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Minnesota cannabis regulators announced Wednesday they will abandon their initial social equity licensing lottery system and transition to a standard licensing process for both social equity and general applicants.

The Office of Cannabis Management’s decision comes after a Ramsey County District Court judge stayed the planned Nov. 26 license lottery, which was intended to distribute 182 preapproval permits among 648 qualified social equity applicants.

“We remain committed to launching an equitable, sustainable and responsible cannabis marketplace in Minnesota,” OCM Interim Director Charlene Briner said. “Our path forward ensures we remain on track to launch Minnesota’s new cannabis market.”

The change follows four lawsuits filed by rejected applicants who contested OCM’s elimination of 1,169 social equity applications from the lottery pool. The agency previously accused some applicants of attempting to “flood the zone” with hundreds of straw applicants to gain unfair advantages.

According to the agency, the 648 applicants who previously qualified in the preapproval process will automatically advance to the next licensing phase. Those seeking uncapped licenses, including micro-businesses allowing cultivation, can proceed directly with securing their permits, while applicants for capped license categories will enter a social equity lottery. Unsuccessful candidates will gain another opportunity through a general lottery.

The state will maintain its 50-50 split of licenses between social equity and general applicants, Briner said during a morning press conference Wednesday. The canceled preapproval process would have distributed 25% of the total social equity licenses.

Denied applicants can request refunds or participate in the standard licensing cycle, which offers broader opportunities to correct application issues including a formal appeals process. OCM will issue requests for more information in February 2025.

The new timeline includes:

• Jan. 15, 2025: Social equity verification begins
• Feb. 18, 2025: Application window opens for both social equity and general applicants
• May-June 2025: Sequential lotteries for capped licenses

Local jurisdictions are preparing for the expiration of municipal moratoriums on Jan. 1, 2025. Some communities delayed passing cannabis business ordinances while awaiting clarity on the state’s licensing timeline, OCM officials said.

Addressing questions about the office’s legal authority to end the preapproval process, Briner stressed its discretionary nature.

“The statute is very clear that the office may conduct a preapproval round. It is not a requirement in statute,” she said.

During the briefing, Briner also responded to allegations about personal contact influencing application decisions.

“I have had numerous, dozens, if not hundreds of people reach out to me personally,” she said, noting all inquiries are forwarded to OCM’s general counsel and chief regulatory officer. “I don’t know of anyone who has had a conversation with me that has influenced a licensing decision because I am essentially not involved individual decisions for licensees.”

When asked about the timeline from lottery to market entry, Briner noted business readiness would dictate speed.

“Theoretically, people could be standing up and opening for business relatively quickly after we open that approval for capped license types after we conduct the lottery,” she said. “But it’s really an individual business decision for each business operator.”

Regulators said they will work with partner agencies to identify violations of the state’s “true party of interest” provisions, which could result in five-year prohibitions on obtaining cannabis licenses.

“While this announcement does not fully address the disappointment of the 648 qualified applicants who expected to be entered into a lottery on November 26, our commitment to the principles of social equity is undiminished,” Briner added.