Minnesota Cannabis License Types: Cannabis Microbusiness Licensing and Operations

October 20, 2023

One of the more unique approaches to licensing in Minnesota is the focus on helping small local businesses. The microbusiness license provides small businesses with flexibility not available to other licensees.

1. Authorized Actions:  A cannabis microbusiness license allows the licensee to grow, produce concentrate, manufacture artificially derived cannabinoids, and producing other cannabis or hemp products. A microbusiness can also purchase plants, seeds, and flower, and sell cannabis and hemp products to other licensed businesses and directly to customers.
2. On-Site Consumption: The microbusiness license is unique in that it permits the licensee to have an on-site consumption endorsement. On-site consumption is otherwise severely limited in the statute outside of the lower-potency hemp edible retailer license. So microbusinesses are the only licensees permitted to allow on-site consumption of cannabis (in addition to hemp) products. In order to qualify for an on-site consumption endorsement, however, a microbusiness licensee must meet a number of requirements: (1) consumption must be limited to a distinct area of the facility with a distinct entrance; (2) products must be served in the statutorily required packaging (but customers may remove the packaging themselves to consume on-site); (3) consumption and display must not be visible from outside of the licensed premises; (4) a licensee with an on-site consumption endorsement may not sell alcohol or tobacco; (5) a licensee may not permit cannabis or hemp to be consumed through smoking or vaping “on the premises” (but whether this applies to outdoor space is potentially an open question); and (6) they may not distribute samples.
3. Size Limitations: A microbusiness may cultivate up to 5,000 square feet of indoor plant canopy (or one-half acre if growing outdoors). With respect to non-grow operations, the Office is required to establish a limit on the manufacturing of cannabis and hemp products, which must be equal to the amount of flower that can be harvested from a facility with a plant canopy of 5,000 square feet in year. This is going to be difficult to calculate in light of the fact that 5,000 square feet of plant canopy could result in various amounts of flower, depending on plant yield.
4. Retail: In our opinion, the most important restriction on microbusinesses is that they can only operate one retail location, severely limiting their ability to grow.
5. Exceptions Not Applicable to Other Licensees: One obligation imposed on cannabis licensees generally that microbusinesses do not have to abide by is the requirement of an attestation signed by a bona fide labor organization stating the applicant has entered into a labor peace agreement.
6. Multiple Licenses: The only other license that a microbusiness may hold is an event organizer license. Of course, with a microbusiness license the licensee can engage in cultivation, extraction and concentration, production, and sale with the proper endorsements, so would not necessarily need any other license type.

We expect the microbusiness license to be a popular license-type because of the vertical integration it allows. Growth will be limited, but there is potentially a lot of room to make a profitable and viable business with a microbusiness license. Applying for this license, however, will require a lot of information given the various tiers in which it may operate.