The key “new” element driving 2026 House work on hemp and cannabis is that the 2025 omnibus cannabis law built in a January 15, 2026 report trigger and some 1/1/26 effective dates that now kicked in.​ We will update this article and repost as any new updates are entered. One big quesiton remains.... will the State of Minnesota once again increase the cannabis sales tax? OCM report due Jan 15, 2026 HF 1615 / SF 2370 (Ch. 31) requires the Office of Cannabis Management to deliver a proposal to the Legislature by January 15, 2026 on how to streamline the medical and adult‑use supply chains while preserving medical access (especially for rare and childhood diseases).​ That report is now due “this week,” so expect early‑session House hearings that use it as the organizing document for 2026 cannabis policy discussions (medical vs adult‑use integration, license types, product flows).​ 1/1/26 testing + LPHE enforcement Starting January 1, 2026, all testing for hemp‑derived cannabinoid products and LPHE must be done by OCM‑licensed testing labs under the 9810.3100 rules and OCM technical standards.​ OCM has also signaled stepped‑up enforcement after the October 2025 application window: unlicensed hemp‑derived THC sellers that have not entered the LPHE licensing pipeline are subject to enforcement, which is likely to generate oversight pressure and hearings at the House commerce/OCM‑related committees in 2026.​ 2026 Industrial Hemp program live The 2026 Industrial Hemp Program application cycle is open, with a hard April 30, 2026 deadline, updated fees, and mandatory pre‑harvest THC testing at $100 per regulatory sample.​ Crucially, extraction of cannabinoids from hemp is now regulated by OCM starting in 2026, so growers/processors that want to stay in the hemp‑derived THC space must interact with both MDA and OCM; that dual‑jurisdiction issue is a natural 2026 House topic.​ Federal hemp‑derived THC ban clock running Congress has changed the federal definition of hemp in a way that will effectively ban most hemp‑derived THC products by November 2026 if not amended, creating a one‑year policy window that Minnesota policymakers are already being warned about by the U of M Cannabis Research Center.​ Minnesota media and regional outlets are reporting that U.S. Senators and Representatives are working on new THC/hemp laws in response to the shutdown‑deal ban, and this is explicitly framed as a major issue for Minnesota’s hemp industry between now and late 2026.​ What is not updated yet As of mid‑January 2026, House Session Daily and the general schedules show no 2026‑specific cannabis/hemp policy bills beyond the existing 2025–26 HF files; committees have not yet posted detailed 2026 cannabis hearing agendas for after the February 17 session start.​ The underlying 2025 tax change (gross receipts tax increased to 15%) and the 2025 policy omnibus are still the operative framework; no new rate changes or structural overhauls have been enacted since that package.​ Specific 2025–26 HF numbers you care about (e.g., LPHE clarifications, canopy expansion, event sales, municipal bans) have been entered yet.

To apply for a cannabis event organizer license in Minnesota, begin by preparing the required information and supporting documents, then submit your application and pay the fee through the OCM Citizen Portal. Below are the key steps and details: Step-by-Step Application Process 1. Register and Prepare Application Materials Create an account in the OCM Citizen Portal if not already registered. Gather all necessary business information, including ownership documentation, legal registrations, and tax ID numbers. Complete any required worksheets or forms provided by the OCM for license applications. 2. Application Requirements for a Cannabis Event Organizer Authorized Actions: The license allows organizing temporary cannabis events of up to four days, authorizing sales of cannabis flower, products, hemp edibles, and on-site consumption. Details you must submit: Type and number of any other cannabis licenses held. Name and location/address of the event. Event name and a diagram or map of the event layout, entrances/exits, sales, and consumption areas. Event dates and hours (no more than four days per event). A preliminary list of the licensed retailers who will sell at the event (can be updated up to 72 hours before the event). Description of how cannabis and related products will be stored, secured, and managed at the event. Evidence of local government approval and any required local permits for the event, since local approval is mandatory. Security plan and arrangements for event security personnel (security must be present at all times during public access to cannabis). Restrictions: The event organizer license cannot be held by a business also licensed as a testing facility or lower-potency hemp manufacturer or retailer. 3. Submit the Application Online Log in to the OCM Citizen Portal and select "cannabis event organizer" as your license type. Complete all sections, attaching all required documents and diagrams. Carefully review your application, then proceed to payment ($750 application/license fee). After submitting, monitor the email or the portal for correspondence or supplemental requests from OCM. 4. Additional Requirements Local government approval: You must provide written approval or evidence of local permitting for the event each time you apply. Security: Contract or employ on-site licensed security for the duration of the event while cannabis is present. Retailer Registration: Submit a finalized list of all authorized retailers who will sell the product at the event before the event begins. 5. License Decision and Event Execution OCM will review your application for completeness, required documentation, and local approval. Upon approval, receive the temporary event license authorizing the planned event for up to four days. Follow all statutory and regulatory requirements during the event—including security, storage, and record-keeping. Important Notes: Minnesota requires a new event license for each event. Sales and consumption are limited to adults 21+, with required age controls at entry points . Local governments may have additional event-specific ordinances or application steps to complete. No “free” cannabis or hemp products can be given to attendees. For detailed guidance and forms, always consult the OCM website and your local city/county government regarding permits and local requirements. What local permits are commonly required for cannabis events? Local permits required for cannabis events in Minnesota typically include a city or county event permit, plus approvals for zoning, fire safety, security, and possibly temporary structure, food, or alcohol sales (if allowed). Every cannabis event organizer must obtain written local government approval confirming the event meets all applicable local zoning rules, ordinances, and permit requirements before applying for a state event license. mn +3 Common Local Permits and Approvals Event Permit : Most cities or counties require a dedicated cannabis event permit (sometimes called a temporary cannabis event permit or special event permit) for any cannabis-oriented gathering, even if the venue already has other event permissions. Zoning and Land Use Approval : Local authorities review the event location to ensure compliance with zoning, buffer zones, occupancy, and site layout requirements. Fire and Building Safety : Large events, use of tents, canopies, or event infrastructure may need a fire department permit and/or building safety inspection to ensure emergency exits, egress, suppression systems, and overall event safety. Security Plan Approval : Most municipalities assess or require approval of a detailed security plan, often involving minimum staffing, licensed guards, access controls, and emergency protocols. mn +1 Public Health and Sanitation, the event includes food or beverage service, temporary food vendor permits and sanitation plans are often required. Noise/Sound Permits: There will be amplified sound or live music; a noise permit may be needed per local ordinances. Alcohol Sales/Consumption Permits : Cannabis events may not allow alcohol consumption by state law, but if other portions of the event involve alcohol, separate liquor licensing is needed—sometimes triggering additional local review . Traffic and Public Safety Approvals : Depending on event size, local governments may require plans or fees for traffic management, crowd control, parking, and emergency medical presence. c Local Government Approval Form A "Local Approval of Cannabis Event" form, signed by an authorized city or county representative, is mandatory, and must affirm that the applicant’s plans meet all local regulations and permit requirements for the location, activities, and expected attendance. No OCM event license is issued without this verified approval. mn +1 Local Variation Requirements will vary widely by city, township, or county; organizers must consult with local officials at the earliest planning stage to determine exact permits needed for a specific site and event type.

Cannaspire/Carpfish Creative Webinar: Minnesota and Federal Updates from Jan 6, 2026. ---------------------------------------------------------------------------------------------------------- By: * Warren Harasz Chief Compliance Officer @ Cannaspire | Business Licensing, Compliance Strategy ▶️ READ THE FULL BREAKDOWN @ CANNASPIRE After decades of federal inaction, we’re finally witnessing a significant shift in cannabis policy. The Trump administration has directed agencies to pursue rescheduling cannabis from Schedule I to Schedule III. This change could reshape the business landscape for operators, investors, and regulators. Understanding the Implications But what does this actually mean? Here’s Warren's breakdown from the compliance and operational side. 1. 280E Relief Changes Everything If cannabis moves to Schedule III, 280E goes away. This change means: Lower effective tax rates Higher real profitability Greater pricing flexibility New life for distressed operators This is the single biggest financial shift the industry has ever seen. 2. Rescheduling Does Not Legalize Cannabis It's important to note that rescheduling does not mean cannabis is fully legalized. Key points include: No interstate commerce No federal adult-use program No safe harbor for non–DEA-registered distribution This is just the beginning of normalization—not the finish line. 3. Banking May Improve, but AML Lives On Expect more banks and credit unions to enter the cannabis space. However, remember: BSA/AML rules still apply. Enhanced due diligence is here to stay. Your compliance program becomes your creditworthiness. Cannabis banking won’t be a free-for-all; it will favor well-documented, well-run operators. 4. New Competition Is Coming Lower taxes and federal acknowledgment of medical use will attract Big Pharma, Big Tobacco, Big Alcohol, and private equity back into the market. This will accelerate: M&A activity Consolidation Demand for pharma-grade documentation and controls Higher expectations for QA, GMP alignment, and SOP maturity Operators who treat compliance like an asset—not a chore—will win. 5. The Downsides: Lawsuits & FDA Risk Nothing in cannabis comes without turbulence. Here’s what to watch for: Lawsuits challenging the rescheduling process Potential injunctions delaying implementation Increased FDA involvement for certain product categories More scrutiny for ingestibles, claims, and manufacturing controls This could become the most regulated version of cannabis we’ve ever seen. 6. Hemp-Derived THC Will Face Pressure With the federal crackdown already underway, expect: A unified THC regulatory framework Stricter oversight of hemp-derived intoxicants A shrinking gray market The delta-8 era is not long for this world. What Should Businesses Do Now? Strategic Recommendations Here’s what Warren is advising Cannaspire clients to do: ✔ Prepare for 280E to end—without assuming it’s immediate. ✔ Upgrade compliance systems toward FDA-level expectations. ✔ Consolidate SOPs, logs, and training into an auditable structure. ✔ Strengthen banking relationships proactively. ✔ Scenario-plan for litigation delays or partial reversals. The Compliance Era Begins Rescheduling marks the start of a compliance era—not just a tax break. If you’d like help preparing your operation for this next phase, Cannaspire is here to support everything from compliance infrastructure to SOP development to operational readiness.

