Minnesota cities face deadline for making cannabis rules

Recreational cannabis sales are coming to Minnesota, and cities have some big decisions to make: Where can the shops go? Can they be next to schools? Should the cities get in the game?

"It's the hot topic," said Plymouth Planning and Development Manager Chloe McGuire, who noted that it's not often cities get to write rules for a new industry. "This is what we wait for as planners."

When the Minnesota Legislature passed the law in 2023 that clears the way for recreational cannabis sales , it included a clause that allowed cities to adopt time-limited moratoriums that prevented retail shops from setting up within their borders. In some ways, it was a formality. Recreational sales can't happen until the state finishes its rule-making process , which is still underway.

But some cities chose to hit pause as a way of adding "extra protection" so they could pivot if the state changed cannabis laws or launched the industry earlier than expected, said Kyle Hartnett, assistant research manager for the League of Minnesota Cities.

Many cities that adopted moratoriums have until the end of the year to lift them, leading to a flurry of fall meetings aimed at figuring out where recreational retailers can set up shop and which government officials will be tasked with running their compliance checks. State law also allows cities to limit the number of recreational cannabis stores, though they must allow at least one for every 12,500 residents.

"We can decide on number of licenses and zoning districts, but we do have to provide for it," said McGuire, who is also on the executive committee for the Minnesota chapter of the American Planning Association. "We can't ban it. That decision has been made for us."

In larger, denser cities, such as Minneapolis , public discussions have focused on how to create a limited number of buffer zones around places where children spend time, without running afoul of the requirements to allow a minimum number of stores. In smaller cities, officials have also debated how to best regulate a new industry with limited staff.

People in the cannabis industry are closely watching to see what patchwork of regulations emerges and what that might mean for their business plans.

"We're seeing all sorts of different approaches, and it really speaks to the diversity of businesses that are forming in this state," said Leili Fatehi, partner and principal of Blunt Strategies, a cannabis consulting firm.

Some business owners already have hemp shops and hope to expand to offer cannabis in their current cities. Others are thinking about where they want to set up, Fatehi said, and are considering how much competition they might face and whether the local government officials are welcoming.

"It continues to be, for us, a lot of matchmaking between clients," Fatehi said, "because people are still in that process of deciding what it is they want to do."

Some cities, including Osseo, are debating opening up municipal cannabis stores. The city has one proposal from a Minnesota company offering consulting services to help set up the business and another from a venture capital firm offering to cover the real estate and set-up costs in exchange for a portion of the proceeds.

Council Member Mark Schulz likes the idea of being able to bring in additional money to pay for city services without having to increase residents' property taxes. But, he said, "the biggest thing is trying to make sure that we're looking out and protecting our residents and our community."

Osseo council members are also weighing whether to set up buffer zones that would prohibit retail cannabis stores from operating within 500 feet of schools or within 250 feet of parks and day care centers.

Buffer zone proposals appear on many council agendas this fall. Maplewood officials are aiming to pass an ordinance in November. As of now, City Manager Michael Sable said the council seems inclined not to limit the number of stores, treating cannabis similarly to alcohol and tobacco.

"For us, it would have been a cap of four, but the majority of the council said no cap," Sable said.

He said it's likely cannabis stores will be able to operate where retail establishments are allowed, with the exceptions of buffer zones around schools and parks.

Some smaller cities are turning to county officials for help. The Wright County Sheriff's Office already runs alcohol compliance checks for many smaller cities that don't have their own police departments. So, county officials offered to enter a joint powers agreement to run cannabis compliance checks for them as well.

"Most cities have been receptive to the county reaching out and kind of promoting the joint powers agreement," Wright County Attorney Brian Lutes said. "I think cities are in the same boat as counties where we're all trying to figure this out."