Garner, Ginsburg & Johnsen, P.A. Law Offices

MINNESOTA CANNABIS LICENSE TYPES: CANNABIS TRANSPORTER LICENSING AND OPERATIONS

A cannabis transporter license is a somewhat unique type of license. In the alcohol industry, there are essentially retailers, wholesalers, and producers/suppliers (and while this is an oversimplification of alcohol regulations, it covers the basic idea underlying alcohol regulation). So while we have discussed retail licensing and wholesale licensing that generally track the underlying approach to alcohol regulation, we now have this new “transporter license” (which, as will be discussed in a subsequent post, is not the same as a delivery license). 

1. Authorized Actions: A cannabis transporter license allows the license holder to transport cannabis and hemp products. These products can be transported from cannabis
   microbusinesses, cannabis mezzobusinesses, cannabis cultivators, cannabis manufacturers,
   cannabis wholesalers, lower-potency hemp edible manufacturers, medical cannabis retailers,
   medical cannabis processors, and industrial hemp growers to cannabis microbusinesses,
   cannabis mezzobusinesses, cannabis manufacturers, cannabis testing facilities, cannabis
   wholesalers, cannabis retailers, lower-potency hemp edible retailers, medical cannabis
   processors, medical cannabis retailers, and medical cannabis combination businesses. In other words, the transporter is something of a middleman between the supplier and wholesaler tier and between the wholesaler and the retailer. Ultimately, however, it is likely that wholesaler licensees will simply obtain a wholesaler license and a transporter license to avoid this extra link in the chain of custody.
2. Additional Information Required: Applicants for a cannabis transporter license must provide additional information (beyond the standard license application information), including: (1) the number and type of equipment the business will use to transport immature cannabis plants and seedlings, cannabis flower, cannabis products, artificially derived cannabinoids, hemp plant parts, hemp concentrate, lower-potency hemp edibles, and hemp-derived consumer products; (2) a loading, transporting, and unloading plan; (3) a description of the applicant’s experience in the distribution or security business; and (4) evidence that the business will comply with the applicable operation requirements.
3. Surety Bonds: Cannabis transporter licensees will also need surety bonds of various types.
4. Multiple Licenses; Limits: A person, cooperative, or business holding a cannabis transporter license may also hold other licenses, such as a cannabis wholesaler license, a cannabis delivery service license, and a cannabis event organizer license. However, there are restrictions on owning or operating other types of cannabis businesses. As with the other licenses, however, it is not clear how many transporter licenses a business can hold, and whether investors can own an interest in a number of transporter licenses that exceed the number of transporter licenses that a business can hold.

It seems like a transporter license is basically going to go hand-in-hand with a wholesaler license, although there may be independent transporter licensees that offer services to wholesaler and other licensed businesses. 

With respect to operations, transporter licensees are also subject to a number of requirements.

Transportation Manifest

Like a flight that must include a manifest of passengers, so must a transporter maintain a manifest of cannabis and hemp products that it is transporting. This shipping manifest must be with the transporter at all times and the transporter entity must maintain a copy of that manifest. This is likely to prevent ‘spillage’ or products ‘falling off the back of the truck.’ Minnesota is serious about keeping this market subject to state regulation and by requiring these manifests, the state is trying to ensure that no products end up outside of the regulated market. 

1. Chain of Custody Report: In addition to the manifest, a transporter must log the chain of custody so that every employee who touches the product and every vehicle that contains the product is accounted for. 
2. Storage Compartment: One of the items we have heard some concerns about is the need for transporters to have a “locked, safe, and secure storage compartment that is part of the motor vehicle or in a locked storage container that has a separate key or combination pad.” The question is whether a locked and secure truck is a sufficient “compartment” that is part of the motor vehicle or if there must be a compartment inside the vehicle with its own separate lock. We do not yet have an answer to this question but it is likely that the Office will issue rules and regulations that will bring some clarity to this issue.
3. Identifying Logos or Business Names Prohibited: In order to cut down on the possibility of theft, the transporter’s vehicles cannot be marked in any way that would indicate the vehicle is transporting cannabis or hemp products. A transporter may be able to put its own name on the vehicle but only if it does not reference the fact that it is a transporter of cannabis and hemp.
4. Randomized Deliveries: Another requirement intended to prevent theft is that transporter licensees used randomized delivery routes.
5. Multiple Employees: Each transporter vehicle transporting cannabis or hemp products must be staffed with at least two employees, and at least one employee must remain with the vehicle at all times. 
6. Random Inspection: Any time a vehicle that is a transporter licensee’s vehicle is on the road (whether on route to a cannabis business or not) or is at a cannabis business, it is “subject to inspection.” It is not clear whether this inspection right is given to the police or if the inspection right is limited to the Office’s inspectors. This is likely an issue that will be addressed in the rules and regulations yet to be drafted.

Transporting cannabis is not going to be an easy operation. A lot of planning will have to go into the business from an operational perspective, which means the financial plans must account for all of the above requirements (and more).