Article 1

Regulation of the production, sale, and consumption of Cannabis

Article 1 establishes a regulatory system for the cultivation, manufacturing, distribution, retail sales of recreational cannabis.

Section 1 (349B.01) defines the following terms:  cannabis; cannabis accessory; cannabis cultivation facility; cannabis establishment; cannabis product; cannabis product manufacturing facility; cannabis testing facility; commissioner; consumer; cultivation permit; disqualifying felony offense; immature plant; local government; mature plants; premises; public health standards and practices; public place; retail cannabis store.

Section 2 (340B.03) sets out the general provisions of chapter 340B.

Subdivision 1 specifies that the scope of this chapter is to establish the means by which the cultivation, production, distribution processing, manufacturing, sale, and testing of cannabis and cannabis products are to legally occur in this state.  Specifically states that this chapter does not limit the rights of a patient enrolled in the medical cannabis registry, a registered designated caregiver, or registered manufacturer under the medical cannabis registry program; or a person who is licensed by the commissioner of agriculture to grow industrial hemp under chapter 18K.

Subdivision 2 states that a person who is 21 years of age or older may cultivate, possess, purchase, transport, transfer, use and consume cannabis, cannabis products and cannabis accessories as permitted in law.

Subdivision 3 specifies that nothing in this chapter shall be construed to  (1)require an employer to permit  or accommodate an employee’s use, consumption, possession, sale or cultivation of cannabis or cannabis products in the workplace or on the employer’s property; (2) prevent an employer from adopting a policy that prohibits the consumption of cannabis or cannabis products in the workplace or to work while under the influence of cannabis; or (3) create a cause of action against an employer who discharges an employee for violating a policy that restricts or prohibits the consumption of cannabis by employees.

Subdivision 4 specifies that an employer may not discipline or discriminate against an employee or a prospective employee because the employee or prospective employee has metabolites of cannabis in the employee’s or prospective employee’s blood.  Specifies that this does not prevent an employer from disciplining or discharging or taking other adverse employment action against an employee for violation of a workplace drug policy or for working under the influence of cannabis.

Subdivision 5 specifies that nothing in this chapter prohibits a person or entity that occupies, owns, or controls a property from prohibiting or otherwise regulating the possession, consumption, display, transfer, distribution, sale, transportation or cultivation of cannabis or cannabis products on the property.

Subdivision 6 specifies that a residential landlord may not prohibit the possession or the consumption of cannabis or cannabis products by nonsmoking means by a tenant who is 21 years of age or older, with some exceptions.

Subdivision 7 specifies that this chapter does not authorize a person to consume cannabis in a public place.

Subdivision 8 requires the commissioner of health to submit to the legislature an annual report of the progress on processing licenses; an overview of the cannabis; the number of applications filed with the commissioner; and the commissioner’s enforcement actions taken against licensees.

Section 3 (340B.04) describes the duties of the commissioner of health in the regulation of cannabis, cannabis products, cannabis accessories, and cannabis establishments.

Subdivision 1 describes the duties of the commissioner under this chapter.

Subdivision 2 authorizes the commissioner to enter into interagency agreements with other state agencies for technical, regulatory, enforcement, or inspection duties.

Subdivision 3 states that no person employed by the commissioner and assigned to administer or implement this chapter shall have a direct or indirect financial interest in any cannabis establishment.

Section 4 (340B.05) requires the commissioner to adopt rules necessary to implement this chapter.

Subdivision 1 requires the commissioner to adopt rules by January 1, 2021.  Requires the commissioner to apply public health standards and practices to protect public health when adopting these rules. Requires that the rules adopted by the commissioner must allow retail cannabis stores to begin selling cannabis, cannabis products and cannabis accessories by January 1, 2022.

Subdivision 2 describes the areas in which the rules adopted by the commissioner must address.

Section 5 (340B.06) describes the general licensure requirements for all cannabis establishments.

Subdivision 1 specifies that no person may operate a cannabis establishment unless licensed by the commissioner.

Subdivision 2 specifies that a license shall only be issued to a person who (1) is a resident of this state for at least two years prior to the date of the application; (2) is 21 years of age; (3) has not had a license issued under this chapter revoked within five years prior to the application date; and (4) is not delinquent on any local, state and federal taxes.

