‘This is a big pivot:’ Future cannabis business owners share disappointment with new licensing process

[MUSIC PLAYING] NINA MOINI: Well, there's a new path forward for business owners looking to open a cannabis business. This morning, the Office of Cannabis Management announced a change to how businesses can get a license to operate in the new marijuana market. You may remember a lottery was created for social equity applicants. That allowed for people who live in high poverty areas, those harmed by the war on drugs, and military veterans to be the first to get their hands on a license.

But after the state rejected 2/3 of those applicants, a legal battle ensued. So now, to keep things on track to launch the market early next year, the state is now putting all applicants in one pool. That means those social equity applicants who were approved won't get the head start they were promised. Here's Charlene Briner, who's the interim director for the Office of Cannabis Management, at a press conference earlier this morning.

CHARLENE BRINER: I think I would want to share with the 648 applicants our disappointment. This was certainly not an outcome that we were hoping would materialize. And we know that today's path forward does not provide a perfect solution, but I'm hoping that they will take some comfort in seeing that there is a clear path forward.

NINA MOINI: Joining us now for their reaction is Jen Randolph Reise, who's the head of business and cannabis law at Northstar Law Group and who represents clients who say their social equity applications were denied. Thanks for being with us this afternoon, Jen.

JEN RANDOLPH REISE: Thanks so much for having me.

NINA MOINI: And we're also very happy to have Lynn Wachtler, a nurse practitioner who runs The North Bloom magazine, a cannabis lifestyle magazine, and operates a small business that sells medically-oriented, hemp-derived products. Thank you for being here as well, Lynn.

LYNN WACHTLER: Thank you so much for having me.

NINA MOINI: Well, of course, Jen, I want to go right to you here. We just had this announcement from the state a little bit ago. What is your reaction to this announcement?

JEN RANDOLPH REISE: It's mixed. I think what OCM is doing here is driving forward quickly to be able [AUDIO OUT] this market open, but somewhat at the expense of the social equity applicant. That's something that we've seen happen in a lot of states. But the Office of Cannabis Management botches the first round somehow or is challenged in court about it. And so it's pushing my clients who got into the lottery and my clients who did not get into the lottery, pushing their timeline back even further.

NINA MOINI: Lynn, there have been a lot of delays and changes for people who want to start a cannabis business. I'm curious, what has the process been like for you?

LYNN WACHTLER: Yeah, so that's a good question. We've got just a wide and big network of small businesses all kind of experiencing just various and numerous changes to navigate in this space in terms of label changes, dose changes, navigating local ordinances that change. And it just requires tremendous ability to navigate and just really collaborate with other small businesses, sharing resources.

So just trying to focus on the positive things that I've seen coming out of some of these delays, which really is just this tremendous collaboration and businesses coming together to work together to really stand up the industry because in the end, it really is all about providing consumers with safe products, supplant medicinal use, recreational use, and spiritual uses.

So it just has been really great to see folks come together from that side of things.

NINA MOINI: You're kind of all in the same boat, it feels like. And Lynn, just to reiterate, weren't a social equity applicant. You already have a business that's selling these hemp-derived products. Some people might not understand the difference. It's kind of hard to keep up with the different terms and the different amounts. And I'm curious, would this new license allow you to sell things that you can't already sell right now, or what are you waiting for?

LYNN WACHTLER: Yes, Minnesota has one of the-- is one of the states which has a regulated hemp-derived market. So we always explain to consumers what is the difference between hemp-derived. And so with a new license, we'd be able to sell higher doses, also some forms that are not available on the hemp-derived side.

Just that ability to have a wider range of products at our fingertips to just really bring consumers the full range of products they might need to address all of their concerns. We see people using for sleep, anxiety, PTSD. Just gives us more options.

NINA MOINI: Yeah. Jen, I'm curious, from your perspective, are you gaining more confidence in the way that the state is rolling out this entire process? Do you foresee more hiccups? What are you keeping an eye out for as things progress?

JEN RANDOLPH REISE: I'm disappointed this morning. I hoped that OCM could do right by more of these social equity plaintiffs, both the ones that got-- or social equity applicants, I'm sorry, both the ones who got into the lottery and the ones who were denied who were true social equity applicants.

At the same time, I think the state did hear some of the concerns that we had raised a couple of weeks ago over those denials.

They are giving people a path forward in the next round that will be really valuable to them, a chance to be able to understand why OCM denied their applications or to challenge that decision, and also, importantly, giving people an opportunity to get their application fees either refunded or rolled into the next round, which was something that people had felt really strongly was unfair, especially when these denials felt so unfair, to have OCM just keep their $500 application fee for a micro or $5,000 for a mezzo license.

So I'm glad to see OCM listening to the community on that. And I'm also glad to see them setting forth a clear process forward. So this is a big pivot this morning for me and for a lot of the people that I serve. But we're ready for it, and I'm excited for Minnesota to see these businesses stand up and flourish because we've got some incredible Minnesota entrepreneurs that are excited to open cannabis businesses here.

NINA MOINI: And Lynn, when these laws were first passed at the state level, it sounded like the hope was that a bunch more dispensaries would be ready and open and up and running in 2025. But now, with these delays, that also delays the supply, correct, the cultivation of the cannabis? What concerns you the most about these delays as it relates to your business?

LYNN WACHTLER: Well, I think just any type of delay like this, it just, looking at capital, just the folks I talked to, they're in an industry that's not built yet. And so they're wondering, how are they going to feed their families? Should they go look for a job outside of the industry?

With the timeline being pushed back, it just raises a lot of questions for folks, my business included, how to move forward. It sort of feels like treading water, in a way. But again, I come back to collaboration. These small businesses, we get together and have ideas in terms of just how can we move forward, different ideas for generating revenue, thinking outside the box. It's been really neat to see.

And especially if you're a longtime entrepreneur, entrepreneurs are made for this kind of thing. Their ability to pivot on a dime and navigate through tricky waters is just incredible to see. So it requires being fearless. And these businesses really are.

And their stories, I've seen from on the magazine side, social equity and our veterans, just incredible fortitude and just the willingness to drive forward and just proceed. Put an obstacle in front of them, and they're going to navigate it bravely. So it's been incredible.

NINA MOINI: Certainly risk-takers, brave folks jumping into this kind of new market. And it's great that you all are working together and trying to think outside the box. But before I let you go, Lynn, I am curious, what would be really helpful, at this point, from the position of the state in helping you and others with your business? Is it just let's move this paperwork along faster? Is there something that the state could do now to make this process less painful for folks?

LYNN WACHTLER: Well, I think having-- we just received this news. And so I think we just need to take a minute and process what they just came out with and then just really counting on our legal teams to help us understand what it means for our businesses, what might be the next step forward.

So I think the best thing would be for us all to just take a breath, digest this news, and then begin to develop strategies and plans. And we know, in cannabis, we're going to have to pivot. We're going to have to be adaptable and flexible. So right now, I think it's just let's take a breath and a pause and digest. And let's really work together.

NINA MOINI: Sure. Jen and Lynn, I really appreciate you both jumping on with me today, and we hope you'll keep us posted as this process continues.

LYNN WACHTLER: Thank you. Love to talk to you about the next chapter in the future.

NINA MOINI: Thank you so much. That's Jen Randolph Reise, head of business and cannabis law at North Star Law Group, and Lynn Wachtler, who runs The North Bloom magazine, a cannabis lifestyle magazine, and operates a small business that sells medically-oriented, hemp-derived products.