Yesterday, in the grand American tradition of bungled, cannabis social equity programs, the Minnesota Office of Cannabis Management (OCM) canceled its social equity applicant lottery. In its announcement, OCM pivoted to an early 2025 lottery combining social equity and general applicants.
This development was no real surprise, following a court order delaying the preapproval lottery last month. It’s also no surprise in the very big picture: I’ve said since forever that cannabis lotteries are a bad proposition and states should knock it off. Here we are again, though. To all my fellow Minnesotans– welcome!
We have clients who were selected for the OCM preapproval lottery and others who were not. In all, two-thirds of applicants were denied. Grievances were roundly and rightly aired on social media and elsewhere. The loudest complaints came from applicants who had committed significant, time, energy and capital into a system designed to ameliorate harms caused by marijuana prohibition, but seemed to do the opposite.
Per OCM’s announcement, applicants in the “denial” camp will be allowed to withdraw their applications and request a refund of fees, provided they do so on or before January 10, 2025. These stymied applicants would still be allowed to apply in future licensing rounds. Alternatively, they can leave their applications in the pool for automatic entry in the “standard licensing cycle”, to use the OCM terminology.
As to the 648 applicants who were preapproved, but are undoubtedly disappointed as well, they will be ushered automatically into the next licensing round.
OCM also announced today that it will request more information in February of 2025 of applicants who were denied in the preapproval round, but wish to continue to the next licensing cycle. OCM explained that applicants will have the opportunity to correct a “broader range of errors in their applications” than was available in the license pre-approval process.
The next social equity applicant verification round will open on January 15, 2025 and close on January 30, 2025. Then, OCM will open a new license application window for all applicants from February 18, 2025 to March 14, 2025. Finally, the lottery for “capped” license types for social-equity applicants is planned for May or June of 2025, followed by a lottery for “capped” license types for all applicants.
This sounds like a decent roadmap given the circumstances, but the schedule could also change– especially with litigation pending. That makes life difficult for anyone trying to do business planning, including the 648 social equity applicants who had qualified and were expecting to participate in the lottery. These applicants have lost the “early mover advantage” many had counted on– even if no cannabis sales can happen until final rules are adopted; and the lottery concludes; and Minnesota’s cannabis market officially opens. Whenever that is.