Subdivision 3 establishes an application fee.

Subdivision 4 states that a license issued under this chapter are valid for one year, and to renew a license the licensee must submit a renewal application.

Subdivision 5 requires a separate license for each class of license and for each premise located in this state. Also specifies the number of licenses a person may hold at any given time and states that a person issued a testing facility license may not hold another license.

Subdivision 6 states that a license is not transferrable.

Subdivision 7 describes the application process. Requires an applicant to submit the application fee and applicable license fee to the commissioner.  Requires the commissioner to begin accepting applications on October 1. 2021 and requires the commissioner to process the application within 45 days after the receipt of the application.  If the application is denied the applicant has the right to appeal the commissioner’s denial of a license.

Subdivision 8 authorizes the commissioner to inspect the premises of a cannabis establishment premises and to inquire into the construction and operation of the establishment.

Subdivision 9 specifies the annual license fees.

Subdivision 10 prohibits a cannabis establishment from employing any person who is under the age of 21 years or who has been convicted of a disqualifying felony offense.

Section 6 (340B.07) describes the licensure requirements for retail cannabis stores.

Subdivision 1 requires a retail cannabis store to obtain a license in order to operate.

Subdivision 2 requires a retail cannabis store to only purchase cannabis and cannabis products from a cannabis cultivation facility or a cannabis product manufacturing facility and specifics that the purchase transaction must only occur on licensed premises.

Subdivision 3 requires a retail cannabis store to track all cannabis and cannabis products from point of transfer from a cannabis product manufacturing facility to the point of sale.

Subdivision 4 specifies that a retail cannabis store can only sell to a person who is 21 years of age or older and has a valid government issued identification card showing that they are 21 years of age or older.

Subdivision 5 requires an employee of a retail cannabis store to verify that the purchaser has a  valid proof of age and specifies that relying on a fraudulent proof of age shall not be grounds for the revocation or suspension of a licensed issued.   Also specifies that the store may not require a person to provide personal information other than a valid proof of age and shall not be required to acquire or record any personal information about consumers other than information typically needed to conduct a financial transaction at an on sale liquor establishment.

Subdivision 6 requires all cannabis and cannabis products sold in a retail store to be properly packaged and labeled in accordance with the requirements of this chapter.

Subdivision 7 specifies that a retail cannabis store may not sell anything other than cannabis, cannabis products or cannabis accessories.

Subdivision 8 prohibits the consumption of any cannabis or cannabis product on the premises of the retail cannabis store.

Subdivision 9 prohibits the retail cannabis store from delivering or making arrangements for the delivery or shipment of cannabis, cannabis products, or cannabis accessories to an individual.

Subdivision 10 requires each employee of a retail cannabis store to go through training that has been approved by the commissioner.

Section 7 (340B.08) describes the licensure requirements for cannabis cultivation facilities.

Subdivision 1 requires a cannabis cultivation facility to obtain a license in order to operate.

Subdivision 2 requires a cannabis cultivation facility to track the cannabis cultivated by the facility from seed or immature plant to the wholesale purchase.

Subdivision 3 specifies that a facility may only sell cannabis at wholesale to a cannabis product manufacturing facility, other cannabis cultivation facilities or to a retail cannabis store.

Section 8 (340B.10) describes the licensure requirements for cannabis product manufacturing facilities.

Subdivision 1 requires a cannabis product manufacturing facility to obtain a license in order to operate.

Subdivision 2 specifies that a cannabis product manufacturing facility may only purchase cannabis from a licensed cannabis cultivation facility or produce its own cannabis if it is licensed as a cannabis cultivation facility. Also requires a cannabis product manufacturing facility to track all cannabis that it processes from the point the cannabis is delivered or processed to the point of transfer to a retail cannabis store.

Subdivision 3 prohibits a cannabis product manufacturing facilities from (1) adding any food product if the manufacturer of the food product holds a trademark unless the facility uses the trademarked food product as a component or as part of a recipe and does not state or advertise to the consumer that the cannabis product contains a trademarked food product or (2) intentionally or knowingly label or package a product in a manner that would cause a reasonable consumer  confusion as to whether the cannabis product is a trademarked food product.

