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

MINNESOTA CANNABIS LICENSE TYPES: CANNABIS WHOLESALER LICENSE AND OPERATIONS

Minnesota’s cannabis wholesaler license gives licensed wholesalers a number of rights when it comes to purchasing and selling cannabis at wholesale, but it is not going to be the Wild West – far from it, in fact.

1. Authorized Purchases: A cannabis wholesaler license allows the licensee to purchase immature cannabis plants, seedlings, cannabis flower, cannabis products, lower-potency hemp edibles, and hemp-derived consumer products from various sources, including microbusinesses, mezzobusinesses, cultivators, manufacturers, and other cannabis microbusinesses. Licensees will also have the ability to purchase hemp concentrate from an industrial hemp processor licensed under chapter 18K.
2. Authorized Sales: Licensed cannabis wholesalers are permitted to sell immature cannabis plants, seedlings, cannabis flower, cannabis products, lower-potency hemp edibles, and hemp-derived consumer products to cannabis microbusinesses, mezzobusinesses, manufacturers, and retailers. They can also sell only lower-potency hemp edibles to lower-potency hemp edible retailers. 
3. Importation: Interestingly, the law expressly authorizes a licensed wholesaler to import hemp-derived products and lower-potency hemp edibles from outside of Minnesota. Notice that it expressly omits the ability to import any products other than hemp-derived products – this is because to comply with federal law, Minnesota’s legislature knew that they could not allow the importation of cannabis (or ‘marijuana’ under federal law) because it is federally illegal and importation would constitute interstate commerce over which the federal government has jurisdiction. 
4. Additional Information Required: Applicants for a cannabis wholesaler license must submit details about, among other things, their facilities, ventilation systems, and policies to prevent the sale of products to unlicensed business.
5. Multiple Licenses: A wholesaler licensee may also hold a cannabis transporter license, a cannabis delivery service, and a cannabis event organizer license. Cannabis delivery is unlikely to be high on the list of wholesalers’ priorities because they’re likely to focus on business-to-business volume rather than direct-to-consumer delivery.
6. Limits on Wholesaler Licenses: The Office of Cannabis Management may establish rules to limit the number of cannabis wholesaler licenses a person or business can hold – whether or not they will prohibit individuals from owning an interest in multiple retail licenses has yet to be decided. And while the Office has some degree of discretion in determining how many wholesaler licenses a person may have an interest in, it looks like if they limit the number of wholesaler licenses a business can hold, then such restriction will also apply to directors, managers, general partners, and cooperative members. It seems like the implication is that the Office may allow passive investors in multiple wholesaler licenses even if they limit the number of wholesaler licenses a business may hold to one license.

The above only covers licensing issues. When it comes to operational matters, wholesalers are subject to a variety of restrictions and requirements.

1. Separation of Products: In order to avoid cross-contamination, wholesalers need to keep cannabis products (including plants and flower) separate from all other products (including lower-potency hemp edibles). In other words, they cannot just throw all their inventory into the back of a track, but must have a special portion designated for cannabis flower, plants, and products.
2. Records and Labels: The cannabis wholesaler licensee must ensure that all labels remain affixed to the products to which they are attached.
3. Importation: As noted above, wholesaler licensees will be able to import hemp-derived products. But there is a specific endorsement that they must obtain before importing any hemp-derived products. Moreover, the out-of-state supplier whose products are being distributed by a wholesaler licensee, either must be licensed in another jurisdiction and subject to regulations that are aimed at protecting consumer health and safety, or the wholesaler must establish to the Office’s satisfaction that they supplier engages in practices similar to the practices required for hemp-derived product suppliers in Minnesota. How the Office will go about determining this is not clear but will likely be part of the rules and regulations.

These are not the only operational requirements that wholesalers must meet, but it is a starting point. And ultimately, the Office’s rules and regulations are going to go into much more detail about operational requirements for wholesaler licensees.