Minnesota THC shop owners upset over new dispensary licensing rules
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Dean Anderson in his Uffda store at Nicollet and Diamond Lake Road. Photo: Nick Halter/Axios
When Dean Anderson signed a long-term lease to open a low-dose THC shop in Southwest Minneapolis in April, he had hopes to eventually turn the store into a full-scale marijuana dispensary.
Yes, but: His future is looking much less certain these days following what he's calling a "bait and switch" by state lawmakers.
Why it matters: Changes to the state's recreational cannabis law, approved by the Legislature in May, have Anderson and other shop owners now feeling like getting a license will be a long shot.
State of play: A wave of THC shops have opened all over the metro in the past several months as owners try to build up their brand and position themselves for a full dispensary license when the state begins granting them, which is expected early next year.
Friction point: The new state law replaces a points-based system with a vetted lottery. Business owners like Anderson said they believed having an existing retail operation would net them points and position them for a license.
How it works: The new legislation allows for 150 dispensaries in Minnesota, but half of them have to go to "social equity applicants," which includes people who have been convicted of selling or possessing marijuana, veterans, and those from low-income neighborhoods.
- There are 3,800 businesses registered statewide to sell low-dose THC products. Some are full-on stores like Uffda, but others are corner stores, breweries, or other small businesses that sell just a few gummies or seltzers.
What they're saying: Anderson, who operates two stores under the Uffda brand, was dismayed by the law change. He quit his job as a paramedic and sold his house to get into the industry.
- "A lot of people who pioneered this market are now being hung out to dry," he said. "It's honestly pretty daunting trying to figure out how we pivot from here — knowing that everything we built counts for nothing."
Tom Schmidt, co-owner of three Natreum THC shops in the Twin Cities, said opening the stores early was a "calculated risk" based on the state's 2023 law that prescribed a merit-based system.
- "Pioneers like ourselves not only took on the risk, but we have been instrumental in helping to build up the state's cannabis hemp-based market as well as investing a significant amount of time and effort into education and helping destigmatize cannabis use," he added.
The other side: DFL Rep. Zack Stephenson, who authored the 2024 bill that changed the licensing process, said retailers who felt opening a store would give them an advantage misunderstood the old system.
- He noted that most of the criteria for the points system were proof of plans for things like security, employee training, and environment, which don't require an operating store.
Reality check: One of the criteria was "knowledge and experience," which would have seemingly favored existing retailers.
Between the lines: The state Office of Cannabis Management asked for changes in part because it said the points system would put the state at risk for lawsuits.
- Leili Fatehi, an attorney who advises cannabis companies, said that while the change has led to uncertainty for small businesses, the new system still requires some merit-based criteria to qualify for the lottery.
What we're watching: How many businesses apply for a limited number of licenses when the process opens in the back half of the year.