Minnesota Cannabis Laws

249 Businesses Secure First Cannabis Licenses in Minnesota’s First Lottery

On June 6 2025, the Office of Cannabis Management (OCM) announced the results of the state’s first lottery for social equity applicants. Out of a total 776 qualified applicants, 249 were awarded various license types, including cultivator, manufacturer, retailer and mezzobusiness. The entire event was even live streamed on Youtube.

A second lottery will be held for general applicants on July 22. Social equity applicants who failed to win the lottery in the first round will be included in the second lottery automatically. Crucially, winners of the lottery will only receive a preliminary license – full approval will follow after passing a background check, securing a labor peace agreement, and meeting all local zoning, safety, and OCM inspection requirements.

Minnesota Raises Taxes on Cannabis Products From 10% to 15%

When Minnesota legalized recreational cannabis in 2023, it did so with a gross receipts tax of 10%. However, even before sales have begun, a new budget agreement announced on May 16 2025 has raised taxes to 15%. The gross receipts tax is in addition to the state sales tax rate of 6.875% which remains unchanged.

Minnesota Proposes Two Bills to Regulate Psilocybin Therapy and Legalize Cultivation for Adults

In the span of a week, Minnesota lawmakers introduced two separate Psilocybin-related bills: one to regulate therapeutic psilocybin and another to decriminalize personal use and cultivation for adults.

On March 24, 2025, Rep. Andy Smith (DFL) proposed HF 2699 that aims to decriminalize non-commercial personal possession, use, and cultivation of psilocybin for adults 21+, eliminating criminal and civil penalties. The bill would establish a Psychedelic Medicine Board to set possession limits and mandate public education on responsible use and harm reduction, along with employment, housing, and parental protections for compliant users.

A few days later on March 27, 2025, the same representative proposed bill HF 2906 that aims to create a regulated system for therapeutic psilocybin access for adults 21+, allowing supervised sessions with facilitators for qualifying medical conditions. Uniquely, it permits patients to cultivate their own psilocybin or designate cultivators.

Uncertainty for Minnesota's Medical Cannabis Program in Light of New Recreational Rules

Some experts believe Minnesota’s upcoming legalization could attract a wave of new businesses while prompting many medical operators to exit. Consultant and lobbyist Maren Schroeder believes requirements like a 2:1 medical-to-recreational plant ratio and separate production lines are economically unfeasible for cultivators.

This may lead large operators to leave the medical program, resulting in higher prices, reduced access to vital medications, and a loss of patient protections. Schroeder among other experts are working with lawmakers to adjust the rules and keep the medical marijuana program viable.

Minimum Age: Under Minnesota’s Adult Use Cannabis Act, recreational cannabis is fully decriminalized as of August 2023 for individuals aged 21 and older, allowing possession, use, and home cultivation. It can be sold legally by licensed dispensaries to adults older than 21 years.

Possession Limits: Adults 21 years of age or older can possess up to 2 ounces of cannabis flower or equivalent hemp products, 8 grams of concentrate, and edibles with up to 800 mg of THC in a public place. In their private residence, individuals can possess a maximum of 2 pounds of cannabis flower.

Medical Use: Qualified patients registered under Minnesota's Medical Cannabis Program can purchase and use medical cannabis within state lines, but it cannot be smoked or vaped in public.

Recreational Use: Recreational cannabis has been legal in Minnesota since 2023 but sales have yet to begin. The first dispensary licenses were given out in June 2025 with sales potentially starting from 2026.

Consumption Areas: Cannabis can only be consumed in a private setting and cannabis consumption areas as designated by local governments. Tenants must check with landlords if cannabis consumption is allowed on the premises. It cannot be used while operating a motor vehicle or heavy machinery.

Regulatory Organization: The Office of Cannabis Management (OCM) is responsible for licensing and regulation of cannabis in Minnesota.

Compliance Software: Minnesota has contracted METRC as its official seed-to-sale system.

