabis industries as well and has become a leading attorney in the Minnesota cannabis world.

Jeffrey works with clients who have branches, offices, and restaurants across the country, and he joined Husch Blackwell in 2024 to ensure nationwide coverage for the organizations he represents. He handles deals with values in the low millions up to hundreds of millions—but he treats every deal like a major deal, because he knows no transaction is small or insignificant to the client. Jeffrey is known for going beyond an individual transaction and thinking holistically about the client’s business and its future: he structures deals and gives advice with an eye to the organization’s long-term goals, often all the way to an eventual exit strategy. His ability to serve as a business partner draws clients back again and again, and Jeffrey has served many of the same clients for nearly 20 years.

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Photo of Hilary Bricken Hilary Bricken

With a passion for organizational growth, Hilary advises clients in the cannabis, healthcare, and life sciences spaces on transactions, regulatory compliance, governance matters, and other corporate needs.

Hilary likes being a dealmaker: she values building collegial relationships with clients and other attorneys, and

…

With a passion for organizational growth, Hilary advises clients in the cannabis, healthcare, and life sciences spaces on transactions, regulatory compliance, governance matters, and other corporate needs.

Hilary likes being a dealmaker: she values building collegial relationships with clients and other attorneys, and she loves helping clients create value and business opportunities. She also appreciates the in-depth strategies that transactions rely on.

Much of Hilary’s practice is devoted to mergers, acquisitions, and other transactions, as well as to serving as first point of outside counsel for certain clients. She also assists with entity formation and the drafting of various governance documents and asset portfolio management. In addition, Hilary advises clients on industry-specific regulatory compliance.

Hilary’s experience with the cannabis industry dates to 2010, when she began assisting medical cannabis providers with business questions. It was immediately clear to her that this emerging, growing industry had a massive need for corporate counsel, and she has advised cannabis clients—including many major national and international companies—ever since. Her experience includes cannabis licensing; marijuana and industrial hemp regulatory compliance; mergers and acquisitions; corporate and transactional matters, including negotiating management services agreements, fee slotting agreements, cultivation supply agreements, and intellectual property licensing agreements; receiverships; dissolution and wind downs; and financing and debt restructuring. In 2023, Hilary joined Husch Blackwell out of enthusiasm for the firm’s deep bench of innovators in the cannabis and healthcare space.

Hilary also devotes a significant portion of her practice to healthcare clients, including physicians, physician groups, and medical services organizations, and she represents clients regarding the off-label application of controlled substances.

Known for offering a commonsense business approach to legal questions, Hilary never gives legal advice in a vacuum. She provides clients with definitive guidance that has practical applications, adding value and supporting business goals.

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Photo of Jonathon Duffy Jonathon Duffy

Jonathon defends clients in product liability and labor and employment matters. Jonathon focuses his current practice on product liability and employment law. He defends clients against various chemical exposure allegations and is particularly experienced with mold after representing a military housing provider whose…

Jonathon defends clients in product liability and labor and employment matters. Jonathon focuses his current practice on product liability and employment law. He defends clients against various chemical exposure allegations and is particularly experienced with mold after representing a military housing provider whose properties allegedly contained the substance. His litigation experience also includes mediation relating to employee dismissal after FMLA leave. In addition, Jonathon counsels clients on federal and state employment law, helping them avoid potential litigation. He frequently advises on employee handbooks and necessary revisions after new legislation.

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