Subdivision 4 requires that cannabis and cannabis products be prepared on the premises of the cannabis product manufacturing facility that is used exclusively for the preparation of the product with equipment that is used exclusively for the preparation of the product.

Subdivision 5 requires a cannabis product manufacturing facility to affix a label to all cannabis and cannabis products that meets the labeling requirements of this chapter, and requires that the cannabis products are clearly distinguishable from commercially available products not containing cannabis.

Section 9 (340B.11) describes the licensing requirements for cannabis testing facilities.

Subdivision 1 requires a cannabis testing facility to obtain a license to operate. Specifies that a cannabis cultivation facility or cannabis product manufacturing facility does not need to license as a testing facility to test for quality control purposes.

Subdivision 2 states that a person who has an indirect or direct financial interest in a cannabis testing facility cannot have a direct or indirect financial interest in a cannabis cultivation facility, cannabis product manufacturing facility or a retail cannabis store.

Section 10 (340B.12) requires testing of cannabis and cannabis products.

Subdivision 1 requires each cannabis cultivation facility and cannabis product manufacturing facility to submit representative samples to a cannabis testing facility in order for the facility to certify that the cannabis and cannabis products comply with required standards.

Subdivision 2 requires the cannabis cultivation facilities and the cannabis product manufacturing facilities to submit the testing results to the commissioner.

Subdivision 3 requires the commissioner to take the necessary action to destroy the entire lot if the sample tested does not meet the required standards.

Subdivision 4 prohibits the cannabis cultivation facility and the cannabis product manufacturing facilities from selling any cannabis and cannabis product  that test positive for any contaminant  at a level that has been identified as potentially unsafe to the consumer.

Section 11 (340B.13) requires the commissioner to develop and maintain a seed to sale tracking system.

Section 12 (340B.14) paragraph (a) requires each cannabis establishment to keep a complete set of books and records that show the business transactions for the current tax year and the three preceding tax years.

Paragraph (b) authorizes the commissioner to require a cannabis establishment to furnish any information the commissioner deems necessary for the administration and enforcement of this chapter. And may require an audit of the books and records of the establishment.

Paragraph (c) states that the premises of a cannabis establishment is subject to inspection or investigation by the commissioner during regular business hours and at other times of apparent activity.

Section 13 (340B.15) establishes package and labeling requirements.

Subdivision 1 requires a retail cannabis store to ensure that prior to sale each cannabis or cannabis product: (1) is properly packaged and in compliance with federal child resistant packaging requirements; (2) does not include any false or misleading statements regarding health or physical benefits; (3) is packaged in plain, opaque, tamperproof, and childproof containers with only the store’s logo or business name; (4) is packaged in recyclable or reusable containers and (5) includes a symbol or other easily recognizable mark indicating that it contains cannabis.

Subdivision 2 requires a cannabis product manufacturing facility to affix a label to all cannabis and cannabis products that the facility transfers to retail cannabis stores.  Specifies what the label must include.

Section 14 (340B.16) describes the process under which a person can cultivate cannabis for personal use.

Subdivision 1 specifies that a person must have a cultivation permit issued by the commissioner before that person can cultivate cannabis for personal consumption.

Subdivision 2 specifies what an applicant for a cultivation permit must submit to the commissioner. Specifies that the commissioner must begin issuing permits no later than January 1, 2023 and that the commissioner must approve or deny an application within 60 days.  If an application is denied the commissioner must inform the person of the reason for the denial.  Specifies the reasons under which the commissioner may deny an application.

Subdivision 3 requires a permit holder to inform the commissioner of any change within 30 days.

Subdivision 4 specifies that a permit in valid for two years and describes the process for renewal.

Subdivision 5 establishes the fees for the cultivation permit, permit renewal, and for late fees.

Subdivision 6 requires that a person who is interested in obtaining a cultivation permit must complete a training course and pass a written or online examination regarding cannabis cultivation and cannabis laws.  Specifies what the training course must cover.

Subdivision 7 requires a permit holder to maintain the permit at the physical location where the cannabis is cultivated. And must provide it upon lawful demand by a peace officer.

Subdivision 8 requires the commissioner to establish grounds and procedures for revoking or suspending a permit.

Section 15 (340B.17) outlines illegal acts.

