Minnesota Expands Medical Market, Legalizes Adult Use

Adult-use sales could begin in 2025.

The long-awaited bill legalizing recreational marijuana in Minnesota has been signed into law by Gov. Tim Walz, following approval from the state Senate in a narrow 34-32 vote. Minnesota becomes the 23rd state in the U.S. to legalize adult-use cannabis.

The new legislation, HF 100, expands the existing medical marijuana industry, previously permitting only two companies to grow and sell cannabis. Under the new bill, the state will allow a minimum of one retailer per 12,500 residents, leading to potentially over 450 dispensaries across the state, considering Minnesota’s population of over 5 million, MPR News reported.

Starting from August 1, the law will decriminalize marijuana use and possession for those aged 21 and over, also allowing home cultivation of cannabis plants. However, retail sales of cannabis are not expected until 2025, as state regulators need time to establish new industry rules and procedures for granting business licenses.

Additionally, the law establishes a state cannabis tax rate of 10%, which will be in addition to the state’s existing 6.875% sales tax, creating a total likely tax rate of approximately 17%.

An immediate change will take effect Wednesday, allowing liquor stores to sell hemp-derived, low-potency THC edibles and beverages. The law also eliminates the $200 enrollment fee for new patients in Minnesota’s medical cannabis program.

The landmark bill signing ends months of legislative debates and numerous committee hearings, marking a significant shift in Minnesota’s unique cannabis market, which had previously allowed the sale of hemp-based THC edibles at convenience stores, while strictly regulating medical marijuana flower and other products.

Gov. Walz expressed confidence in the upcoming establishment of the state cannabis office and the licensing process for cannabis businesses. He shared plans to hire a a head honcho for the Office of Cannabis Management in the summer.

Proponents of the law, like Leili Fatehi, campaign manager for the pro-legalization MN is Ready Coalition, told the Minnesota Star Tribune that they wish to see a leader committed to eliminating the illicit market, promoting social equity, and creating a “craft, small-business-oriented cannabis industry.”

Maren Schroeder, MN is Ready’s coalition director, acknowledged that the law will need ongoing adjustments, much like alcohol laws. Both Schroeder and Fatehi advocate for a reduction in criminal penalties for those possessing more cannabis than the law permits.

“I think possession as a felony, generally, is a problem,” Schroeder told the outlet, arguing that adults should not face strict limits on how much marijuana they can legally possess. “We don’t have a limit on how much beer you can have in your house.”

Cover: Minnesota Gov. Tim Walz, middle, signs a bill to legalize recreational marijuana for people over the age of 21, making Minnesota the 23rd state to do so, Tuesday, May 30, 2023, in St. Paul, Minn. (AP Photo/Abbie Parr)

Adam Jackson

Adam Jackson writes about the cannabis industry for the Green Market Report. He previously covered the Missouri Statehouse for the Columbia Missourian and has written for the Missouri Independent. He most recently covered retail, restaurants and other consumer companies for Bloomberg Business News. You can find him on Twitter at @adam_sjackson and email him at adam.jackson@crain.com.

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