The Minnesota cannabis market is unique due to its specific regulatory framework, which includes "Mezzobusiness" licenses, strict Labor Peace Agreement (LPA) mandates, and a robust low-potency hemp-derived market that pre-dates adult-use legalization.

Minnesota cannabis license holders face strict regulations regarding the gifting of cannabis or cannabis products. These rules apply to customers, veterans, and employees. Gifting is only allowed under specific circumstances. Gift-Giving to Customers Only private individuals can legally gift up to 2 ounces of cannabis flower or its legal equivalents to another person aged 21 or older. This must be done without any exchange of money or goods/services—true gifts only. Knutson Casey ​ Businesses, including license holders and their representatives, cannot provide gifts or promotional samples of cannabis to customers, even if no payment is involved. Using gifts as incentives for products, services, or in connection to sales or promotions is expressly prohibited by law. Reddit ​ The law clearly states that “gifting” cannabis as a marketing tool, bonus, or incentive (e.g., “free joint with purchase”) is not allowed for license holders. GovDelivery ​ Gift-Giving to Veterans Veterans may qualify for social equity licensing provisions, but there are no special rules allowing license holders to gift cannabis to veterans outside the strict limitations mentioned above. MJBizDaily ​ Cannabis cannot be gifted to veterans as part of business promotional activity or sales, even if framed as honoring or supporting veterans. GovDelivery ​ Veterans participating in medical cannabis programs may only acquire products through medical cannabis retailers, not via business gifts. Revisor ​ Revisor ​ Gift-Giving to Employees License holders are not allowed to gift cannabis products to employees as a benefit, incentive, or bonus. All employee-related cannabis handling must adhere to worker regulations and not personal gifting allowances. Revisor ​ Revisor ​ Any “gifting” in the employer-employee relationship (including as a holiday bonus or incentive) would not qualify as a legal, uncompensated personal gift. Key Takeaways for License Holders Gift-giving of cannabis by businesses—whether to customers, employees, or specific groups such as veterans—is not permitted as a marketing, promotional, or compensation practice. Reddit ​ Private individuals can gift cannabis in personal, uncompensated contexts, but licensed entities cannot do so as part of their professional or commercial operations. Arechigo-Stokka ​ Violating these rules may result in disciplinary actions or criminal liability for license holders. Always consult the latest OCM regulations and legal counsel for compliance confirmation. The Importance of Compliance Understanding and adhering to these regulations is crucial for all cannabis license holders in Minnesota. Non-compliance can lead to severe consequences, including loss of license and legal penalties. Navigating the Complex Landscape The cannabis industry is evolving rapidly. As laws change, staying informed is essential. Regularly review updates from reliable sources to ensure compliance. Resources for License Holders For further information, consider consulting the following resources: Minnesota Cannabis Legalization Bill Overview Understanding Cannabis Regulations Minnesota Cannabis Laws Summary Conclusion In summary, while gifting cannabis may seem appealing, it is heavily regulated in Minnesota. License holders must navigate these laws carefully to avoid penalties. Always prioritize compliance and stay updated on legal changes. References Knutson Casey Arechigo-Stokka CBS News on Cannabis Reddit Discussion GovDelivery Bulletin MJBizDaily on Veterans Revisor Statutes DAV Resources for Veterans Revisor Rules 10. Minnesota Cannabis Laws 2024 11. Treez Blog on Cannabis Laws

As federal cannabis rescheduling progresses toward a Schedule III classification, cannabis industry operators can anticipate transformative changes in their tax treatment and financial services access. President Trump's December 18, 2025, Executive Order has accelerated a timeline that will likely culminate in final rescheduling by mid-2026. The operational and financial implications are substantial, though constrained by the reality that rescheduling, while significant, does not constitute federal legalization. Tax Relief: The End of Section 280E The most immediate and consequential benefit of Schedule III reclassification is the elimination of Internal Revenue Code Section 280E, which currently prohibits cannabis businesses from deducting ordinary and necessary business expenses. Under the current regime, a cannabis operation with $1 million in revenue, $650,000 in cost of goods sold, and $250,000 in operating expenses faces taxation on $350,000 of gross income, resulting in approximately $105,000 in federal taxes and a net loss of $5,000 after tax. [1] The same business operating under post-rescheduling tax rules would deduct the $250,000 in operating expenses, reducing taxable income to $100,000 and federal taxes to $30,000—creating $70,000 in after-tax cash flow. This improvement transforms unit economics for retail dispensaries, cultivation operations, manufacturers, and ancillary services. [1] Timing and Retroactivity Considerations Relief from 280E will almost certainly be prospective—effective once the DEA's final rule becomes official, expected in the first half of 2026. The IRS explicitly stated in 2024 that amended return claims filed in anticipation of rescheduling lack merit. However, businesses can file "protective refund claims" for open tax years (within three years of filing or two years of payment) to preserve their right to claim retroactive relief if Congress or the IRS provides favorable guidance. Any protective claim should be supported by reasonable tax positions and professional advice to avoid penalties. [2] [3] [4] [5] Available Federal Tax Credits Post-Rescheduling Once 280E no longer applies, cannabis businesses gain access to a suite of federal tax credits and deductions previously blocked by their Schedule I classification: Research and Development (R&D) Credit The R&D credit is one of the most valuable benefits available to cannabis operators. It provides a dollar-for-dollar credit against tax liability for qualifying research expenses. Eligible activities include: [6] [1] Cultivation method optimization (plant spacing, nutrient formulation, climate control) Product development and formulation refinement Extraction technology improvements Delivery method development (gummies, topicals, edibles, etc.) Software development for inventory management and compliance The credit can be claimed under either the traditional method or the alternative simplified credit method, and recent legislative changes have made it more accessible to smaller and medium-sized businesses. Hemp and CBD companies have already demonstrated the credit's utility—federally legal cannabis products have accessed R&D credits, confirming the IRS's willingness to support cannabinoid research once the legal bar is cleared. [6] Work Opportunity Tax Credit (WOTC) - Link to learn more Labor-intensive cannabis operations—retail, cultivation, and manufacturing—can claim WOTC for hiring individuals from targeted groups, including ex-felons, unemployed veterans, and recipients of certain federal assistance programs. The credit functions as a direct reduction in tax liability, making it particularly valuable for cultivators and retailers with seasonal hiring needs. [7] [1] Bonus Depreciation and Capital Deductions A significant development outside the rescheduling context is the restoration of 100% bonus depreciation through 2030 under the One, Big, Beautiful Bill enacted July 4, 2025. Cannabis operators placing qualified property (equipment, machinery, vehicles, qualified improvement property) into service after January 19, 2025, can now fully expense these assets in the year of acquisition and placement in service. This accelerates cash flow recovery from capital investments in cultivation facilities, processing equipment, and retail build-outs. [8] Additionally, Section 179 small business expensing has been increased to $2.5 million with a phase-out threshold of $4 million, providing an alternative for businesses that may not qualify for full bonus depreciation. Cost segregation studies—detailed analyses that break buildings into component asset classes with shorter depreciation periods—become particularly valuable tools for cannabis real estate investments post-rescheduling, as operators can now claim these accelerated write-downs. [8] [1] Qualified Business Income Deduction and Accounting Flexibility Cannabis pass-through entities (S-corps, partnerships, LLCs) will gain access to the 20% Qualified Business Income (QBI) deduction under Section 199A, previously uncertain due to the 280E classification. Additionally, operators regain flexibility in accounting methods and inventory valuation techniques, allowing for more sophisticated tax planning around expense timing and cost allocation. [7] Energy and Clean Energy Credits While Section 179D (the Energy Efficient Commercial Building Deduction) is being repealed for projects beginning construction after June 30, 2026, cannabis operators can still access federal clean energy credits for investments in energy-efficient lighting, HVAC systems, and renewable energy. These credits remain available and become particularly relevant for indoor cultivation operations, which are energy-intensive. [8] Banking and Payment Processing: Progress with Limitations Rescheduling will improve financial services access, but it does not resolve the core banking challenges facing the industry. Cannabis will remain a federally controlled substance, subject to Bank Secrecy Act (BSA) and anti-money-laundering (AML) compliance requirements. [9] [10] Why Rescheduling Alone Is Not Sufficient Schedule III classification removes the federal stigma and changes the legal framework for cannabis, but it does not grant cannabis the same federal status as a fully legal business. The 2014 FinCEN guidance that classifies cannabis sales as "high-risk" will remain in effect unless Congress acts. Banks and credit unions will still need to file Suspicious Activity Reports (SARs) on all cannabis transactions, verify licenses, document beneficial ownership, and maintain ongoing compliance monitoring. Major credit card networks (Visa, Mastercard, American Express) will not process cannabis transactions without explicit congressional protections. [10] [11] [9] Expected Banking Improvements from