Subdivision 1 states that it is a misdemeanor for a retail cannabis store to permit a person under the age of 21 to consume cannabis or cannabis products on the retailer’s premise.

Subdivision 2 states that it is a petty misdemeanor for any person under the age of 21 to purchase or attempt to purchase cannabis or cannabis products from a retail cannabis store unless under the supervision of an adult for training, research or education purposes.

Subdivision 3 states that it is a petty misdemeanor for a person under the age of 21 to enter a cannabis retail store for the purpose of purchasing cannabis.

Subdivision 4 states that it is a petty misdemeanor for a person under the age of 21 to claim to be 21 years of age or older for the purpose of purchasing cannabis.

Subdivision 5 state that a person is not 21 until 8:00a.m on the day of the person’s 21st birthday.

Subdivision 6 specifies the acceptable forms proof of age identification. 

Section 16 (340B.18) describes the local regulations.

Paragraph (a) authorizes a local government to adopt ordinances or regulations that prohibit cannabis establishments within the local government’s jurisdiction or pass regulations that are more restrictive than the requirements in this chapter if the local government determines that they are necessary to protect the public health.

Paragraph (b) states that a local government must not adopt a regulation or ordinance to prohibit or establish criminal penalties for the cultivation, possession, use or consumption of cannabis or cannabis products as authorized under this chapter or chapter 152.

Section 17 (340B.19) states that a contract related to the operation of a cannabis establishment is enforceable.

Section 18 (340B.25) establishes in the state treasury a cannabis account in the special revenue fund for the deposit of all revenue collected from the retail sales of cannabis, cannabis products and cannabis accessories under chapter 297A.  Specifies how a portion of the funds in the account are to be appropriated.

Section 19 appropriates money to the commissioner of health from the state government special revenue fund to implement this chapter.

Article 2

Taxation

Under current law, business expenses, such as wages and rent, are generally deductible at the federal level for purposes of calculating federal taxable income, and Minnesota incorporates these deductions in calculating Minnesota taxable income. Federal law, however, prohibits the deduction for expenses incurred in a trade or business consisting of trafficking in controlled substances, such as medical cannabis, that are prohibited by federal law. Thus, the deduction does not flow through to Minnesota taxable income. As proposed to be amended, a subtraction would be allowed for the federally disallowed expenses for purposes of calculating Minnesota income tax, corporate franchise tax, and alternative minimum tax.

Section 1 allows the subtraction from individual income tax; Section 2 allows the subtraction from corporate franchise tax; and Sections 3 and 4 allow the subtraction for purposes of calculating alternative minimum tax. Sections 1 to 4 are effective beginning in tax year 2022.

Section 5 provides that the sale of cannabis, cannabis products, or cannabis delivery accessories is a retail sale and not a sale for resale. Sales for resale are exempt from sales tax because the sales tax is paid by the end user. Effective for sales and purchases made after December 31, 2021.

Sections 6 to 8 restate the definitions of cannabis and cannabis products that were established in Article 1 for purposes of the sales tax chapter. Establishes a definition of "cannabis delivery accessory." Effective for sales and purchases made after December 31, 2021.

Section 9 carves out from the general sales tax rate the new provision in section 10 for taxation of cannabis, cannabis delivery accessories, and cannabis products. Effective for sales and purchases made after December 31, 2021.

Section 10 establishes a tax rate of 37 percent on the retail sales of cannabis, cannabis delivery accessories, and cannabis products. Effective for sales and purchases made after December 31, 2021.

Section 11 authorizes statutory cities, home rule charter cities, and towns to impose up to a three percent sales tax on retail sale of cannabis, cannabis delivery accessories, and cannabis products. Effective January 1, 2022, and any new tax imposed is effective the day after the governing body files its approval with the Secretary of State.

Section 12 instructs the Revisor to make necessary changes to remove references to marijuana in the chapter of Minnesota Statutes that requires the filing of returns and payment of tax on marijuana products, and make necessary cross-reference changes consistent with the removal requirement. Effective January 1, 2022.  

Article 3

Clean Indoor Air Act

Article 4 makes modifications to the Minnesota Clean Indoor Air Act by including in the prohibition the smoking of cannabis and the inhaling or exhaling of vapor (tobacco and cannabis) from an electronic delivery device.

