The Office of Cannabis Management will open its next adult-use licensing window Feb. 18 through March 14 and is asking the Legislature for narrow budget adjustments and rule changes intended to accelerate market launch, Interim Director Eric Taubel told the Minnesota House Commerce and Policy and Finance Committee on [date not specified].

The licensing window, a request for a small operating adjustment, carry-forward authority for a community-reinvestment grant, a variance to allow non‑ISO‑certified testing labs to operate while pursuing ISO certification, and a technical clarification to social‑equity license criteria are the agency’s primary asks this session.

Why it matters: The state is moving from rulemaking into the licensing phase for an adult‑use market. Committee members and industry representatives said that how licensing, testing capacity and social‑equity rules are implemented will determine whether small businesses, social‑equity applicants and medical patients gain timely access or face additional delays.

Taubel (interim director) told the committee the agency has grown rapidly since its August 2023 creation, from about nine full‑time employees last winter to roughly 90 now, with about 20 additional temporary staff to handle licensing volumes. He said the office has also inherited the medical and hemp‑derived cannabinoid programs and consolidated those regulatory duties.

“We will be opening that licensing window February 18. It'll run through March 14,” Taubel said.

Licensing and preapproval litigation
Taubel described the office’s decision to pause the earlier preapproval lottery and instead run a general licensing round after multiple lawsuits; he said the office chose the pivot to avoid prolonging uncertainty for applicants. He told members the preapproval system offered a time advantage to some applicants but was vulnerable to legal challenges that could have stalled other parts of the market. Taubel said the office has offered previously preapproved applicants entry into the full licensing round “without additional fee” and will let applicants who were rejected in the preapproval round correct identified deficiencies.

Committee members, including Representative Nolan West, pressed Taubel on the litigation risks and whether the office’s approach reduced or shifted those risks. Representative West said of the interim director: “You have a hard, hard job.” Taubel replied he would serve in whatever capacity asked and reiterated the office’s goal to launch the market while preserving fairness.

Testing capacity and proposed variance
Taubel told members that an acute bottleneck is laboratory testing capacity. He said independent labs that plan to test cannabis products must obtain International Organization for Standardization (ISO) accreditation, a process that can take 18 to 24 months including a six‑month on‑ramp. To avoid early shortages on the retail side, the office proposed a variance allowing labs under contract with an ISO certifier to operate while working toward full ISO accreditation, combined with enhanced oversight and secondary review of testing results.

Social equity, stays of adjudication and juvenile adjudications
The office is proposing a technical change to social‑equity eligibility criteria after hearing feedback that stays of adjudication and some juvenile adjudications left would‑be applicants unfairly excluded. Taubel described stays of adjudication (court stays where defendants successfully complete probation and later have charges dismissed) as one example and said the proposed change would allow consideration of those records in social‑equity determinations.

Grants and safeguards
Taubel described two grant programs under OCM: a community‑reinvestment grant (small awards generally $50,000–$200,000) to support communities harmed by cannabis prohibition, and a revolving “Can Grow” technical‑assistance fund aimed at agricultural entrants. He said the office is working with the state Office of Grants Management and the Legislative Auditor’s reports to build internal controls and that unspent general‑fund grant dollars at the end of the biennium will return to the general fund unless carry‑forward authority is provided.

Medical program, research and enforcement
Taubel said the medical program has grown to more than 51,000 registered patients and nearly 2,500 registered health‑care providers. The office recently released a chronic‑pain research report showing more than one‑third of patients reported decreased pain and roughly 25% reduced or stopped non‑cannabis pain medications after entering the program.

On enforcement, Taubel said the office inherited the hemp‑derived cannabinoid enforcement program and has conducted more than 3,000 inspections. He said the compliance rate at inspected sites rose from roughly 35% in early 2024 to about 75% in recent months, with a short period in December 2024 where compliance reached about 87%, attributing the improvement to an education‑first enforcement approach.

Rulemaking and potency limits
Taubel said the office posted its notice of intent to adopt rules and the public comment period for the proposed rules was scheduled to close imminently. He said the rules proposed a 70% potency cap for certain adult‑use concentrates and a 50% cap by volume on infused products; medical products were treated differently in the draft rules. He framed the potency limits as a public‑health compromise aimed at addressing youth exposure and vaping concerns.

Tribal compacts and supply
Taubel said nation‑to‑nation compacts with tribal nations are being negotiated by the governor’s office and the compacting process is ongoing; he declined to disclose details of those negotiations while they remain private. Several members noted tribal participants are building capacity and could be significant suppliers.

Public testimony and stakeholder concerns
Veil Fatahee, testifying for a coalition of applicants and industry advocates, criticized the agency’s cancellation of the preapproval lottery and alleged the change undermined the legislature’s intent to provide an early advantage to operationally ready social‑equity businesses. “The preapproval lottery was explicitly written into law by the legislature to provide Minnesota's most operationally ready social equity owned businesses with the opportunity to have an early mover advantage,” Fatahee told the committee. He asked lawmakers to exercise oversight of implementation and engagement.

What the agency will ask lawmakers
Taubel said the office will submit narrowly tailored policy proposals this session focused on timing and limited fixes rather than broad redesign. He told the committee the agency’s primary budget asks were: a small operating adjustment for rising costs and IT, carry‑forward for community‑reinvestment grant funds that may need more time to execute, authority for the testing‑lab variance, and a clarification to social‑equity eligibility language. He said the agency had “jackets on our policy proposals” but did not provide a public schedule for those bills during the hearing.

Ending note
Committee members asked for follow‑up and suggested staff‑to‑staff conversations to identify statutory fixes. Taubel said the office is focused on launching the market, then iterating on rules and processes based on experience.