Minnesota’s First Recreational Cannabis Dispensaries are Navigating Nuances in Licensure, Real Estate and Land Use

The state of Minnesota has completed its cannabis licensing lottery and issued preliminary licenses to a pool of selected entrepreneurs. Those licensees now have 18 months to get their businesses up and running, or they face the prospect of losing their licenses. That means it’s “go time” for cities, counties and cannabis entrepreneurs to work together to make these businesses come to life. In recent talks with attendees of the Midwest CannaCon conference, I found entrepreneurs who were focused and ready to execute their plans. Those conversations, combined with issues we’ve been navigating on behalf of clients, have revealed a few common themes. Here are factors that entrepreneurs should keep in mind to help their next steps run smoothly: Understanding Nuances of Zoning Avoid the mistake of homing in on a location for a retail store and starting down the road of lease negotiations before confirming with the city or county that your location is zoned correctly and outside of any mandated buffer zones. For example, some entrepreneurs have made the mistake of assuming that an otherwise properly zoned space is clear to proceed with, without realizing that a planned unit development, proximity to schools or other “sensitive” uses, or some other zoning restriction would disqualify that space. This situation can sometimes be navigated by requesting a special zoning amendment from the city, but costs for these amendments can be in the thousands. Don’t be afraid to contact city or county officials to ask questions, and be specific with your plans. For example, “I have a microbusiness license and I want to open a retail store. Is this address zoned correctly?” Additionally, know that many city maps that illustrate buffer zones around schools, churches, etc. are showing estimations, and you will need to confirm distances precisely to determine if a space is fully outside of a buffer zone. We have worked with clients who had a prospective space disqualified over a matter of a few feet.  Don’t Wait to Engage with Inspectors It’s also a good idea for entrepreneurs to engage early with the fire inspector or building inspector to understand their requirements. Ultimately you may need to hire an architect or engineer to create the final drawings for the inspector, but in the early stages even a rough drawing can help you start the conversations and avoid wasted time. If you do hire an architect or engineer, it’s a good idea to find one who has worked in that city previously and understands how their inspections operate. As any tradesperson will tell you, standards can vary widely, even between neighboring towns. Find Out Your Place in Line Another thing to ascertain from the city or county early on is whether the area has a limit on licenses, and if so, how many applications have already been submitted. If your application would be far down in the queue for a limited number of licenses, your time will be better spent looking elsewhere. Be Transparent with Landlords Cannabis businesses are not just new for cities; they’re new for landlords too. Tactics landlords have used in the past with other tenants may not work in this new situation. Some landlords may try to insist on an “open by” date for your business, but the number of variables in the state’s current cannabis landscape makes it very difficult to be specific about opening dates. Be wary of promising a timeline. If you’re seeking a growing space, the power supply is another major issue to determine with the landlord. You may find a large space with cheap rent, but if the power needs to be upgraded, determine who will be taking on that cost before signing a lease. The Clock is Ticking As mentioned, those who have received their license approval have 18 months to complete the rest of the steps in the state’s process and open their doors. With the clock ticking, it’s important for entrepreneurs to work efficiently and prevent lost time. Our team at Larkin Hoffman is ready to help businesses navigate this new landscape, and can help advise on licensure, site selection and more.