Minnesota Medical Cannabis

Minnesota became the 22^nd state to legalize medical cannabis in 2014 (Laws of Minnesota 2014, chap. 311 (SF2470)). The Minnesota Department of Health established the Office of Medical Cannabis after the passage of the medical cannabis bill and the office was tasked with implementing the law. The office began soliciting bids for medical cannabis manufacturers in early fall of 2014.

Two companies have been selected as registered manufacturers of medical cannabis in Minnesota and 14 dispensaries are currently operated in the state.

In 2016, “intractable pain” was added to the list of qualifying conditions for participation in Minnesota’s Medical Cannabis Program. In 2020, two new qualifying medical conditions – sickle cell disease and chronic vocal or motor tic disorder – were approved, effective Aug. 1, 2021. In July 2023, Minnesota regulators added irritable bowel syndrome and obsessive-compulsive disorder to the list of qualifying conditions.

When the program first launched, medical cannabis was available in pill, vapor oil, and liquid forms. Topicals (which are applied to the skin) were added in December 2016 and water-soluble cannabinoid multi-particulates with orally dissolvable products in December 2019. In 2021 the Legislature expanded the law to allow medical cannabis patients to smoke “dried raw cannabis”, effective March 1, 2022 and in December, the Department of Health approved “infused edibles in the form of gummies and chews” as an additional delivery option for patients, effective August 1, 2022. In November 2023, they added dry herb vaporization to the list of approved delivery methods, effective August 1, 2024.

In 2019, Minnesota passed legislation that exempt businesses from Section 280E of the federal tax code that allows cannabis companies to deduct business expenses from their state income taxes.

Minnesota residents participating in the medical cannabis program are required to join a patient registry in order to obtain and use medical cannabis for treatment purposes. As of September 2023, there were 2,448 practitioners and 41,140 registered patients. The top two qualifying medical conditions are chronic pain (58.93%) and post-traumatic stress disorder (32.83%).

According to the 2022 MJBiz Factbook, the Minnesota medical cannabis market hit $70 million to $90 million in sales in 2022, that is up from an estimated $60 million to $75 million in 2021.

Minnesota Adult-Use Cannabis

In May 2023, the state became the 23rd to legalize adult-use cannabis after the governor of Minnesota signed a bill allowing residents over the age of 21 to possess up to two ounces of cannabis in public and to home-cultivate up to eight plants (of which four may be mature) starting August 1. In addition to creating a system of licensed, private cannabis businesses, municipalities, and counties could own and operate government dispensaries. The legislation also allows for on-site consumption lounges and cannabis delivery services. A new ten percent gross receipts tax went into effect on July 1, 2023, for all THC-related purchases, excluding medical cannabis.

How to Start a Cannabis Business in Minnesota?

Business licenses are expected to be issued in late 2024, with adult-use sales beginning in early 2025. However, the first recreational cannabis dispensary opened Aug. 1 2023 in the Red Lake Nation area of northwest Minnesota.

Projections

With the postponement of retail cannabis sales to 2025, the gross receipts tax is expected to generate $13 million in fiscal year 2025, according to the Department of Revenue. The forecast rises to $40 million in 2026, $65 million in 2027 and $85 million expected in 2028.

Minnesota Cannabis Market Infographics

Minnesota Hemp Industry