ST. PAUL, Minn. (FOX 9) – The pot of people eligible for Minnesota’s first cannabis license lottery just got a lot smaller.
The Brief
1,169 social equity applications for Minnesota’s cannabis lottery were rejected, and about 640 will head to the lottery for about 280 licenses.
Veterans with rejected applications told FOX 9 the process was unfair and didn’t give them a chance to appeal, even when they though the Office of Cannabis Management (OCM) made a simple error reviewing the application.
Industry experts expect OCM to schedule the lottery for early December, but lawsuits seem likely to hold it up.
The Office of Cannabis Management (OCM) sent out rejection notices on Monday to about two-thirds of the social equity applicants.
Veterans make up a good chunk of the social equity applicants, along with people who had cannabis convictions.
Bad actors weeded out?
A few of the veteran applicants told FOX 9 they’re fine with the state trying to clear out bad actors like straw man businesses with out-of-state owners, but they think the OCM has made some serious legal mistakes with its rejections.
Who was rejected?
Seven years in the Army Special Forces were supposed to help Mahtomedi’s Nick Jawor have a leg-up on the competition for Minnesota’s first cannabis business license.
“We felt we had a pretty good chance of getting ahead of it,” Jawor told FOX 9.
But four months after submitting his application, the first thing he heard from the OCM was that his application was denied.
He says the issue could be resolved in two minutes, but there’s no way to appeal it or request a hearing.
“This is insane that they’ve done this to so many people,” said Michael Mayes, CEO of Quantum 9 – a consulting firm that’s working with several cannabis clients.
An OCM spokesperson said the office sent 1,169 denial letters on Monday, and will soon send out approval letters to about 640 applicants.
No detailed denials
But attorneys and consultants working with rejected clients are unhappy with the lack of detail and inconsistencies with the denials.
They say nitpicky problems could’ve been corrected if applicants got deficiency notices, like they were supposed to.
“Most of them were small technical issues,” said Jen Randolph Reise, a business and cannabis specialist at North Star Law Group. “Some of them seemed to me to be technical issues on OCM side.”
Gaming the system
OCM did not want to comment on individual applications, but interim director Charlene Briner told us in a statement that “the review process also revealed a high number of applications that were inconsistent with the protections in law designed to prevent predatory practices, ‘zone flooding’, and other attempts to game the system to gain unfair or illegal advantage.”
Reise says OCM had every right to weed out those applicants.
“But with these denials, OCM has thrown the baby out with the bathwater,” the attorney said.
Lottery ahead
The lottery date still isn’t set, but most people in the industry now expect OCM to schedule it in about two weeks.
However, several people involved with the rejected applications say they expect lawsuits over the denials, which will mean no lottery and no licenses for months.
H/T: www.fox9.com