Rescheduling Despite these limitations, rescheduling will catalyze incremental improvements: Expanded participation : More regional and community banks and credit unions may reconsider cannabis relationships as federal risk perceptions decline. [10] Enhanced lending : Specialized cannabis lenders (Casa Verde Capital, Merida Meridian, and others) will likely expand product offerings—term loans, working capital facilities, and eventually real estate financing. [10] Regulatory clarity : Banks serving cannabis may face lower compliance costs as regulators gain confidence in the framework, potentially reducing account maintenance fees and documentation burdens. [10] Relationship stability : Existing cannabis banking relationships should stabilize, reducing the risk of sudden account closures. [10] Current Compliant Payment Solutions as of December 2025 Given continued federal restrictions on traditional banking, cannabis retailers operate through specialized compliant payment methods: Point of Banking (POB) : Functions as an at-the-counter ATM where customers access their bank account directly. Customers are typically charged convenience fees (varying by processor), and transactions round to dollar amounts. POB remains the most stable and widely-used payment method. Importantly, retailers using integrated POB solutions (embedded in POS systems) see an average 30% increase in customer basket size, as shoppers are no longer constrained by cash in their pockets. Evolve Payment and Paybotic are leading providers. [12] [13] ACH Transfers : Bank-to-bank electronic transfers that bypass credit card networks entirely. ACH costs 1–1.5% per transaction—significantly lower than POB's convenience fees—and provides direct deposit into the dispensary's account. Modern processors like Flowhub (through Aeropay integration) and Cova have made ACH accessible through QR code checkout and instant bank verification using Plaid technology, improving customer experience. [13] [12] Cash : Remains the largest payment method at most dispensaries, but creates significant security (armed robbery, theft), logistics (armored vehicles, vault costs), and compliance risks. Industry data shows cannabis retailers process approximately $30 billion in annual transactions, with cash dominating but alternative payment methods increasingly preferred. [13] The Path to Mainstream Banking: SAFER Banking Act Real progress toward normal banking access depends on the Secure and Fair Enforcement Regulation (SAFER) Banking Act, which has evolved from the earlier SAFE Banking Act. As of July 2025, the SAFER Banking Act passed the Senate Banking Committee on a bipartisan 14-9 vote and now awaits a full Senate floor vote, expected by year-end 2025. The House has passed versions of the SAFE Banking Act seven times, indicating sustained bipartisan support. [11] The SAFER Banking Act would: Protect banks and credit unions from federal penalties for serving state-legal cannabis businesses Clarify FinCEN guidance on cannabis account monitoring Protect account holders, including employees and ancillary service providers Enable lending for cannabis real estate, equipment, and working capital Provide regulatory clarity on deposit insurance and account termination If enacted (realistic scenario for 2026), the SAFER Act would unlock traditional lending, credit card processing pilots through specialty networks, and broader institutional investment. Cannabis operators should monitor this legislation closely, as passage would represent the inflection point for genuine financial services normalization. [11] Realistic Timeline and Operator Expectations 2026 (H1) : Rescheduling finalized (likely March–May). Operators gain 280E relief for expenses paid or incurred after the effective date. Tax filings reflect new deductibility in 2027 tax year. 2026-2027 : SAFER Banking Act passes (high probability). Banks begin establishing cannabis lending programs. Payment processors expand offerings. Regional banks and credit unions enter the market. 2027-2028 : Meaningful credit card access via specialty networks for compliant operators. Institutional capital becomes more accessible (venture debt, growth equity, M&A). State-legal operators begin accessing traditional SBA lending and equipment financing. 2028+ : Normalization of banking services, though continued AML compliance and monitoring remain. Federal legalization (full descheduling) becomes realistic if rescheduling demonstrates stability and public support. Recommended Operator Actions Now For Tax Planning : Begin documenting R&D activities contemporaneously, as the IRS requires detailed records to substantiate credits. Compile hiring data for Work Opportunity Tax Credit claims. Develop financial models under post-280E assumptions to understand valuation upside and reinvestment capacity. Engage a cannabis-specialized CPA to assess cost segregation opportunities and bonus depreciation timing, particularly if you're planning facility investments in 2025-2026. For Banking and Payments : Maintain relationships with current compliant payment processors (POB or ACH). Ensure your business licenses, standard operating procedures, and internal controls are documented and organized, as banks will expect these materials when rescheduling opens conversations about account relationships. Set up integrated ACH solutions (through Flowhub/Aeropay or Cova) if not already in place, as this reduces human error and improves customer experience over a standalone POB. Begin building clean, beneficial ownership records and compliance files now, reducing friction if your bank requests additional documentation post-rescheduling. For Operations : Strengthen financial reporting and internal controls to prepare for potential investor interest, institutional lending discussions, and M&A activity. Expect significant consolidation and institutional capital entry within 18–24 months of rescheduling finalization. Operators with audited financials, transparent records, and scalable operations will command premium valuations. The cannabis industry stands at an inflection point. While rescheduling is not legalization, it removes the federal tax penalty that has suppressed industry profitability and prevents access to mainstream financial services. For operators prepared to capture these opportunities—through diligent tax planning, robust compliance, and strategic positioning—the next 18–36 months represent a transformational window. Goodwin Law (December 18, 2025) MGO CPA (December 21, 2025) AAFCPA (December 19, 2025) Greenleaf Brief (June 3, 2024) Tax Controversy 360 (May 20, 2024) Corvee (October 17, 2022) Bonadio (December 21, 2025) Plant Moran (July 20, 2025) Abrigo (September 29, 2025) Buchalter (December 18, 2025) Herring Bank (June 1, 2025) Flowhub (September 21, 2025) WebJoint (October 28, 2025) [3] [4] [5] [12] [9] [2] [6] [1] [13] [7] [11] [8] [10] ⁂ ARTICLE SOURCES https://www.mgocpa.com/perspective/cannabis-rescheduling-key-tax-financial-considerations/        https://www.goodwinlaw.com/en/insights/publications/2025/12/alerts-practices-can-bye-bye-280e    https://www.currentfederaltaxdevelopments.com/blog/2025/12/19/tax-alert-executive-action-on-marijuana-scheduling-and-the-potential-sunset-of-irc-section-280e    https://tax.thomsonreuters.com/news/administrations-shift-on-cannabis-draws-criticisms-from-some-republicans/    https://www.aafcpa.com/2025/12/19/executive-order-to-reschedule-cannabis-what-it-means-for-irc-280e/    https://www.abrigo.com/blog/marijuana-safe-banking-in-2025-will-rescheduling-bring-relief-for-financial-institutions/     https://www.buchalter.com/insights/federal-cannabis-rescheduling-creates-new-banking-opportunities/     https://www.npr.org/2025/12/26/nx-s1-5652027/marijuana-reclassified-trump-executive-order      https://www.cohnreznick.com/insights/cannabis-tax-compliance-planning-for-potential-rescheduling     https://www.dlapiper.com/en-us/insights/publications/2025/12/eo-accelerates-marijuana-rescheduling-framework-for-hemp-derived-cannabinoids         https://vicentellp.com/insights/cannabis-rescheduling-explained/      https://www.afslaw.com/perspectives/alerts/oops-we-did-it-again-executive-action-revives-federal-marijuana-rescheduling     https://www.bonadio.com/article/cannabis-rescheduling-executive-order/      https://corvee.com/blog/rd-tax-credit-for-cannabis-industry/   https://www.evolvepayment.com/blog/cannabis-payment-processing-support-partnering-for-prosperity-in-new-markets/   https://www.marijuanamoment.net/marijuana-rescheduling-should-be-followed-by-banking-access-sentencing-reform-and-legalization-bipartisan-lawmakers-say/   https://www.criadv.com/insight/cannabis-rd-tax-credit/   https://www.webjoint.com/2025/10/29/cannabis-payment-processors-2025-compare-top-options/   https://moritzlaw.osu.edu/faculty-and-research/drug-enforcement-and-policy-center/research-and-grants/policy-and-data-analyses/federal-marijuana-rescheduling   https://www.flowhub.com/dispensary-payment-processing-guide   https://cannacon.org/cannabis-safe-banking-act/   https://www.greenleafbrief.com/2024/06/paid-or-incurred-marijuana-rescheduling-taxes-and-section-280e/   https://www.plantemoran.com/explore-our-thinking/insight/2022/08/the-tcja-100-percent-bonus-depreciation-starts-to-phase-out-after-2022   https://www.herringbank.com/business-banking/cannabis-banking/safe-banking-act/   https://www.cbh.com/insights/articles/2025-tax-reform-impact-construction-real-estate/   https://en.wikipedia.org/wiki/SAFE_Banking_Act   https://www.taxcontroversy360.com/2024/05/irc-section-280e-will-no-longer-apply-if-marijuana-is-rescheduled/   https://www.bonadio.com/article/a-look-at-the-tax-implications-of-rescheduling-cannabis/

