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Minnesota cannabis regulators disqualified about two-thirds of the roughly 1,800 applicants for social equity business licenses, meaning the permit lottery scheduled for the week of Dec. 2 will be reserved for 640 hopefuls.

Applicants who were winnowed out either failed to complete the entire application process or didn’t meet eligibility criteria, MinnPost reported.

“While the disappointment is understandable, the basic proxy for readiness is your ability to submit a successful application,” Charlene Briner, the interim director of the Office of Cannabis Management, told MinnPost.

“We’ve always known this is a highly complex regulated space, and we heard concerns about readiness, so the people who get into the lottery are qualified,” Briner said. “We saw people who were trying to game the system in order to improve their chances in the lottery.”

Briner added that many of those who were rejected from the lottery were “zone flooders or predatory applicants or who do not meet the letter of the law around ownership requirements and expectations.”

“We saw a couple of hundred applications that were virtually identical, including the business plans and the projected profits for the first year,” Briner said. “There were multiple people with the same address. They were using a domain name that is unregistered and inactive. Some have a phone number that ties back to the same individual.”

Applicants who are fully vetted and qualify for the lottery will receive a notice from the state OCM within the next two weeks, Briner said. The lottery should be held within a few days of notices being issued.

For the hundreds of cannabis entrepreneurs who were rejected, there’s no appeals process available for lottery eligibility, but they can ask within the next week for their records to be re-reviewed by officials, MinnPost reported.

The lottery will be only for retail, cultivation and manufacturing permits, including microbusinesses and mezzobusinesses, MinnPost reported. The state didn’t receive enough applications for wholesalers, transporters or testing labs to have any competitive lottery, meaning all of those applicants will likely be granted licenses as long as they meet basic criteria.

Under state law, individuals or business entities can only own a single cannabis-related business permit, essentially prohibiting chains and vertical integration.

The new recreational market intends to award the following maximum number of permits:

• 38 retailer
• 100 microbusiness
• 25 mezzobusiness
• 13 cultivator
• 6 manufacturer
• 20 wholesaler
• 20 transporter
• 50 testing lab
• 10 delivery service