Two-thirds of Minnesota social equity marijuana license applicants rejected – InForum

ST. PAUL — The state’s marijuana regulators have begun giving bad news to nearly two-thirds of 1,817 social equity license applicants that they won’t be able to participate in the first licensing lottery expected to be held the week of Dec. 2.

Conversely, the one-third of those who will enter the lottery (about 640 applicants) will officially receive the news within two weeks. This means their chances of getting one of the 280 so-called pre-approval licenses are much better. But wait for the Office of Marijuana Management letter, because the chances of something being discovered that will destroy them are still very small.

The agency said those who received bad news failed to complete the complex application process or took improper actions such as submitting multiple applications (called flooding) or concealed real investors or purported real parties of interest.

“While frustration is understandable, a key indicator of preparedness is your ability to submit a successful application,” said Charlene Briner, interim director of the Office of Marijuana Management. The state “provided the answers to the test in advance,” detailing what was required in law revisions passed in May and how-to guides from OCM staff.

“We always knew this was a highly complex, regulated field and had concerns about preparedness for people entering the lottery to be qualified,” he said.

H LYNCH

Most rejected applicants are “area flooders or predatory applicants or individuals who do not meet the letter of the law regarding property requirements and expectations.”

“We want to make sure that the right universe of fully qualified and vetted applicants is in the mix so they can receive positive notice from us,” Briner said. These good news letters will be sent within two weeks at most, he said, and the first lottery will take place within a day or two.

Briner called Monday “a turning point that gets us closer to the lottery.”

One of the lawyers for some of the applicants said that the rejection notice did not provide detailed information about the reasons.

“This situation is frustrating and concerning, especially since I have been able to review the material I submitted and believe it is fully consistent with OCM’s stated requirements, but these denials are offered as conclusive,” attorney Jen Reise wrote Monday. “In my opinion, this is a significant misstep by OCM and I encourage them to allow immediate repudiation and reversal of mistaken denials.”

OCM staff noted that state law does not allow appeals of decisions to deny access to the pre-approval lottery, but does allow rejected applicants to request a review of their records as long as it is done within seven days.

“An applicant whose application is rejected or not selected by lot may not appeal or request a hearing,” the law states.

At least three license types will not trigger the lottery, as there are fewer qualified applicants than the number of social equity licenses provided by the Legislature. These are: marijuana wholesaler, marijuana carrier and marijuana testing facility. Most applicants are for growers, manufacturers and licenses that allow the sale of products to customers. Once approval letters are sent, the agency will submit a new list of active applicants by license type, Briner said.

Pre-approval licenses for social equity licensees for applicants from groups or neighborhoods that are disproportionately harmed when marijuana use and sale are criminalized are intended to help these applicants get a head start on their business preparations before the anticipated opening of the legal market in the spring. . But for applicants who win licenses for cannabis cultivation, micro-businesses and mezzo-businesses, this also means they can get seeds into the ground as soon as they receive the license. The law change in May aims to make cannabis supplies available earlier, so there will be no open doors to empty stores during the spring distribution.

Briner divided those who will receive rejection notices into four groups:

• Those who fail to meet qualification standards established by state law
• Those who are unable to provide the necessary documentation to verify that they meet the qualifications, despite OCM’s efforts to provide them with an additional opportunity
• Those with “inconsistencies” between ownership requirements and beneficial party provisions.
• Those who appear to be committing fraud and what he calls “zone floods”

“We have seen people trying to cheat the system to improve their chances in the lottery,” Briner said, saying some violators were identified through routine OCM inspections, while others were identified by whistleblowers.

“We saw several hundred applications that were nearly identical, including business plans and projected profits for the first year,” he said. “There was more than one person with the same address. They were using an unregistered and inactive domain name. Some of them have a phone number belonging to the same person.”

Briner joked that they were so arrogant that he asked, “Are you kidding me?” he thought.

OCM’s other discovery of bad actors (all out-of-state applicants) came via a tip from a tipster who was approached to recruit people to apply and then get paid if they won the lottery. State laws do not allow the purchase of pre-approval licenses and contain provisions that would slow or block license transfers.

“I think this person is worried about getting involved in something,” he said. This came after the person read an earlier MinnPost article detailing how OCM will more intensively vet the actual interested party both before and after the lottery, but before licenses are issued to winners. “The individual became concerned and alarmed when he realized this was a clear violation of Minnesota law.”

Briner said the agency is considering its options, which could include blocking those fraudulent applicants from receiving licenses in the future when the market is opened to all applicants. And depending on the scope of the violations, OCM said it wants to see “whether there are enforcement actions that could be taken by agencies other than OCM.”

The May revisions to the 2023 recreational marijuana act gave OCM a to-do list with deadlines for the social equity lottery to hopefully be achieved by the end of 2024. It created a summer application period for social equity status followed by an application window. It closed on August 12.

Since then, OCM has been selecting 1,817 initially qualified social equity applicants to identify and ensure they are not applying more than once to see if they have valid business plans and sufficient funding, at least 65% of which comes from social equity eligible individuals. The investors mentioned are real investors. The second is called the “real interest party”.

The law says people can only have one license. This means that one person cannot be more than one shop owner, store owner and grower. This also meant preventing corporate interests or deep-pocketed investors from controlling much of the new market.

This story first appeared on MinnesotaReformer.com.