Minnesota Lawmakers Approve Cannabis Law Updates to Boost Adult-Use Rollout and Improve Hemp Regulations

After two years of setbacks, Minnesota legislators pass key changes designed to streamline licensing, support hemp entrepreneurs, and reduce regulatory confusion.

Minnesota lawmakers reached a final agreement on May 17, 2025, to revise the state’s adult-use cannabis legislation, which was originally signed into law by Gov. Tim Walz in May 2023. These newly adopted changes are intended to clear regulatory roadblocks and better prepare the state’s Office of Cannabis Management (OCM) to launch a functional legal market.

The bipartisan conference committee finalized the cannabis omnibus policy bill in response to OCM recommendations and mounting pressure from prospective cannabis business owners. The bill includes targeted amendments addressing licensing challenges, social equity provisions, and limitations affecting the state’s low-potency hemp sector.

Six Strategic Modifications to Strengthen Minnesota’s Cannabis and Hemp Framework

The 2025 cannabis policy legislation introduces six significant modifications designed to align Minnesota’s regulatory structure with industry realities. These provisions include:

1. Creation of a wholesaler license for low-potency hemp beverages.

2. Recognition of adjudicated cannabis convictions for social equity applicant status.

3. Permission for product sampling at cannabis-related events.

4. Legal export of non-compliant hemp-derived products to other states.

5. Testing permissions for facilities still undergoing accreditation.

6. Clarification that one beverage serving may contain up to 10mg of THC.

These adjustments aim to correct inefficiencies in the state’s original adult-use cannabis law, help Minnesota keep pace with national cannabis expansion, and provide clarity for entrepreneurs navigating a fragmented marketplace.

Senate and House Approve Final Language; Bill Now Awaits Governor’s Signature

The Minnesota Senate approved the bill along party lines on May 17 with a 34-32 vote. One day later, the House passed the bill with a vote of 80-50. The legislation is now on Gov. Walz’s desk for final approval, a move expected in the coming days.

House sponsor Rep. Zack Stephenson (DFL-Coon Rapids), who also led the 2023 adult-use legalization effort, highlighted the importance of licensing hemp beverage wholesalers. He emphasized the economic benefits such products have brought to struggling local breweries.

“These low-dose hemp THC beverages are a Minnesota innovation,” Stephenson noted during House deliberations. “They’ve become a lifeline for small breweries adapting to declining beer sales.”

Lawmakers Express Frustration With Slow Program Rollout Compared to Other States

Rep. Nolan West (R-Blaine) criticized the state’s slow implementation of adult-use sales, pointing out that Minnesota legalized cannabis six months before Ohio but has yet to open a single licensed dispensary. In contrast, Ohio retailers have sold over $500 million in adult-use cannabis since their program launched in August 2024.

“Minnesota could have been a leader,” West said. “Instead, we’re watching other states pass us by while small business owners here are stuck in limbo.”

West, who originally criticized the overregulation in the 2023 bill but ultimately voted in favor, argued the new legislation brings the state “one step closer” to finally launching a viable adult-use market.

OCM Plans to Launch License Lotteries in June Amid Rising Public Demand

The OCM announced it will conduct license lotteries beginning June 5, 2025, focusing first on social equity and general applicants in three categories: cultivators, manufacturers, and vertically integrated “mezzobusinesses.” A separate lottery for dispensary applicants will follow later in the summer.

Interim OCM Director Eric Taubel assured lawmakers the agency is now fully staffed and equipped to move the market forward.

Cannabis Industry Advocate Says Law Now Risks Failing Small Operators

Despite supporting the bill, cannabis entrepreneur and consultant Leili Fatehi voiced concern over what she views as a growing departure from the equity and small business values originally championed in 2023.

Fatehi, a partner at Blunt Strategies and owner of vertically integrated hemp business Crested River, criticized the increasing regulatory burden on hemp operators and social equity applicants.

“The system has become fear-based, not risk-based,” she said. “It’s creating costs and restrictions that ignore market realities and harm the very groups legalization was meant to help.”

Fatehi noted that hemp businesses now face higher fees, shrinking profit margins, and minimal support—even as they serve wellness-focused consumers in cities where full cannabis access remains restricted or delayed.

Local Governments Accused of Delaying Adult-Use Market With Overreach and Inaction

A recurring issue raised during the hearings involved local governments. Under the 2023 law, municipalities cannot ban dispensaries outright but may regulate them through zoning and permitting. However, several cities have implemented what advocates call “voluntary obstruction,” including lengthy registration processes and duplicative requirements.

Rep. Jessica Hanson (DFL-Burnsville) said she has heard from numerous applicants frustrated with local officials dragging their feet or outright blocking retail cannabis development.

“This is happening across Minnesota,” Hanson said. “Cities are either overreaching with complex registration processes or deliberately stalling to prevent dispensary openings. That wasn’t the intention of our law.”

Hanson attempted to include stronger state oversight language in the 2025 revisions, but that effort was blocked by representatives of local governments, whose cooperation was necessary for the bill’s passage.

Local Control Debate Remains a Sticking Point as State Pushes Forward

The issue of local control has been contentious since adult-use legalization was first debated. In 2023, Republicans pushed for language allowing municipalities to ban cannabis businesses. The final law struck a compromise: cities must allow at least one dispensary per 12,500 residents but can impose zoning limits.

Now, advocates like Hanson argue that even this compromise is being undermined by cities creating regulatory bottlenecks that delay the entire market launch.

“These delays don’t just hurt entrepreneurs,” Hanson warned. “They benefit the illicit market, reduce consumer safety, and create more confusion. If the adult-use launch fails to meet expectations, it will be because of unnecessary local interference.”

Advocates Call for Continued Reforms and Enforcement of Legislative Intent

While the 2025 policy revisions represent progress, industry participants and lawmakers acknowledge that more work is needed. Many worry that without more assertive state action, municipal interference will continue to hinder rollout efforts.

Meanwhile, entrepreneurs—especially those from marginalized communities—remain in limbo, waiting for the opportunity they were promised.

As Gov. Walz prepares to sign the bill into law, supporters hope the coming months will finally deliver results: licensed stores, accessible products, and a functioning legal market that lives up to Minnesota’s cannabis reform goals.