Growing Regulations: Adults in Minnesota may grow up to 8 cannabis plants for personal use, no more than 4 of which can be mature, flowering plants. Cultivation must be done in a secure, locked space, out of the public view.

Adults above the age of 21 can purchase and carry only up to 2 ounces (56 grams) of cannabis flower or equivalent hemp products, 8 grams of cannabis concentrate, and edibles with less than 800 mg of THC. These limits do not apply to patients and primary caregivers enrolled in Minnesota’s Medical Marijuana Program.

It is illegal for licensed cannabis retailers to sell to patients without a valid medical marijuana card, minors, and anyone who cannot provide valid identification proving their age.

Minnesota’s medical cannabis program allows Minnesota residents with specific qualifying medical conditions to access medical cannabis. As of June 2025, the list of conditions that qualify for medical marijuana in Minnesota are:

• Alzheimer's disease
• Amyotrophic lateral sclerosis (ALS)
• Autism spectrum disorder (must meet DSM-5)
• Cancer*
• Chronic motor or vocal tic disorder
• Chronic pain
• Glaucoma
• HIV/AIDS
• Inflammatory bowel disease, including Crohn’s disease
• Intractable Pain
• Irritable bowel syndrome
• Obsessive-compulsive disorder
• Obstructive Sleep Apnea
• Post-traumatic stress disorder (PTSD)
• Seizures, including those characteristic of epilepsy
• Severe and persistent muscle spasms, including those characteristic of multiple sclerosis (MS)
• Sickle cell disease
• Terminal illness, with a probable life expectancy of less than one year*
• Tourette syndrome
• Any medical condition for which a patient’s health care practitioner has recommended, approved, or authorized the use of cannabis by that individual to treat the condition

*If the illness or its treatment causes (any of) severe pain, nausea, vomiting, or significant weight loss

Yes, home cultivation of cannabis is allowed in Minnesota for individuals aged 21 and older. The law permits the following:

• 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 at the primary residence of someone 21 or older.
• Plants must be in an enclosed, locked space that is not open for public view.

This provision allows adults to cultivate their cannabis plants for personal use within specified limits.

Cannabis consumption in Minnesota is subject to certain restrictions:

• Cannabis can be consumed by people 21 and older on private property and residences (unless the property owner prohibits cannabis use).
• On-site consumption is permitted at places with approved licenses or event permits, though as of the provided information, no licenses or event permits are available.
• Smoking or vaping cannabis is allowed outside where it isn’t prohibited by the Minnesota Clean Indoor Air Act, such as on a sidewalk or outside a restaurant or bar. It’s also prohibited in multifamily housing buildings.
• Cannabis cannot be used when operating a motor vehicle or heavy machinery.
• Consumption is prohibited in specific locations, including public schools, state correctional facilities, areas where the smoke or vapor could be inhaled by a minor, federal property, federally subsidized housing, and on an employer's premises.
• Owners of daycares must disclose if they permit cannabis use outside of their normal business hours.

It's important to note that local communities may have additional ordinances that prohibit smoking or vaping cannabis in public places, so it's advisable to check local regulations as well.

In Minnesota, the state agency responsible for cannabis licensing and regulation is the "Office of Cannabis Management" (OCM). Minnesota's Medical Cannabis Program will also transition from the Minnesota Department of Health to the Office of Cannabis Management, effective March 1, 2025. This means OCM will henceforth oversee the licensing and regulation of both adult-use (recreational) and medical cannabis businesses in the state.

In Minnesota, individuals and entities interested in obtaining a marijuana business license must meet specific eligibility criteria. Applicants must:

• Be at least 21 years old.
• Pass background checks with no disqualifying criminal convictions.
• Meet residency requirements outlined by the state.
• Comply with any additional requirements set by the OCM.