Section 1 (144.413, subdivision 4) adds to the definition of smoking in the clean indoor air act lighted cannabis, lighted cannabis product and inhaling or exhaling vapor  from an electronic delivery devise or an electric cannabis delivery device.

Sections 2 through 5 (144.413) add a definition of cannabis, cannabis product, electronic cannabis delivery device and electronic delivery device.

Sections 6 and 7 (144.414) strike language that specifically prohibits the use of an electronic cigarettes at day care premises and at health care facilities (a specific prohibition for electronic cigarettes at a day care center or health care facility is no longer necessary)

Section 8 (144.4165) specifically prohibits the use of cannabis or cannabis products, the use of an electronic cannabis delivery device or to possess any of these items in a public school.

Section 9 repeals section 144.414, subdivision 5 (prohibiting electronic cigarettes at certain facilities.)

Article 4

Controlled Substanes Act; Expungement

Sections 1 to 3 define “cannabis product,” "concentrated cannabis," and “consume” for purposes of the controlled substances chapter of law.

Section 4 amends the misdemeanor crime of possessing marijuana in a motor vehicle. Current law applies to possession of more than 1.4 grams (0.05 ounces). This section increases that to one ounce (28.35 grams) and also prohibits possession of more than eight grams of concentrated cannabis or cannabis products that cumulatively contain more than 800 milligrams of THC.  These are the same amounts that the bill legalizes (see section 9).

Section 5 adds a new misdemeanor crime for consuming a cannabis product or marijuana in a motor vehicle on a street or highway.

Sections 6 to 8, and 11 are conforming changes.

Section 9 legalizes certain acts relating to cannabis and cannabis products. Authorizes persons 21 or older to: (1) possess or transport, purchase from a retail cannabis store, or transfer without renumeration to a person who is 21 or older; one ounce or less of cannabis, eight grams or less of concentrated cannabis, or cannabis products that cumulatively do not contain more than 800 milligrams of THC; (2) with a cultivation permit, possess, cultivate, process, or transport up to four cannabis plants (with no more than two being mature); (3) possess, use, or transport cannabis accessories or purchase them from a retail cannabis store; (4) assist a person 21 or older to perform a legal act relating to marijuana; or (5) consume cannabis or cannabis products. Of note, a person may not smoke or consume cannabis in violation of the Minnesota Clean Indoor Air Act, or consume cannabis or cannabis products in a public place, on private property without the owner’s consent, or in a manner that endangers others. Defines terms. Clarifies that a person may not operate a vehicle or perform certain work while under the influence of cannabis.

Section 10 legalizes certain acts relating to cannabis and cannabis products for persons 21 or older who are licensed to operate a retail cannabis store or a cultivation, manufacturing, or testing facility, or who manufacture, possess, or purchase cannabis accessories or sell accessories to a person 21 or older, or who lease or otherwise allow the use of property for any activities lawfully engaged in under this section or chapter 340B (article 1).

Section 12 authorizes expungements sealing criminal records relating to specified past offenses involving small amounts of marijuana. Under this section, the attorney general, in consultation with the Bureau of Criminal Apprehension and the courts, must identify past convictions that qualify for expungement and notify the appropriate prosecutor who handled the case (and attempt to notify the offender). The prosecutor must then review the case to determine whether it qualifies for expungement and notify the court of this (and attempt to notify the offender). A court shall order expungement in cases that the prosecutor determines qualifies. Offenders notified that their case doesn’t meet the standard for expungement or who did not receive any notice may bring a petition for a judicial determination. An expungement ordered under this section restores the subject to their status before the original criminal action was brought.

Section 13 contains effective dates.

Article 5

Miscellaneous Provisions

Sections 1 and 2 (152.23 and 152.345) modify the medical cannabis registry program by permitting a student who is a registered patient to possess and self-administer medical cannabis or have medical cannabis administered on the grounds of a school, on a school bus or van or at a school sponsored event.

Section 3 (214.1015) prohibits a health related licensing board from taking disciplinary action against a regulated person for providing advice or services to a cannabis establishment or an entity seeking licensure as a cannabis establishment or deny a license to an applicant for licensure solely because the applicant was previously employed by a cannabis establishment.