Upcoming License Application Opportunities June 18, 2025 St. Paul, Minn. – Today, the Office of Cannabis Management (OCM) announced a significant milestone: the issuance of the first cannabis business license in Minnesota. The inaugural licensee, Herb Quest, LLC, is a microbusiness based in Brook Park, Pine County. Their primary focus will be the outdoor cultivation of cannabis plants. “Issuing the first business license is a major milestone for the office,” said OCM Interim Director Eric Taubel. “** With our first licensed cultivator now able to begin growing plants, and more than 600 businesses within the final steps of completing their applications and securing approvals from local governments, we are now seeing the first pieces of Minnesota’s adult-use market fall into place.”** Verification of Social Equity Status Prospective applicants can verify their social equity status from July 7 at 12:01 a.m. until July 21 at 11:59 p.m. Recent changes to Minnesota’s cannabis law have expanded the criteria for social equity status. This now includes applicants who have received stays of adjudication and adjudications of delinquency. OCM will proactively review submissions from individuals whose social equity status was previously denied under the old criteria. Those whose status is now verified will be informed accordingly. Completing social equity verification is not mandatory for obtaining a cannabis business license. However, it is essential for individuals who wish to apply for a cannabis business license with a social equity classification or for those intending to buy into a pre-existing cannabis business license that includes a social equity component. Individuals who have already verified their social equity status do not need to seek verification again. For more information about the social equity verification process, including qualifying criteria and guidance, please visit OCM’s Social Equity Verification Process webpage . New Application Window for Cannabis Testing Facilities On August 1, OCM will open a new and ongoing application window for cannabis testing facilities. These facilities are crucial for establishing the supply chain in Minnesota’s cannabis industry. State law does not limit the number of testing facilities that can operate. Recent legislative changes have introduced a license variance process for cannabis testing facility applicants. This change aims to address potential bottlenecks in testing capacity. It allows applicants to obtain a license while they await accreditation from the International Standards Organization (ISO). “ISO accreditation is a lengthy process, so we wanted to provide a shorter runway for labs who wish to enter Minnesota’s cannabis market in such an essential way while also helping other cannabis business owners get up and running with safe, tested products,” said Max Zappia, OCM’s chief regulatory officer. ** “Having testing facilities with capacity is essential to our mission to establish an equitable cannabis industry that prioritizes public health and safety, consumer confidence, and market integrity.” Applications for Cannabis Event Organizer Licenses Also starting on August 1, OCM will begin accepting applications for cannabis event organizer licenses. This will be an open-ended opportunity for applicants, with applications accepted on a rolling basis. The cannabis event organizer license allows the holder to plan and host temporary cannabis-related events in Minnesota. According to Minnesota law, cannabis events must be limited to individuals aged 21 and older. These events cannot include the sale or consumption of alcohol. However, they may feature the on-site sale and use of adult-use cannabis products, lower-potency hemp edibles, and hemp-derived consumer products. Event organizers can host multi-day events, provided that the event does not exceed four consecutive days in duration. This license type is temporary and must be obtained separately for each event. All cannabis event activities require local approval. This includes any permits or licenses required by the applicable local unit of government, as well as specific approval for on-site consumption areas. Event organizers must obtain this local approval before submitting an application to the OCM and provide proof of local approval as part of the application. Conclusion The issuance of the first cannabis business license marks a pivotal moment in Minnesota's cannabis landscape. With the upcoming opportunities for social equity verification, testing facilities, and event organizers, the state is laying the groundwork for a robust and equitable cannabis market. Download a copy of the license issued to Herb Quest, LLC. Access * summary data showing the review status of cannabis business license applications, broken out by license type and current application status. For information on submitting an application for a cannabis business license, please visit mn.gov/ocm/businesses/licensing Media Contact: Jim Walker (651) * 539-5082 [jim.walker@state.mn.us](mailto:539-5082jim.walker@state.mn.us Permalink: * https://mn.gov/ocm/media/news-releases/index.jsp?id=1202-693728

The cannabis industry in Minnesota is experiencing rapid growth, attracting many entrepreneurs looking to capitalize on the opportunities that come with legalization. With this dynamic shift, grants tailored for cannabis businesses are gaining importance, serving as essential resources for funding and support. Navigating these grants effectively can be key to thriving in this competitive landscape. This blog post will explore the available cannabis business grants in Minnesota and provide actionable tips on how to apply for them successfully. Understanding the Grant Landscape As Minnesota expands its cannabis laws, various state programs have been established to support cannabis entrepreneurs. These programs provide financial assistance in the form of grants, with a focus on communities that were most affected by cannabis prohibition. Recognizing these initiatives allows you to leverage available resources to your business's advantage. Many of Minnesota's cannabis grants are designed to promote economic development, generate jobs, and support small businesses owned by individuals from marginalized backgrounds. For example, the state aims to allocate at least 30% of grant funding to businesses owned by individuals from historically underrepresented groups. By aligning your business objectives with these goals, your chances of securing funding significantly increase. Key Grant Opportunities Minnesota Department of Employment and Economic Development (DEED) A main source of grant funding for cannabis businesses in Minnesota is the Minnesota Department of Employment and Economic Development (DEED). This agency manages several programs dedicated to fostering economic growth throughout the state. For cannabis ventures, DEED has specific resources to support small business owners. To stay ahead, regularly check the DEED website for updates on grant availability and application deadlines. For instance, in 2023, DEED announced $1.5 million in funding specifically allocated for cannabis startups. Keeping an eye on such announcements can provide you with a competitive edge. Community Outreach Grants Community outreach grants are tailored for organizations and businesses dedicated to engaging with communities negatively impacted by cannabis prohibition. These funds aim to facilitate outreach, education, and resources that promote understanding and safe practices related to cannabis use. For example, if your business focuses on providing educational workshops on responsible cannabis use for marginalized communities, applying for these community outreach grants could be advantageous. In 2022, grants in this category totaled over $500,000, demonstrating the potential impact available through these opportunities. Small Business Grants A number of local organizations also offer small business grants that can apply to cannabis ventures. These resources are crucial for startups seeking funding without accruing debt. Participating in local business networks and chambers of commerce can enhance your visibility and lead you to discover additional funding sources. For example, the Dakota County Community Development Agency offers grants up to $10,000 for small businesses, which could include cannabis-related startups. Preparing Your Grant Application Research and Planning Before applying, conduct thorough research on the specific requirements for each grant opportunity. This includes understanding the grant goals, how they align with your mission, and what documentation will be needed. A well-researched application can significantly improve your chances of securing funding. Crafting a Compelling Narrative Your application should tell your business story in an engaging way. Clearly outline your business objectives, the positive impact you aim to have on the community, and how you plan to utilize the grant funding. Focus on specific goals, like creating 10 new jobs or conducting five educational workshops, and use measurable outcomes to strengthen your case. Financial Documentation Most grant applications require detailed financial documentation, such as your business plan, profit and loss statements, and projected budgets. These documents should be thorough, accurate, and readily available. Showing a clear and organized financial outlook can instill confidence in grant reviewers and demonstrate your preparedness. Navigating the Application Process Follow the Guidelines Each grant opportunity will have specific guidelines and criteria. It is critical to follow the instructions regarding formatting, required information, and submission processes carefully. Applications that are incomplete or fail to meet requirements are often disqualified early in the process, making attention to detail vital. Network with Other Entrepreneurs Building connections with other entrepreneurs within the cannabis industry is invaluable. Networking can provide insights and tips on how to successfully navigate the grant application process. Attend industry events or join local cannabis business associations to connect with others who have successfully obtained grants. Seek Professional Assistance If writing grant applications feels overwhelming, consider hiring professional help. Many organizations specialize in grant writing for cannabis businesses. Experts can assist you in crafting a compelling application that meets the grant’s requirements and maximizes your chances of success. Moving Forward with Confidence Navigating cannabis business grants in Minnesota may seem challenging, but these funding opportunities are essential for entrepreneurs eager to make an impact in the cannabis industry. By understanding available grants, preparing a strong application, and effectively managing the application process, you can unlock new avenues for growth. As the industry continues to expand, keeping informed about grant opportunities will be crucial for achieving long-term success. By forming strong community connections and aligning your business goals with grant objectives, you can lay a solid foundation for your cannabis enterprise. By carefully exploring grant options and utilizing community resources, Minnesota's cannabis entrepreneurs have the chance to successfully navigate funding complexities and thrive in this exciting industry. Taking these steps will not only bolster your business growth but also contribute positively to the overall development of Minnesota's cannabis community.