The Office of Cannabis Management (OCM) oversees the licensing process for all license types, which we’ve broken down into three key phases:

1. Application Preparation and Submission

The initial phase involves gathering all necessary documentation, including preparing a detailed business plan outlining your dispensary's operations, security measures, and compliance strategies. In addition to the business documents, applicants also need to secure local government approval for the chosen dispensary site, ensuring compliance with local zoning ordinances.

All of this information is to be submitted in a comprehensive application to the Office of Cannabis Management (OCM) along with the required application fees.

2. Public Notice, OCM Review, and Lottery

The applicant must provide public notice of the intent to open a dispensary, allowing the community to voice concerns or support. During this stage, the OCM will begin its evaluation of applications and select candidates based on a scoring system.

For capped license types, the OCM will enter top applicants into a randomized lottery. For uncapped license types, qualifying applicants will be contacted by the OCM for the next steps.

Lottery winners and qualifying applicants will undergo a background check to ensure they meet the eligibility criteria, including criminal history checks via the OCM and Bureau of Criminal Apprehension.

Capped versus uncapped license type considerations

3. Preliminary License and General License

After clearing all background checks, the applicants will be awarded preliminary licenses as they enter the final phase of the licensing process.

Preliminary licenses do not allow sale or operations but can be converted into general licenses within 18 months.

The conversion process involves submitting their specific site location and comprehensive operational plans, securing local zoning and building code compliance, passing an OCM site inspection, paying the final license fee, and for retail-focused businesses, obtaining local retail registration.

Once awarded, general licenses are non-transferable and a new license is required for significant changes in business structure or ownership.

Editor’s Note: The most recent application window for recreational cannabis retail licenses in Minnesota closed on March 16, 2025, with the first round of lottery winners announced on June 5, 2025. A second round of lottery winners is scheduled to be announced on July 22, 2025.

As of June 5, the Office of Cannabis Management (OCM) has not yet announced when the next retail license application window will open. However, it’s possible that the timeline may align with the application period for 2026 hemp licenses, which is expected to begin in early November 2025.

Minnesota has specific regulations regarding the location of marijuana dispensaries and retail establishments. Dispensaries must be:

• At least 500 feet away from schools, public parks, and libraries.
• Sited in areas zoned for commercial or industrial use.
• Compliant with any local zoning regulations.

Applying for an adult-use Cannabis Retailer license in Minnesota involves three different fees:

• Application fee: $2,500
• Initial license fee: $2,500
• Renewal license fee: $5,000

The initial license fee will also include the fee for the first annual renewal and all fees are non-refundable as per Minnesota state law. Learn more about the cost of opening a dispensary here.

Source

Yes, Minnesota does have a social equity program that aims to promote participation from communities that have been disproportionately impacted by cannabis prohibition and enforcement.

To qualify as a social equity applicant in Minnesota, an individual must meet at least one of these criteria: Personal conviction for cannabis possession/sale before May 1, 2023.

• Parent, guardian, child, spouse, or dependent convicted of cannabis possession/sale before May 1, 2023.
• Was a dependent of someone convicted of cannabis possession/sale before May 1, 2023.
• Military veteran (including service-disabled) or current/former National Guard member.
• Military veteran or National Guard member who lost honorable status due to a cannabis offense.
• Resides in a Disproportionately Impacted Area for at least 5 years with:
• High cannabis enforcement rates (applicant may provide supporting data).
• Poverty rate of 20% or more.
• Median family income below 80% of statewide/metropolitan median.
• At least 20% of households receiving SNAP.
• High Social Vulnerability Index.
• Participated in farm operations for at least three years, providing majority labor/management on a farm with $5,000-$100,000 gross sales in the prior year.

Candidates can verify themselves as social equity applicants for free to avail benefits including access to grant programs (CanRenew & CanGrow), not having to pay the license fee again for the second round of licenses priority (if not selected initially) and more importantly, getting priority in licensing through a separate lottery/licensing round.

Minnesota’s law explicitly recognizes the sovereignty of Tribal Nations, giving them the authority to decide whether to allow cannabis sales on their land and whether to participate in the state’s broader cannabis market. This means that Native American tribal nations in Minnesota can operate independently from state laws and regulations.

