Almost 10 years after legalizing medical marijuana, Minnesota seems poised to fully legalize recreational marijuana in the very near future. While the state’s future in cannabis is still full of uncertainty, it’s also full of unprecedented opportunities.
A bill to legalize marijuana and expunge low-level cannabis-related convictions has been in the works for the past several years. While it failed to pass the Senate in 2021, it’s now being reworked in hopes of being passed in 2023. However, Minnesota did pass new legislation legalizing hemp-derived THC edible products.
With so many recent and upcoming changes, Minnesota’s cannabis market is a uniquely challenging one to navigate. But with the right expert advice, patience, and commitment to quality, it’s also an exciting market to jump into.
Here’s what you need to know about the developments beyond medical marijuana Minnesota is undergoing and how to prepare for the future of this tenuous market.
What Is Hemp-Derived THC?
Hemp-derived THC, as the name suggests, comes from hemp rather than marijuana. The two types of THC are similar in molecular structure and psychoactive effect, but hemp, unlike marijuana, meets the federal requirement of containing less than 0.3% THC — meaning it’s legal to sell under federal regulation and in most states.
In addition to medical marijuana, Minnesota now allows for the sale of hemp-derived THC edible products of up to 5 mg per serving. This includes beverages, which are currently enjoying a surge in popularity.
Still, Minnesota’s law regarding hemp-derived THC edible products is mired in controversy, and it’s left to individual cities to set their own regulations or bans on THC edibles.
Beyond Medical Marijuana: Minnesota Demand Grows
While still only having legalized medical marijuana, Minnesota is setting the state up for a number of changes, both at the business level and potentially for future federal policy.
Impacts on Cannabusinesses
With the new law, Minnesota-grown hemp can now be used to manufacture hemp-derived edibles. This is good news for hemp growers, who saw the price of hemp-derived CBD fall drastically prior to this bill.
However, Betsy Morem and Mark Waller, CPAs and co-founders of Morem & Waller, note that it takes significantly more manufacturing power to produce hemp-derived THC than it does to grow cannabis products.
As a result, Morem explains, “Some people have been having to look outside of Minnesota to get their products manufactured, which raises an issue in itself.” While the demand for these products is increasing, without the proper infrastructure, there’s a long wait time to get THC products manufactured and on the shelves.
Impacts on Federal Policy
The big problem with people looking outside the state to source raw materials is, of course, that transporting these materials across state lines is illegal under federal law.
“I see the hemp bill that’s passed and what’s happening in the marketplace as an example of creatively finding ways to continue to raise the issue of legal cannabis in general,” Waller says. “From the public-opinion side of things, it’s really increased the level of interest in the state and pushed the conversation forward quite a bit.”
Whether the increasing demand will pressure the federal government to change their policy and fully legalize cannabis remains to be seen, but it’s not impossible.
Unique Opportunities & Risks in Minnesota
As Waller points out, the hemp-derived bill doesn’t have much precedent, so there’s a lot of uncertainty surrounding it. For example, since hemp isn’t classified as a Schedule 1 drug, the standard tax guidelines may not apply to hemp-derived THC, at least for now.
With so many products and regulations being introduced for the first time, a lot remains to be settled in terms of legislation. To avoid potential issues, Morem recommends tracking hemp-derived THC sales separately, even once it becomes legal to sell cannabis-derived THC products.
Still, as the state shifts toward full legalization instead of only allowing medical marijuana, Minnesota offers a unique opportunity for new cannabusiness owners — despite the risks that come with all this uncertainty.
Prioritize Quality
The key to getting a leg up in the emerging Minnesota cannabis market is to be flexible and take it slow. Since legislation is still in flux, be prepared to adapt when new compliance guidelines are rolled out. If at all possible, hire people who really understand the industry and can help you anticipate such changes.
Now is the time to start making connections in the community and determine what your business can bring to the market, whether it be a unique idea or product or just something that you do exceptionally well.
“There just isn’t a lot of quality assurance with the hemp-derived THC products that are out there right now,” Morem says. “The better and safer products that we can have out there, the more people will accept cannabis in the state.”
Whether it be for recreational or medical marijuana, Minnesota — and any market, really — needs cannabusiness owners who genuinely care about quality and safety.
Be a Voice for Positive Change
Since legalizing medical marijuana, Minnesota has seen — and continues to see — uncertainty as well as growth. As you step into this new territory, keep in mind that regulations and attitudes alike are subject to change — and that can be a very good thing.
“There’s plenty of room for everybody,” Morem says, “but your heart and intentions have to be in the right place for it to be a good industry for you.” You have the opportunity to influence your community for the better and help move the cannabis industry forward.
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