Minnesota Cannabis License Types: Hemp Licenses

October 20, 2023

Hemp licenses are somewhat different from cannabis licenses in the sense that a lower-potency hemp edible manufacturer may also own a lower-potency hemp edible retailer license. Moreover, a person could also hold an industrial hemp cultivation license. The vertical integration for lower-potency hemp edible licensees that are not available to cannabis licensees (other than micro- and mezzobusinesses), may help hemp licensees create efficiencies where cannabis licensees cannot. 

1. Hemp Manufacturer Authorized Actions: A lower-potency hemp edible manufacturer license will permit the licensee to purchase hemp plant parts, hemp concentrate, and artificially derived cannabinoids from other cannabis or hemp-licensed businesses. It will also allow them to make their own hemp concentrate, artificially derived cannabinoids, and consumable lower-potency hemp edible products, which they can then sell to the customer (or to other cannabis and hemp licensed businesses).
2. Hemp Manufacturer General Operational Requirements: Hemp manufacturing must take place in a facility and on equipment that meets applicable health and safety requirements that the Office establishes (including with respect to cleaning and testing machinery between production of different products).
3. Hemp Concentrate: A hemp manufacturer that produces hemp concentrate is subject to many of the same requirements of a cannabis manufacturer that produces concentrate. For example, the lower-potency hemp edible manufacturer must inform the Office of its extraction and concentration methods, as well as identify volatile chemicals used in production.
4. Artificially Derived Cannabinoids: Where a hemp manufacturer creates artificially derived cannabinoids, the manufacturer must inform the Office of all methods of conversion, along with specific catalysts, as well as the type and molecular name of all cannabinoids or other compounds that the manufacturer will create.
5. Third-Party Certification: Each licensee must obtain a certification from an independent third-party “industrial hygienist or professional engineer” approving (1) electrical, gas, fire suppression, and exhaust systems; and (2) plans for safe storage and disposal of hazardous chemicals.
6. Disclosures: A hemp manufacturer that sells hemp concentrate or artificially derived cannabinoids must provide written disclosure to the buyer stating the methods of extraction and concentration or conversion used, along with any solvents, gases, or catalysts.
7. Ingredient List: A lower-potency hemp edible manufacturer must provide a statement to the buyer disclosing all of the product’s ingredients (including major food allergens declared by name – e.g., milk, eggs, tree nuts, peanuts, wheat, and soybeans).
8. Transportation: One area where hemp manufacturers may have an advantage over cannabis manufacturers is that hemp manufacturers can transport hemp themselves, so long as they comply with certain operational requirements, including: (1) the products are in a locked, safe, and secure storage compartment that is part of the vehicle or in a locked container with separate key or combination pad; (2) the products are not visible from outside the vehicle; (3) the manufacturer must have a shipping manifest, describing the contents of each package; (4) all departures, arrivals, and stops must be appropriately documented; and (5) only employees may enter the vehicle at any time it is transporting hemp products.

These requirements are just the tip of the iceberg. The Office will provide more detail regarding operational requirements in the rules and regulations that it ultimately issues.

Hemp retail licensees also have a variety of operational requirements they must meet.

1. Products: Hemp retail licensees may only sell products obtained from licensed Minnesota cannabis or hemp businesses. Because wholesalers can import hemp products, retailers may be able to obtain out-of-state products, but they will have to go through a wholesaler to get them. This is also how alcohol from outside Minnesota gets into Minnesota (only through an importer/wholesaler who can then sell to retailers).
2. Display and Storage: A lower-potency hemp edible retailer must ensure that all products (other than those intended to be consumed as beverages) are displayed behind a checkout counter or in a locked case. Inventory that will ultimately be given to the purchasing customer must be stored separately in a secured area (except for hemp beverages).
3. Transportation: Lower-potency hemp edible retailers may transport product on public roadways if the products are: (1) in final packaging; (2) in tamper-evident containers that are not visible from outside the vehicle; (3) the retailer has a shipping manifest; (4) all departures, arrivals, and stops must be documented; and (5) only employees may be in the vehicle when the vehicle contains hemp products.
4. Compliant Products: This provision caps the amount of Delta-9 THC at 25 milligrams per serving, and it also limits hemp-derived CBD and CBG to 25 milligrams per serving. Hemp products may also not contain any artificially derived cannabinoid other than Delta-9 THC. Much like our current hemp laws, if the lower-potency hemp edible contains more than a single serving, it must be packaged in a way that shows by scoring, wrapping, or some other indication, the amount that would qualify as an individual serving size. And hemp beverages will be capped at two servings per container. Finally, we have received a lot of questions about this portion of the statute – more specifically, Section 342.46, Subd. 6(c), which limits the size of a single package containing multiple servings to 50 milligrams of Delta-9 THC, 250 milligrams of CBD, and 250 milligrams of CBG. Hemp producers are concerned at the 250 milligram limit of CBD and CBG per package. Businesses outside of Minnesota, for example, currently sell CBD oil containing thousands or even tens of thousands of milligrams of CBD – it will be difficult or impossible for Minnesota producers to compete if they can only sell packages with 250 milligrams. We do not know if this will be amended but it is a concern for hemp producers.
5. On-Site Consumption: Another benefit to the lower-potency hemp edible retailer license is the ability to permit on-site consumption. This permission will be given to lower-potency hemp edibles that also hold on-sale liquor licenses (or beer and wine licenses) under Minn. Chapter 340A. Ultimately, local units of government issue retail licenses and they are not issued under Chapter 340A, but 340A does give the local units of government such authorization. Lower-potency hemp edibles sold for on-site consumption (other than beverages) must be served in the required sealed packaging, but may be removed by customers and consumed on site. And while beverages can be served outside of their packaging, the information required to be on a lower-potency hemp edible label must be displayed. There are a few gray areas when it comes to on-site consumption. For example, the law states: “Food and beverages not otherwise prohibited by [by law or ordinance] may be prepared and sold on site provided that the retailer complies with all relevant [laws, rules, and ordinances].” On the one hand, this suggests that lower-potency hemp edibles may be used in dishes or beverages served to customers, but it is also not clear how a retailer can do that and still comply with all the labeling and packaging requirements. We suspect that the Office will have some guidance about this when the rules and regulations are drafted.