In fact, the Red Lake Nation opened the first recreational marijuana dispensary in Minnesota, NativeCare, on August 1, 2023.

Source

Due to the recognized sovereignty, products sold on tribal land are exempt from state taxes, but tribal governments may impose their own taxes. The Red Lake Nation is not charging taxes, as all profits go directly to the tribe.

More recently, the White Earth Nation made history by opening Minnesota's first recreational marijuana dispensary off tribal reservation lands, in Moorhead. This has been possible thanks to a landmark agreement allowing the tribe to operate up to eight such stores statewide.

Section 342.32 of the 2024 Minnesota Statutes states that licensed retailers in Minnesota can sell a variety of cannabis products, including:

• Cannabis flower
• Cannabis concentrates
• Edible cannabis products
• Lower-potency hemp edibles
• Immature cannabis plants and seedlings
• Hemp-derived consumer products

At the point of sale, cannabis sales in Minnesota are subject to a recently increased 15% cannabis tax on gross receipts, which is in addition to standard state sales tax of 6.875% and any other local sales tax rates.

There are no details yet about the delivery or online sales for recreational cannabis products in Minnesota. The legislation might evolve, so it's best to periodically check the OCM’s website for updates regarding sales channels.

On-site consumption of cannabis may be permitted at Minnesota dispensaries with approved licenses and/or event permits. Local laws and restrictions still apply.

Marketing cannabis in Minnesota comes with strict rules designed to protect public health and prevent youth exposure. Key restrictions include:

• No advertising to anyone under 21 or encouraging overconsumption
• No ads within 1,000 feet of schools, playgrounds, or similar locations
• Prohibition on billboards, TV, radio, pop-ups, and sponsored social media posts
• Limits on print, digital, email, and SMS marketing
• Public health warnings must be clearly included in all ads
• Free samples, giveaways, and out-of-state targeting are banned

Always seek legal review to ensure compliance with Minnesota’s evolving cannabis marketing laws.

Minnesota enforces strict packaging and labeling requirements to ensure consumer safety and information transparency. Cannabis products must be:

• Sold in child-resistant packaging.
• Clearly labeled with THC content and other relevant information.
• Include warnings about the potential health risks of cannabis use.
• Adhere to any additional packaging and labeling rules set by the OCM.

Minnesota has contracted METRC as their official seed-to-sale partner which means cannabis retailers in the state are required to use METRC for all tracking, reporting, and inventory control requirements under the Office of Cannabis Management’s (OCM) guidelines.

Yes. Cova's Cannabis Dispensary POS Software and inventory management system includes all the features needed to keep cannabis retailers compliant, including:

• ID scanner for age and card verification
• Integrated inventory and sales tracking and reporting
• Built-in product equivalency conversions and purchase limit enforcement

Navigating the regulatory landscape for establishing a compliant cannabis dispensary in Minnesota requires careful planning and adherence to state laws and regulations. As the industry evolves, staying informed about updates and changes in legislation is crucial to ensuring the success and compliance of your cannabis retail business. Sign up below for regular updates.

Dive deeper into everything related to cannabis retail in and around Minnesota with these curated resources.

• How to Open a Cannabis Dispensary in Minnesota
• How Much Does it Cost to Open a Cannabis Dispensary in Minnesota?
• Cannabis Dispensary Case Studies

Minnesota’s move toward recreational cannabis legalization marks a major shift in the state’s cannabis landscape. While the foundation for a regulated market is actively being built, progress hasn’t come without hurdles—entrepreneurs face delays, evolving rules, and lingering uncertainty around medical cannabis, delivery, and consumption.

Still, this period of transition presents a key opportunity. With a legal framework now in place, it’s the right time for entrepreneurs, patients, and consumers to start planning for participation in a free market.

Stay informed as the industry evolves — subscribe to the Cova newsletter for the latest updates on cannabis retail regulations, trends, and technology.