THC-O (more precisely THC-O-acetate) is a semi-synthetic, lab-made derivative of THC that acts as a prodrug: the body metabolizes it into THC, which then activates the CB1 receptors in the brain to produce a high. It appears significantly more potent and less predictable than regular delta‑9 THC, with added safety and legal concerns.​ It's said to be on the target list of Washington's hemp crackdown. What THC-O Is THC-O-acetate is the acetate ester of THC, created by chemically modifying THC (often produced from hemp-derived CBD via delta‑8 THC) with acetic anhydride in a lab. It does not occur naturally in the plant in meaningful amounts, so it is considered a synthetic or semi-synthetic cannabinoid rather than a naturally extracted one.​ Chemically, THC-O differs from THC by the addition of an acetyl group, which changes how the molecule behaves in the body and likely contributes to its increased potency. Because it relies on volatile reagents and precise lab conditions, improper production can introduce contamination or byproducts.​ How It Works In The Body THC-O functions as a prodrug, meaning it is not strongly active until the body metabolically removes the acetate group, converting it into a form of THC that then binds to CB1 receptors in the endocannabinoid system. This metabolic step contributes to a delayed onset, with effects reported to start 20–30 minutes after inhalation or ingestion and last several hours.​ Once converted, the THC produced from THC-O acts similarly to delta‑9 THC, as a CB1 agonist that produces euphoria, altered perception, and other typical cannabis effects, but users often describe the intensity as stronger and more dissociative or “psychedelic.” Because the pharmacology is understudied and the conversion may vary between individuals, dose–response is less predictable than with standard cannabis products.​ Potency, Effects, and Risks Preclinical and anecdotal sources suggest THC-O may be roughly 2–4 times more potent than delta‑9 THC by weight, so doses that seem small compared with normal edibles or vapes can still be overwhelming. Reported effects include strong euphoria, intensified sensory perception, time distortion, and sometimes anxiety, paranoia, or nausea, particularly at higher doses or in inexperienced users.​ There are important safety flags: research and expert commentary emphasize that human data are limited, product quality is inconsistent, and long‑term health effects are unknown. When heated (for example, in some vape setups) THC-O-acetate can decompose at high temperatures and generate ketene, a highly toxic gas, raising extra concerns about vaping THC-O concentrates.​ Legal and Regulatory Status Federally, THC-O sits in a gray area: it is generally treated as a synthetic tetrahydrocannabinol, which falls under the Controlled Substances Act, even if the starting material is hemp. Some hemp-industry sources still argue that hemp-derived THC-O is covered by the 2018 Farm Bill, but legal and enforcement interpretations increasingly treat it as an illegal synthetic cannabinoid rather than a compliant hemp extract.​ States vary widely, with several explicitly banning THC-O or lumping it in with other synthetic cannabinoids, while others regulate or have yet to clarify its status. Anyone considering using or selling THC-O should verify current state law and recognize that regulations around synthetic and “novel” cannabinoids are tightening rapidly.​ THE BREAKDOWN: What THC‑O Is, How It Works, and How It Shows Up in Vapes/Prerolls THC‑O (THC‑O‑acetate) is a semi‑synthetic, lab‑made THC prodrug that the body converts into THC. It is more potent and less predictable than standard delta‑9 THC, with significant safety and legal concerns. Some “legal” hemp brands have used THC‑O and similar synthetics in vapes and prerolls by exploiting hemp loopholes and vague labeling, but regulators and toxicologists are increasingly warning against it, and many jurisdictions are moving to ban or restrict it. 1. What THC‑O Is... THC‑O (usually THC‑O‑acetate) is: A chemically modified form of THC : lab chemists take THC (often made from CBD via delta‑8) and add an acetyl group using acetic anhydride, creating an acetate ester. A semi‑synthetic cannabinoid , not something the plant naturally produces in usable amounts. Marketed historically as “3x stronger” or “psychedelic THC,” though that claim is mostly marketing; human data are very limited. Because it is made with reactive chemicals and multiple steps, poor lab practices can leave residual solvents, acids, or unwanted byproducts in the final oil or distillate. 2. How THC‑O Works in the Body Mechanistically, THC‑O acts as a prodrug : THC‑O itself is absorbed (inhaled or ingested) but is not the main active species. The body’s enzymes cleave off the acetyl group, converting THC‑O into a form of THC . That THC then binds to CB1 receptors in the brain and nervous system, producing the familiar cannabis effects (euphoria, altered perception, appetite stimulation, etc.). Key differences from regular delta‑9 flower: Delayed onset: Often slower to kick in (especially oral or heavy oil use) compared with inhaled delta‑9. Higher apparent potency: Users and some lab/animal data suggest it can feel significantly stronger per milligram than standard delta‑9. 2x stronger in fact. Riskier pharmacology: Very little human clinical data; individual metabolism can make effects highly variable and unpredictable. Extra inhalation risk: When heated at high temperatures, acetate esters (including THC‑O‑acetate) can form ketene , a highly toxic gas. This is a specific concern with vapes and prerolls using acetate-based cannabinoids . 3. How “Legal” THC Vendors Have Used THC‑O in Products There are a few common patterns in how some vendors have used THC‑O (and similar synthetics) in vapes and prerolls: A. Exploiting the “hemp‑derived” loophole After the 2018 Farm Bill, hemp with ≤0.3% delta‑9 THC by dry weight was legalized at the federal level. Many operators then: Started with hemp‑derived CBD isolate (clearly legal). Converted it in a lab to delta‑8 , delta‑10 , or THC‑O‑acetate . Argued these compounds were “hemp‑derived” and therefore legal, even though they are synthetically modified cannabinoids. From a regulatory and toxicology standpoint, THC‑O is increasingly viewed as a synthetic THC , not a natural hemp extract, and thus more likely to be treated like an illegal controlled substance or at least a high‑risk “novel cannabinoid.” B. Labeling practices that obscure what’s inside Some brands advertise heavily around “hemp” and “legal THC,” but the fine print (if any) is where THC‑O shows up. Common tactics: Front‑label buzzwords: “Hemp‑derived,” “legal high,” “Farm Bill compliant,” “Delta‑8 + live resin,” “THC blend,” etc. Back‑label or COA only details: List of cannabinoids with abbreviations: “D8, HHC, THC‑O, THCP” etc. Broad categories like “Hemp extract,” “Cannabinoid distillate,” without specifying each component. “Proprietary blend” language: A single milligram number for “hemp cannabinoids” with no breakdown of which cannabinoids, in what ratios. In prerolls, a similar playbook appears: The flower may test as low‑THC hemp (legally compliant on paper). The vendor sprays or infuses the flower with a distillate containing THC‑O (and often delta‑8/delta‑10/HHC). Packaging highlights “hemp preroll” or “compliant THC preroll,” while THC‑O is only mentioned in small print or not clearly differentiated from other cannabinoids. C. Using blends to reduce the apparent THC‑O concentration Rather than selling pure THC‑O vapes, many “legal” products use blends : Delta‑8 or HHC as the main component. THC‑O, THCP, or other potent synthetics at low percentages for extra punch. Terpenes and live resin added for flavor/marketing. This blending lets the vendor: Advertise a familiar cannabinoid (delta‑8, HHC) as the “headline.” Keep THC‑O percentages lower but still create a strong effect profile. Make the COA look less alarming to casual readers, even though small percentages of ultra‑potent synthetics can radically change the experience. 4. Why THC‑O Is Attractive to Questionable “Legal” Vendors From the vendor side (especially in unregulated hemp/gray markets outside state‑licensed cannabis programs), THC‑O and similar compounds have been used because they: Can be made from cheap, abundant CBD isolate , turning low‑value hemp into high‑margin “THC” products. Allow manufacturers to offer intense effects while still claiming “hemp‑derived” legality . Provide differentiation in a crowded delta‑8 market: “stronger,” “psychedelic,” “next‑gen THC,” etc. Often avoid the full suite of testing and oversight found in state‑licensed cannabis markets. However, this comes with real risks: Poorly controlled synthesis → residual solvents, acids, and unknown byproducts. Unknown long‑term health effects and virtually no clinical data. Potential ketene formation in carts or dab products using acetate esters. Increasing attention from regulators, poison centers, and media, leading to bans or enforcement actions. 5. Practical Red Flags in Vapes and Prerolls For someone evaluating products (as a consumer or operator), signs that a vape or preroll may be using THC‑O or similar synthetics in a sketchy way: Sold outside a state‑licensed cannabis dispensary but marketed as “strong THC” or “psychedelic/high potency hemp.” Label emphasizes “hemp,” “Farm Bill compliant,” or “contains <0.3% delta‑9” but does not clearly list all cannabinoids and their mg amounts. COA (if available) shows unusual cannabinoids like THC‑O, THCP, THC‑O‑P, or unpronounceable synthetics , or has incomplete data (no residual solvents, no heavy metals, no byproduct analysis). Products labeled as “sativa,” “indica,” “live resin cart,” or “legal weed preroll” in non‑medical/non‑adult‑use states but sold at gas stations, smoke shops, novelty stores, etc. Any acetate‑based cannabinoid in a vape or dab (THC‑O‑acetate, delta‑8‑O‑acetate, etc.) should be treated as high‑risk due to ketene concerns when heated. 