Cannabis management highlights BLAEDC annual meeting – Brainerd Dispatch

MERRIFIELD — Questions about the state’s cannabis laws abounded at the Brainerd Lakes Economic Development Corp.’s annual meeting.

Max Zappia, chief regulatory officer at the Minnesota Office of Cannabis Management, was the featured speaker at the event, which prompted a robust question and answer session with business and area government leaders Thursday, May 9, 2024, at Gather on 3 Event Center near Merrifield.

The gradual legalization of adult use cannabis included the Cannabis Legalization Act of 2020, which established a regulatory framework for the industry. Zappia is part of that framework.

He provided a review of legislative action around cannabis in the state. Zappia said in 2014, the medical program began, which was at the time and is still considered one of the most conservative medical programs in the state. There are only two registrants and about 40,000 medical patients in it. As far as other medical programs, Zappia said that is pretty low and one of the contributing factors to rolling out the entire program.

In 2018, the Federal Farm Bill delisted hemp, which has .3% THC, the main psychoactive ingredient of the cannabis plant, which WebMD notes is what can make people feel the “high” when smoking marijuana or eating an edible.

“In 2022, lower potency hemp was legalized so at that point you could take that hemp and turn it into some kind of consumable up to 5% milligrams of THC,” Zappia said, noting the fast-forward to 2023 where the state Senate, House and governor’s office passed adult use of cannabis.

Zappia noted Minnesota Statute 342 created the Office of Cannabis Management, and decriminalized cannabis as of Aug. 1, 2023.

“However, it’s not legal to sell without a license,” Zappia said. “There could be a question about why that is, the legislators will speak for themselves. My assumption is there was a strong effort to decriminalize while giving the commercial market time to be formed. Currently, the Department of Health regulates the lower potency hemp market, so that what you find in gas stations and smoke shops, liquor stores — that’s regulated through them, although I will say that if you’re seeing, we call it flower, but the stuff you smoke, that’s not legal, and they shouldn’t be selling that.”

Licenses will be the main regulatory component.

“And those have not been issued yet,” Zappia said. “We are working through that process.”

There are 13 or 16 different kinds of licenses depending on how its split, he said, noting they are split up by size — micro business, which is described as a smaller storefront or producer, a mezzo business is a medium size with a thriving storefront and a cultivator can’t have a storefront. There are going to be licenses to manufacture or transport and test components.

“The law is very intentional that with limited exceptions there’s not going to be vertical integration so if there is a business that does one it can’t also be a business that does another,” Zappia said.

At home, a person can grow up to eight cannabis plants, with no more than four being mature. Flowering plants may be grown at a single residence as long as it is the primary residence of someone 21 or older, the state reports. Plants must be in an enclosed, locked space that is not in public view.

Zappia said local control will be significant. Local governments can have a moratorium on licenses until Jan. 1, 2025. After that the moratorium is void.

A business that wants to operate within a local government will have to have confirmation that its operations fit with zoning ordinances, Zappia said.

“We are working through the rulemaking process. Rulemaking is really lengthy in Minnesota, so expect to continue to work on that through the rest of the year, and potentially into early next year, there will be public comment periods,” Zappia said.

A relevant issue from a business perspective comes from license caps.

“For your purposes, if you’re looking at investment or development, especially for the larger business types of cultivation, or mezzo business, no one knows who’s going to get the license,” Zappia said, noting there will probably be more applications than licenses.

Smaller businesses are probably going to be less restrictive.

“It’s unclear at this point which ones exactly will be capped and which ones won’t, and what that’s going to look like. We’ll find out between now and May 20,” Zappia said.

For a broad view of what this all looks like for the Brainerd lakes area, Zappia noted earlier comments by Crow Wing County Chair Jon Lubke about the robust economic activity in this county.

“So, I think it’s going to look a lot like what we expect down the metro, there’s going to be license activity, there’s probably going to be multiple different kinds of that, whether it’s grow, manufacture or to sell,” Zappia said. “This is an industry that is going to be starting from scratch. And it is also extremely capital intensive to start up, there will be some growing that is outdoors, what we’ve seen from other states is the products that are most in demand are going to be grown indoors.”

He said development costs are between $300 to maybe $700 per square foot for 30,000-square-foot operations.

“So this is going to be very capital intensive,” he said.

Zappia said they expect there will continue to be a little bit of unlicensed sales and his team will be doing everything they can to stop that.

“Local control, especially during the next 12 months, will play a huge role in what this looks like for local areas,” Zappia said.

More information is available online at

www.cannabis.mn.gov/consumers.html

and expected at the

www.blaedc.org

website.

Renee Richardson, managing editor, may be reached at 218-855-5852 or renee.richardson@brainerddispatch.com. Follow on Twitter at www.twitter.com/DispatchBizBuzz.