Hop Law

Minnesota Cannabis Legalization Questions

For those of you that do not know, Minnesota has passed a bill legalizing adult-use cannabis. It is going to take a while to implement but right now, those in the hemp-derived cannabinoid market are confused. I have heard a number of false rumors going around about how this bill impacts the current hemp industry market. For example, I have heard that any business is guilty of a 4th-degree felony because of possession limitations, that CBD oil has been banned, that hemp businesses will have to close and wait for the new licensing regime to go into effect, etc.

In an effort to try and clarify some of these issues for the hemp industry, this blog post addresses some of the revisions to Minn. Stat. § 151.72 and how the recently passed bill impacts the industry in the short-term.

First, however, it is important to note that 151.72 remains in effect. This is important because it allows the hemp industry to continue to operate while the state works on drafting rules, forms, etc. to implement the full cannabis legalization bill. This means that 151.72, Subd. 3 is still effective and this is the provision that allows products containing nonintoxicating cannabinoids (including edible cannabinoid products) to be sole for human or animal consumption (subject to compliance with the entirety of 151.72). The law establishes that so long as the product sold for human or animal consumption does not contain more than .3% of any THC nor more than 5mg of any THC, the product can be sold and is nonintoxicating

Additional clarity under the revised statute:

• The law expressly allows for products to be sold for on-site consumption, which the law was previously silent about. The silence in the prior version led to inconsistent interpretations from industry members and regulators. Now, however, the on-site consumption is expressly permitted under the following conditions: (1) the retailer holds on on-sale license for the sale of alcoholic beverages under Minn. Stat. § 340A; (2) the product is served in original packaging (but customers may remove such packaging and consume on-site); (3) such products cannot be sold to a customer who the retailer knows or reasonably should know that the customer is intoxicated; (4) products may not be mixed with alcoholic beverages; and (5) once the product is opened, it may not be removed from the licensed premises. This is going to make things much clearer for breweries that want to produce and sell at on-sale their own hemp-derived THC beverages.
• The new law allows delt-8 THC and delta-9 THC to be used in edible cannabinoid products where those cannabinoids are “extracted from hemp plants or hemp plant parts or is an artificially derived cannabinoid.”

Additional restrictions and limitations under revised statute:

• Testing requirements remain but the revised language requires testing of “each batch” of products. This is concerning for small producers who are going to face much steeper costs to get their small-batch products to market. This is something that we hoped to change but unfortunately, could not. While this is only speculation, it is possible that the large manufacturers pushed to keep this batch-testing requirement in to keep smaller players from being able to enter the market without severe and expensive testing requirements.
• Manufacturers must disclose all known pesticides, fertilizers, solvents, or other foreign materials applied to hemp during any production or processing stage, including any catalysts used to create artificially derived cannabinoids.
• Manufacturers now have to track “batch numbers” and include the batch number on the packaging. This will make it easier for regulators to trace any problems back to particular batches. While it creates an additional obligation for industry members, it may benefit some to the extent that product recalls can be more narrowly tailored to batch numbers.
• The new law adds a requirement that an edible cannabinoid product (other than beverages) that is intended for more than a single use or contains multiple servings must indicate by scoring or other indicators designating each serving size. Beverages, under the revised language, may only contain up to two servings (meaning no more than 10mg of hemp-derived THC per container). While some have been producing beverages with up to 50mg per container and scoring the label to show the amount that constitutes a single serving, this practice will no longer be permitted.
• While regulators deemed certain cannabinoids unlawful under the previous version of the statute, there were some that interpreted the law to allow for the sale of things like THC-P, THC-O, and HHC. The new form of law expressly prohibits those cannabinoids from being present in a product.
• All edible cannabinoid products (other than beverages) must be displayed behind a checkout counter where the public is not permitted or in a locked case. This seems excessive considering age verification is required for any purchase of an edible cannabinoid product but it is now required.
• The new law requires every person selling edible cannabinoid products to consumers to register with the commissioner by October 1, 2023. This means that any business that wants to continue to sell edible cannabinoid products must register by October 1, 2023. There is no fee for registration.

Unclear provisions:

• Oddly, the statute now also states that a product that contains nonintoxicating cannabinoids (other than an edible cannabinoid product) “may be sold for human or animal consumption only if it is intended for application externally to a part of the body . . . .” It’s not clear to me how something can be for human or animal consumption and yet is only intended for external application. I suppose I can think of an example or two (e.g., body lotion that is edible although not intended for consumption), but I’m not sure what they intended by adding this language.

Long story short, back when 151.72 was revised to allow for the sale of edible cannabinoid products, we told clients to be cautious because more regulation was certain to come. We are now seeing those regulations come to fruition and it will be important to take affirmative steps to comply and to monitor changes in the industry and interpretations of the new language.