6. If You Are A Legal Operator: Why This Is Risky To Touch For a compliant operator (especially someone planning to work in a regulated cannabis market like Minnesota): THC‑O is increasingly seen as a toxicology headache and regulatory red flag . Most serious experts and many state regulators are moving in the direction of:“If it’s a synthetic THC analogue created by acetylation etc., keep it out of consumer products.” Being associated with acetate‑based synthetics can: Complicate licensing and regulatory relationships. Introduce product liability risk if someone is injured. Damage brand credibility with regulators, medical professionals, and informed consumers. Safer strategic approach for a serious brand: Stick to well‑characterized, naturally occurring cannabinoids (delta‑9, CBD, minor cannabinoids that actually occur in the plant) and avoid acetate‑based synthetics . In hemp‑only channels, be transparent about cannabinoid content and avoid relying on “legal high” loopholes that are actively being closed. If you want, the answer can be tailored specifically to Minnesota and to business strategy questions like: “Is there any compliant way to use or market THC‑O in MN’s evolving regulatory structure?” or “How to position a brand that intentionally rejects acetate‑based synthetics and ‘gas station’ vapes.” Is There Any Compliant Way to Use or Market THC‑O in Minnesota? Short answer: NO. There is effectively no compliant path to use or market THC‑O as a consumer product in Minnesota, and this picture is tightening even further at the federal level. Minnesota State Law: THC‑O Is Explicitly Banned Minnesota's 2025 cannabis legislation (SF 2370, Chapter 31) explicitly prohibits THC‑O in edible cannabinoid products . The law states:​ "Edible cannabinoid products are prohibited from containing any other artificially derived cannabinoid, including but not limited to THC‑P, THC‑O, and HHC, unless the office authorizes use of the artificially derived cannabinoid in edible cannabinoid products. Edible cannabinoid products are prohibited from containing synthetic cannabinoids."​ This language is unambiguous: THC‑O is classified as an artificially derived cannabinoid (not naturally present in the plant at meaningful levels). It is specifically listed by name as prohibited. The only exception is if the Office of Cannabis Management (OCM) authorizes it , which has not happened and is extremely unlikely to happen given current regulatory trends.​ The ban applies to all edible cannabinoid products (gummies, beverages, oils, tinctures, etc.).​ What About Vapes and Topicals? The Minnesota law does not explicitly mention non‑edible products (like vapes, concentrates, or topicals) in the artificial cannabinoid restrictions. However, this does not create a legal pathway for THC‑O because: The focus of the hemp/edible regulatory framework is lower‑potency hemp edibles (LPHE) , which are separately regulated from state‑legal adult‑use cannabis.​ Vapes and concentrates sold as adult‑use cannabis products (not hemp) are tightly controlled by OCM and must comply with strict quality, testing, and labeling standards.​ Any product marketed as containing THC‑O would likely violate federal law (see below) and fail state testing and compliance requirements. Selling any intoxicating hemp product (like THC‑O vapes) outside the licensed, regulated system is illegal in Minnesota, as it would circumvent both state and federal law.​ Federal Law: THC‑O is Now Effectively Banned Nationwide The landscape has shifted dramatically as of December 2025. On November 12, 2025 , Congress passed H.R. 5371 (signed into law), which fundamentally redefines hemp and effectively bans THC‑O and similar synthetic cannabinoids nationwide.​ Key provisions effective November 2026:​ Total THC cap : Products can contain no more than 0.3% total THC (including all isomers and analogues like delta‑8, delta‑9, THCA, delta‑10, etc.), not just delta‑9 THC. Per‑container cap : Any finished product containing more than 0.4 milligrams of total THC or THC‑like cannabinoids will be deemed non‑hemp and therefore illegal.​ Ban on synthetic/converted cannabinoids : The law explicitly excludes cannabinoids "synthesised or manufactured outside the cannabis plant," which directly targets delta‑8 conversions, THC‑O acetate, HHC, and similar lab‑made compounds.​ Specific cannabinoids named : Delta‑8, delta‑10, THCP, THC‑O, HHC, and other synthetic isomers are all targeted by this language.​ Result: After November 2026, selling THC‑O under the guise of "hemp‑derived cannabinoid" will be a federal crime, regardless of state law.​ Why OCM Is Unlikely to Authorize THC‑O, Why aren't they even testing for it? Even if a vendor petitioned OCM to authorize THC‑O as an exception under Minnesota law, approval is virtually impossible because: Toxicology concerns : THC‑O is poorly understood, with minimal clinical data. When heated (especially in vapes), it can produce ketene, a toxic gas. OCM and other regulators are aware of these safety issues.​ Regulatory momentum is against it : Every major state—including Minnesota—is moving to restrict or ban synthetic cannabinoids. The federal government just cemented that approach in law. Reputational risk for OCM : Authorizing a product explicitly prohibited in federal law and flagged by poison control centers and toxicologists would be politically and legally untenable for OCM. Legal exposure : If OCM authorized THC‑O and someone was harmed, the state and office could face significant liability. What Is Compliant in Minnesota? If you are building a cannabis brand in Minnesota, here are the actually compliant pathways: 1. State‑Licensed Adult‑Use Cannabis (Delta‑9 THC focus) Apply for a retailer, manufacturer, cultivator, or other license through OCM.​ Recreational cannabis sales began on September 16, 2025.​ Sell delta‑9 THC flower, concentrates, edibles, beverages, vapes, etc., subject to strict testing, labeling, potency, and packaging rules.​ No synthetic or artificially derived cannabinoids beyond the natural plant profile. 2. Lower‑Potency Hemp Edibles (LPHE) Market Apply for a lower‑potency hemp edible retailer, manufacturer, or wholesaler license.​ May contain delta‑8 or delta‑9 THC (if extracted from hemp or artificially derived, but only delta‑8 or delta‑9 , not THC‑O, THC‑P, or HHC).​ Must comply with strict potency limits: Non‑beverage edibles : 5 mg THC per serving, 50 mg per package. Beverages : 10 mg THC per container.​ Must pass testing, meet packaging/labeling requirements, and be age‑restricted to 21+.​ 3. Medical Cannabis Program Two state‑licensed manufacturers produce medical cannabis for registered patients.​ No synthetic cannabinoids; only natural plant‑derived or hemp‑derived products in approved forms.​ The Bottom Line for Operators Do not build a business model around THC‑O in Minnesota. Here is why: State law bans it explicitly in edible products and has no regulatory pathway for non‑edible THC‑O.​ Federal law bans it as of November 2026, making any sale a federal crime regardless of state authorization.​ Safety and liability are major issues : Ketene formation, unknown long‑term effects, and toxicology concerns mean you are exposing yourself and consumers to unquantified risk. Regulators, poison control, and toxicologists all oppose it : You will face enforcement, product seizure, license denial, and fines. Reputation damage : Being associated with a banned, high‑risk synthetic cannabinoid destroys brand credibility with regulators, healthcare providers, and informed consumers. Strategic Recommendation: Focus on state‑compliant adult‑use cannabis (delta‑9) or the LPHE market (delta‑8 within strict limits). Both are legal, growing, and have clear regulatory frameworks. A serious operator should explicitly reject acetate‑based synthetics and position the brand on safety, transparency, and

Date:  December 2, 2025 Related Legislation:   HB 2485  and SB 970  (2025 General Assembly) The Joint Commission to Oversee the Transition of the Commonwealth into a Retail Cannabis Market has proposed 53 legislative changes to support the establishment of a competitive, equitable, and sustainable cannabis retail market in Virginia. These amendments are designed to strengthen oversight, promote social equity, and ensure compliance with regulatory standards. Market Oversight & Compliance 1. Annual Market Health Report Statute:  § 4.1-604 The Cannabis Control Authority (CCA) shall issue an annual report on the condition and health of the cannabis retail market, to be sent to the Joint Commission overseeing the transition. 2. Consumer Education Requirements Statute:  § 4.1-604 The CCA must develop comprehensive consumer education materials highlighting: How purchasing from licensees supports farmers, small businesses, and community reinvestment Responsible cannabis consumption practices Health risks and dangers associated with marijuana use 3. Public Ownership Registry Statute:  § 4.1-604 The CCA shall maintain a publicly accessible online registry containing ownership and financial disclosure information for all licensees. 