HF4398

Purpose

• This bill aims to update Minnesota’s cannabis laws by creating new endorsement pathways for edible cannabinoid products, expanding enforcement and penalties for unlicensed activities, updating license transfer and relocation rules, adding eligibility rules and disqualifications for licenses, and adding new endorsements for cultivation and manufacturing. It also adds requirements around cultivation practices (records, inputs, pest management, pollinator protection) and certain manufacturing safeguards.

Main Provisions

• Edible cannabinoid product handler endorsement

  • Replaces some licensing with an edible cannabinoid product handler endorsement for entities handling edible cannabinoids and certain hemp edibles.
  • In partnership with the Department of Agriculture, the office will regulate edible cannabinoid product handlers similarly to food handlers, with alignment to existing food-handling rules.
  • Endorsement is issued to holders of an existing license (no separate license fee), must align with the license term, and cannot be used to locate edible cannabis manufacturing at the same site as food production except for limited product development sampling.
  • Eligible license holders for the endorsement: cannabis microbusinesses, cannabis mezzobusinesses, cannabis manufacturers, lower-potency hemp edible manufacturers, and medical cannabis combination businesses.
  • Lower-potency hemp edibles may only be produced without adding cannabis flower or concentrate to the product.

• Civil penalties for unlicensed sales and related activities

  • Establishes scaled civil penalties for selling or intending to sell cannabis flower, cannabis products, lower-potency hemp edibles, or hemp-derived products without a license.
  • Penalties escalate by quantity (e.g., up to 2 oz; up to 8 oz; up to 1 lb; up to 5 lb; up to 25 lb; up to 50 lb; over 50 lb) and by retail value, with amounts ranging from a few thousand dollars to as much as $1,000,000 for large offenses.
  • Separate penalty scales apply to selling cannabis concentrates without a license and to importing or selling THC-infused products without a license.
  • Possessing twice the allowed quantity may be used as evidence of intent to sell, triggering penalties.
  • A small per-plant penalty is allowed for growing excess plants without a license.

• License transfers, social equity, and relocation

  • Licenses issued under the chapter may be freely transferred with prior written approval unless a final site inspection is pending or the license is a social equity license.
  • Social equity licenses may only be transferred to another social equity applicant for three years; after three years, transfers can occur to any entity with review and approval.
  • Preliminary license approvals cannot be transferred.
  • New licenses are required if the legal business structure changes or dissolves, and licenses must be renewed annually.
  • The office may allow relocation of a licensed cannabis business location with rules, a relocation application, and a processing fee not to exceed $250; relocation does not extend the license term.

• Disqualifications (felonies and violations)

  • The office may determine disqualifications for felony convictions and certain non-cannabis crimes, with rules to limit issuance to individuals with certain disqualifications.
  • The office must not issue a license to someone convicted of illegally selling cannabis after August 1, 2023 unless five years have passed; similarly for violations of the chapter after that date, with potential set-asides for good-faith mistakes not involving gross negligence or public harm.

• Civil and regulatory offense disqualifications

  • The office may consider civil or regulatory violations from other jurisdictions in deciding license eligibility and duration of disqualification.
  • Five-year waiting periods apply after violations; violations fined by the office (under a specified section) are grounds for disqualification.
  • For a true party of interest owning more than 10% of a revoked license, the length of disqualification can be set.

• Administrative penalties and orders

  • The office can issue administrative orders for violations, requiring corrections or cease-and-desist actions, with defined correction timelines and reconsideration processes.
  • Monetary penalties for each violation can be up to $10,000, and penalties can be pursued in district court.

• Endorsements (general framework)

  • The office must provide endorsement application forms and may deny endorsements for prior suspensions, outstanding fines, or failure to meet location-specific requirements.
  • Endorsement applications carry no filing fee and must align with the license term.

• Cultivation endorsements and requirements

  • Cultivation endorsements are available to cannabis microbusinesses, cannabis mezzobusinesses, cultivators, and medical cannabis combination businesses.
  • Requires cultivation records for batches, including pesticides and inputs; records must be kept for at least five years and produced to the office, the Department of Agriculture, or the Department of Health upon request.
  • Requires compliance with pesticide, fertilizer, soil, and related rules; adoption of an operating plan and cultivation plan addressing water use, recycling, waste disposal, and integrated pest management (IPM).
  • Requires pollinator protection, no adulteration of cannabis products, and security requirements for indoor or outdoor cultivation.

• Manufacturing endorsements

  • Manufacturing endorsements are available to the same general license holders as cultivation endorsements.
  • Manufacturing must occur in an enclosed, locked facility dedicated to cannabis product manufacturing (with possible shared spaces if the license permits it), and equipment must be used exclusively for cannabis product manufacturing.
  • Must comply with all packaging, labeling, and health and safety requirements.
  • Prohibits cannabinoid products manufactured with embedded or inseparable batteries in electronic delivery devices.

Significant Changes to Existing Law

• Introduces an edible cannabinoid product handler endorsement in place of some licensing for edible cannabinoid handling.
• Expands civil penalties for unlicensed sale and import of cannabis products and THC-infused products, with detailed tiered penalties.
• Adds a structured framework for transferring licenses (including social equity licenses) and allows relocation of licensed premises with a fee.
• Establishes disqualification rules based on felonies and post-2013 violations, plus mechanisms for good-faith set-asides.
• Creates and standardizes endorsements for cultivation and manufacturing, including strict operational, recordkeeping, and safety requirements (IPM, pollinator protection, adulteration prohibition, etc.).
• Tightens oversight of cultivation inputs, environmental compliance, and product integrity through new recordkeeping and regulatory provisions.
• Enables a broader system of administrative penalties and civil actions to enforce the act.

Relevant Terms - edible cannabinoid product handler endorsement - edible cannabis product - lower-potency hemp edible - cannabis microbusiness - cannabis mezzobusiness - cannabis manufacturer - medical cannabis combination business - social equity license - license transfer - license relocation - civil penalties - penalties by quantity (cannabis flower, concentrate, THC-infused products) - disqualification - felony convictions - violations after August 1, 2023 - administrative orders - endorsements (cultivation, manufacturing, edible) - cultivation records - pesticides and IPM (integrated pest management) - pollinator protection - adulteration - indoor/outdoor cultivation security - electronic delivery device with batteries - product packaging and labeling - prohibition on cross-site manufacturing with food production (except limited sampling)