The Minnesota Office of Cannabis Management (OCM) announced the cancellation of its planned social equity cannabis license lottery, originally scheduled for November 26, 2024. The decision comes in response to ongoing litigation and a Ramsey County court order that paused the lottery, creating uncertainty for nearly 650 qualified applicants.
From Social Equity Focus to Combined Licensing Cycle
OCM will transition to a unified licensing process in 2025, incorporating both social equity and general applicants. While no exact date has been set, updated timelines suggest the lottery will occur in May or June 2025, months later than previous estimates.
The original preapproval process aimed to give social equity applicants an “early mover advantage,” allowing them to secure licenses and prepare operations before the official market launch. However, the cancellation of this process eliminates that benefit.
“The delays related to the court’s order to pause the lottery eliminate any early-mover advantages,” the OCM stated. Interim director Charlene Briner emphasized that the new plan ensures the cannabis market launch remains on track while preserving key social equity principles.
Legal Challenges and Applicant Frustrations
The preapproval lottery faced legal challenges from multiple angles. Eight appeals were filed by denied applicants seeking inclusion in the lottery, while a ninth came from successful applicants arguing that the lottery should proceed to preserve their advantage.
At the heart of the controversy are claims of improper applicant selection and concerns about so-called “straw applicants,” who allegedly acted as fronts for other parties. The court’s stay of the lottery, while not addressing the underlying legal issues, effectively stalled the licensing process.
“The preapproval lottery was designed to ensure the most operationally ready social equity applicants could overcome systemic barriers and lead the market’s development,” said Leili Fatehi, spokesperson for plaintiffs supporting the preapproval process.
She argued that halting the lottery harms qualified applicants, disrupts market stability, and delays efforts to combat illicit markets.
Revised Licensing Process for 2025
OCM plans to hold two lotteries in 2025:
- Social Equity Lottery: Awards licenses reserved for military veterans, individuals impacted by cannabis prohibition, and residents of heavily policed neighborhoods.
- General Lottery: Includes unsuccessful social equity applicants and general license seekers.
Both lotteries will take place within days of each other, and applications from the canceled preapproval process will automatically roll over. Applicants who received denial notices will have the option to participate in the new cycle or request a refund of their application fees.
Microbusiness licenses, which allow holders to grow and sell cannabis, will remain uncapped, offering opportunities for smaller operations.
Impacts on Minnesota’s Cannabis Market Launch
The delays affect Minnesota’s timeline for launching its cannabis market, which remains one of the slowest in the U.S. While legalization passed in May 2023, recreational sales are now expected to begin in mid-2025.
By comparison, states like Ohio, which legalized cannabis later in November 2023, have already developed a $2 billion market.
Despite the setbacks, OCM remains committed to its goal of fostering a local, small-business cannabis economy while prioritizing social equity. Briner expressed optimism about the revised approach, stating, “Our path forward ensures we remain on track to launch Minnesota’s new cannabis market and also preserves some of the social equity benefits that were at the heart of the preapproval process.”