4. Annual Compliance Audits Statute:  § 4.1-604 The CCA must conduct at least one annual audit of ownership and financial relationships across all licenses, with anonymized summaries included in the market health report. Ownership & Financial Oversight 5. Ownership Investigation & Approval Statute:  § 4.1-604 The CCA shall investigate ownership and control interests of all licensees and retain authority to: Approve or deny ownership, financing, management, and brand-licensing agreements Issue divestiture orders to ensure compliance with ownership limits 6. Regulatory Standards for Ownership Agreements Statute:  § 4.1-606 The CCA must promulgate regulations establishing: An approval process for Board review of ownership agreements Objective criteria defining "undue influence," including considerations such as: Price-setting authority Shelf-space control Financing dependency Shared personnel 7. Market Concentration Limits Statute:  § 4.1-606 The CCA shall establish market-concentration thresholds, including: Regional market-share benchmarks Statewide market-share limits Herfindahl-Hirschman Index (HHI) benchmarks The CCA may deny or condition license issuance or transfers that would create undue market concentration. Administrative & Regulatory Framework 8. CCA Administrative Status Statutes:  § 2.2-2818, 2.2-2905, 2.2-3114, 2.2-3711, 2.2-3802, 2.2-4024 Amendments clarify the CCA's administrative status: Defines CCA employees as state employees for insurance purposes Excludes CCA from Virginia Personnel Act requirements Allows disclosure statements of personal interests Permits closed-session discussions regarding applicant investigations Establishes exceptions for government data collection practices Provides exemptions for Administrative Procedure Act hearings 9. Product Definitions & Labeling Standards Statutes:  § 4.1-600, 4.1-1405, 4.1-1600, 4.1-1602, 4.1-1603 The CCA shall add definitions for: Edible marijuana products Inhalable marijuana products Topical marijuana products Labeling requirements are updated to specify THC/CBD content appropriate to product type. License Types & Capacity 10. Updated License Limits Statute:  § 4.1-606 Retail establishments:  Maximum 350 licenses Tier V cultivation facilities:  Maximum 10 licenses Other license types:  Limits to be established by Board regulation (processing, Tier I-IV cultivation) 11. Terminology Change: "Impact Licensee" Statutes:  § 4.1-606 and cross-references "Micro business" terminology is changed to "impact licensee" throughout the statutes. Impact Licensee Eligibility & Criteria 12. Expanded Impact Licensee Eligibility Statute:  § 4.1-606 Eligibility criteria for impact licensees are expanded to include: Individuals with prior felony convictions for marijuana distribution (18.2-248.1) Prior marijuana-related convictions/adjudications outside Virginia Residents of jurisdictions disproportionately policed for marijuana crimes (2015-2025 census tract analysis) Persons receiving USDA distressed farmer assistance in the past five years 13. Impact Licensee Qualification Threshold Statute:  § 4.1-606 Applicants must meet at least four of seven criteria  to qualify as impact licensees. Priority scoring based on number of criteria met is removed. 14. Ownership Percentage Targets Statute:  § 4.1-606 The CCA must establish measurable ownership percentage targets for each part of the supply chain: Cultivation Processing Retail New License Types & Operations 15. Marijuana Nursery Cultivation License Statute:  § 4.1-800 A new license type authorizing cultivation of immature plants, clones, and seeds: Location:  Indoors or outdoors Maximum canopy:  2,000 square feet Sales:  To other licensees only (no retail sales) 16. Microbusiness License Statute:  New § 4.1-802.1 A new comprehensive license for small operators to: Cultivate, process, and sell  their own cannabis and products Distribution:  Age-verified delivery and limited on-site retail sales Canopy limits:  3,500 sq. ft. (indoor) / 10,000 sq. ft. (outdoor) Restrictions: One license per person/entity One licensed premises per licensee Sales limited to products cultivated/processed on-site Must comply with seed-to-sale tracking, testing, labeling, and packaging requirements 17. Marijuana Delivery Operator License Statute:  New § 4.1-803.1 and § 4.1-606 Operators may deliver marijuana from retail stores or microbusinesses to consumers, subject to CCA-established requirements for: Age verification Delivery radius limitations Recordkeeping standards 18. Shared Processing Hubs Statute:  New section around § 4.1-801 Establishes shared processing facilities allowing microbusinesses and small processors to legally process cannabis products without individual processing facility ownership. Transportation & Logistics 19. Cannabis Transportation Statutes:  § 4.1-800, 4.1-801, 4.1-802, 4.1-1203 Licensees are authorized to: Transport their own cannabis to other licensees, OR Use licensed transporter services Ownership Concentration Controls 20. Interest Definition Statute:  § 4.1-805 For multiple license limitations, "interest" includes any direct or indirect equity interest  in an entity, regardless of percentage, including interests of 0.01% or less. 21. Tier IV Cultivation Limit Statute:  § 4.1-805 No person may hold interest in more than one Tier IV marijuana cultivation facility license . 22. License Transfer Requirements Statutes:  § 4.1-606, 4.1-702, 4.1-900 All license assignments, sales, or transfers—and any changes to ownership or control—require prior written Board approval . Unauthorized transfers are void and grounds for immediate suspension or revocation. The CCA must establish regulations requiring: Ownership tracing through intermediary entities to beneficial owners Change of control triggers: 20%+ equity/voting acquisition, management appointment/removal rights, or cumulative 20%+ transfers within 24 months 23. Financial Arrangement Prohibitions Statute:  § 4.1-606 The CCA shall prohibit licensees from making loans, gifts, service arrangements, marketing payments, or brand-licensing agreements with other licensees that unreasonably influence: Retail pricing Brand placement Shelf allocation Operational Compliance 24. Operational Timeline Statute:  § 4.1-902 The CCA shall suspend or revoke any license if the licensee is not operational within 24 months  of license issuance. 25. Pharmaceutical Processor Requirements Statute:  § 4.1-802 Retail marijuana stores operated by pharmaceutical processors must offer a specified amount or percentage of products from microbusinesses and impact licensees (to be established by Board regulation). Retail Location & Distance Requirements 26. Retail Store Spacing Statute:  § 4.1-808 The required minimum distance between retail marijuana stores is increased from 1,000 feet to one mile . 27. Sensitive Location Proximity Statute:  § 4.1-808 Retail marijuana stores cannot be located within 1,000 feet  of: Places of religious worship Hospitals Schools Playgrounds Child day programs Substance use disorder treatment facilities Government facilities 28. Retail Products Statute:  § 4.1-802 Retail marijuana stores are authorized to sell marijuana paraphernalia . Application & Licensing Process 29. Public Training & Education Statute:  § 4.1-604 The CCA shall conduct open public training and provide educational resources on the application process for licenses. 30. Lottery Transparency Statute:  § 4.1-604 The CCA shall: Commission independent audits of license lottery processes Publish lottery procedures and results on a public dashboard Conviction History Provisions 31. Marijuana Distribution Conviction Clarification Statute:  § 4.1-808 Prior felony convictions for marijuana distribution (18.2-248.1) are not  grounds for denying a license. 32. General Marijuana Offense Provision Statute:  § 4.1-1000 Applicants are not disqualified due to prior marijuana-related offenses (subject to provisions of § 4.1-808). Taxation & Revenue 33. Local Tax Rate Statute:  § 4.1-1003 Local marijuana tax increases from 2.5% to up to 3.5% . 34. Paraphernalia Tax Exemption Statute:  § 4.1-1003 Marijuana paraphernalia is exempt from taxation. 35. Cannabis Equity Fund Allocation Statute:  § 2.2-2499.8 50%  of Cannabis Equity Reinvestment Fund revenue is allocated to the Virginia Cannabis Equity Business Loan Fund (§ 4.1-1501). 36. Initial Appropriations Budget $3 million allocated upfront to support the first round of licenses. Local Control 37. Local Referendum Option Removal Statute:  § 4.1-629 The provision allowing localities to hold referenda to prohibit marijuana sales is removed , eliminating local opt-out authority. Legislative Purpose & Intent 38. Statement of Purpose Statute:  § 4.1-601 The retail market framework is established to: Create a regulatory approach rooted in restorative justice, economic equity, and public health Generate revenue for community reinvestment Create hundreds of new small and local businesses Strengthen Virginia's agriculture sector End the racially disparate impacts of marijuana prohibition Protect health and safety of all citizens Build a competitive, sustainable, and decentralized market  prioritizing durable independent businesses over short-term tax maximization Labor Requirements 39. Labor Peace Agreements Statute:  New § 4.1-1000.1 All marijuana establishment license applicants must enter into a labor peace agreement  with a bona fide labor organization. Advertising Standards 40. Outdoor Advertising Consistency Statute:  § 4.1-606 Outdoor advertising regulations for retail marijuana stores shall be at least as stringent  as those for pharmaceutical processors or cannabis dispensing facilities. 41. On-Premises Signage Requirements Statute:  § 4.1-1402 Signs on marijuana establishment property shall: NOT  display imagery of marijuana or marijuana use NOT  draw undue attention to the facility May display information to help consumers locate the establishment (per medical cannabis facility standards) Implementation Timeline & Special Provisions 42. Temporary DTC Microbusiness Program Enactment clause provisions The CCA shall issue up to 100 temporary Direct-to-Consumer (DTC) microbusiness licenses  to qualified applicants by September 1, 2026: Eligibility: Hemp growers/processors registered with Virginia Department of Agriculture and Consumer Services (in good standing as of July 1, 2026), OR Qualified impact licensee applicants, OR USDA-qualified farmers Timeline: Applications accepted: July 1, 2026 Licenses issued by: September 1, 2026 Cultivation/processing may begin immediately Retail sales begin: November 1, 2026 Program sunsets when 100+ retail stores are operational or 24 months elapse (whichever first occurs) Licensees may convert to standard microbusiness licenses upon program expiration Canopy Limits:  3,500 sq. ft. (indoor) / 10,000 sq. ft. (outdoor) 43. Pharmaceutical Processor Streamlined Application Enactment clause provisions Pharmaceutical processors with existing CCA permits may use a streamlined application process: Conversion fee:  $10 million (one-time, may be paid in installments) Licenses available:  Up to 9 Timeline:  Process completed by November 1, 2026 44. Industrial Hemp Processor/Grower Conversion Enactment clause provisions Up to 5 industrial hemp processors/growers  previously registered with VDACS may obtain cultivation licenses: Conversion fee:  $500,000 (may be paid in installments) Timeline:  Process completed by November 1, 2026 Priority:  Treated equally to Tier IV and Tier V cultivation applicants 45. Application Priority Schedule Enactment clause provisions Beginning July 1, 2026, application processing priority: Temporary DTC microbusiness licenses (up to 100 by September 1, 2026) Streamlined applications for pharmaceutical processors and hemp growers/processors Applications for impact licenses, microbusinesses, and Tier I/II cultivation facilities 46. Initial Issuance Requirements Enactment clause provisions By November 1, 2026, the CCA shall: Process and issue streamlined applications for pharmaceutical processors Process and issue streamlined applications for hemp growers/processors (max 5) Issue at least equivalent amounts of new licenses to impact licensees, microbusiness licensees, and Tier I/II cultivation facility licensees 47. Retail Sales Launch Enactment clause provisions Retail sales may begin November 1, 2026  once licensees meet all operational conditions. 48. Future Studies Enactment clause provisions The Joint Commission shall study: Establishment and implementation of on-site consumption licenses Microbusiness cannabis event permits (e.g., farmers markets) Advantages, disadvantages, and feasibility of Virginia Alcoholic Beverage Control Authority involvement in cannabis enforcement Reference Information Original Legislation:   HB 2485  and SB 970  (Virginia 2025 General Assembly) Note:  These proposed changes are intended to amend the statutory language contained in HB 2485 and SB 970. The text of those bills serves as the foundational framework. Document prepared: December 5, 2025

The amount of biomass you need depends on your specific business model, product mix, and whether you're selling raw flowers or finished products. Here's a comprehensive breakdown based on Minnesota's OCM laws and industry standards. Biomass Manufacturing Limits A Minnesota cannabis mezzobusiness has the following biomass manufacturing limits : Manufacturing Capacity: 30,000 pounds of cannabis products annually This limit is established by statute and is calculated as equivalent to the amount of cannabis flower that can be harvested from a facility with a plant canopy of 15,000 square feet in one year. The Office of Cannabis Management determines the exact conversion methodology between canopy square footage and biomass output to establish this annual manufacturing limit.​ For comparison, a microbusiness (the smaller vertically integrated license) is limited to manufacturing approximately 10,000 pounds of cannabis products annually (equivalent to harvest from 5,000 square feet of canopy).​ Cultivation Limits Supporting Manufacturing The mezzobusiness cultivation limits that feed into this manufacturing capacity are:​ Indoor cultivation : Up to 15,000 square feet of plant canopy Outdoor cultivation : Up to 1 acre of mature, flowering plants (expandable to 3 acres if the Office of Cannabis Management determines expansion is consistent with state goals) Third-Party Processing and Co-Manufacturing Arrangements Based on Minnesota's cannabis regulations, here's what the research reveals about working with third parties for processing and product creation: Purchasing Biomass from Other Licensees : A mezzobusiness can legally purchase cannabis flower, cannabis concentrates, and other cannabis materials from other licensed businesses, including microbusinesses, other mezzobusinesses, cultivators, manufacturers, and wholesalers to use in their own manufacturing operations. This allows a mezzobusiness to supplement their cultivation with purchased biomass up to their 30,000-pound annual manufacturing limit.​ Exclusive Use Requirements : Minnesota regulations require that cannabis manufacturing must take place on equipment that is used exclusively for the manufacture of cannabis products . This means manufacturing equipment cannot be shared for toll processing or contract manufacturing for other licensees.​ Licensee Restrictions : A mezzobusiness license holder cannot own or operate any other cannabis business and cannot hold multiple mezzobusiness licenses. Additionally, the statute states that "no person, cooperative, or business holding a cannabis mezzobusiness license may own or operate any other cannabis business or hemp business or hold more than one cannabis mezzobusiness license."​ Practical Implication : While Minnesota law does not explicitly prohibit toll processing arrangements between separate licensees, the exclusive-use requirements for manufacturing equipment and facilities, combined with the restriction that a mezzobusiness cannot hold multiple licenses or own other cannabis businesses, suggests that traditional toll processing (where one facility processes materials for another licensee on a contract basis) would face regulatory challenges. Each mezzobusiness would need to conduct manufacturing only according to its approved manufacturing plan and only on equipment dedicated to its own operations.​ Recommendation : If you're considering co-manufacturing arrangements or processing biomass for other third parties as a mezzobusiness, it's advisable to contact the Minnesota Office of Cannabis Management directly at cannabis.info@state.mn.us to confirm whether such arrangements are permissible and what additional licensing or operational modifications might be required. Understanding Cultivation Yields To determine how much biomass you need, you must first understand yield per square foot, which is the industry standard metric:​ Industry Average Yield: Conservative estimate : 39.5 grams per square foot annually​ Optimized indoor operations : 50-75 grams per square foot​ High-performing operations : Up to 60 grams per square foot or more​ For a mezzobusiness with 15,000 square feet of indoor canopy: ​ Conservative yield: 15,000 sq ft × 39.5 g/sq ft = 592,500 grams ≈ 1,305 pounds of dried flower annually Optimized yield: 15,000 sq ft × 60 g/sq ft = 900,000 grams ≈ 1,980 pounds of dried flower annually For a microbusiness with 5,000 square feet of indoor canopy: ​ Conservative yield: 5,000 sq ft × 39.5 g/sq ft = 197,500 grams ≈ 435 pounds of dried flower annually Optimized yield: 5,000 sq ft × 60 g/sq ft = 300,000 grams ≈ 660 pounds of dried flower annually Accounting for Processing Losses Your cultivation yield represents dried flowers. However, when you process flower into finished cannabis products, you lose significant biomass due to: Flower-to-Product Conversion Rates: ​ Dry flower trimming loss : You lose approximately 20-30% of weight during trimming and processing as stems and excess leaf material is removed​ Extraction yield (for concentrates/distillates) : Only 10-20% of the starting material becomes the finished concentrate​ Edible manufacturing : Approximately 1-2 ounces of trim per edible serving, depending on potency Example for Mezzobusiness: If you produce 1,305 pounds of dried flower and want to maximize your 30,000-pound manufacturing limit: Approximate usable flower after trimming: 1,305 lbs × 70-80% = 915-1,044 pounds of trimmed flower This means you need to purchase additional biomass from other licensees to reach your 30,000-pound manufacturing capacity​ How Much Biomass to Acquire For a Mezzobusiness Targeting Full Manufacturing Capacity (30,000 lbs annually): ​ You need to acquire approximately 2,000-2,500 pounds of flower input to produce 30,000 pounds of finished products , accounting for different product types: If producing primarily finished flower and trim: ~1,500-2,000 lbs of flower produces ~30,000 lbs when including all product categories (flower, trim, small packages, etc.) If producing high-yield products like edibles and beverages: Lower flower inputs needed due to volume multiplication through infusion Practical Strategy: Cultivate at maximum capacity (15,000 sq ft canopy) to produce 1,300-2,000 lbs of dried flower annually Purchase supplemental biomass from other licensees (microbusinesses, other mezzobusinesses, cultivators, or wholesalers) to fill the gap to 30,000-pound manufacturing limit​ Allocate flower strategically across your product mix (retail flower, concentrates, edibles, trim) For a Microbusiness Targeting Full Manufacturing Capacity (10,000 lbs annually): ​ A microbusiness with 5,000 square feet should produce approximately 435-660 pounds of dried flower annually. To reach the ~10,000-pound manufacturing limit, you would need to: Maximize your cultivation to produce 435-660 pounds of dried flower Purchase 400-800 pounds of additional flower from other licensed businesses to supplement Focus on high-margin products (edibles, concentrates) that multiply flower weight into higher finished product volumes Key Planning Considerations Vertical Integration Advantage : The mezzobusiness and microbusiness licenses allow you to combine cultivation and manufacturing under one license, which means: You can purchase flower, concentrates, and other materials from other licensees to supplement your cultivation​ Your manufacturing limit (30,000 lbs for mezzo, 10,000 lbs for micro) applies to total cannabis products manufactured, not just flower Sourcing Flexibility : You can source biomass from:​ Your own cultivation (15,000 sq ft for mezzo; 5,000 sq ft for micro) Other microbusinesses Other mezzobusinesses Cannabis manufacturers Cannabis wholesalers Licensed hemp growers (for hemp products) Financial Planning Tip : When creating your business plan, calculate your expected yield per square foot conservatively (use 40-50 g/sq ft rather than optimistic 60+ g/sq ft) and plan to purchase 30-50% of your manufacturing inputs from other licensees rather than relying entirely on cultivatio