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Last week, a judge in Ramsey County stopped a lottery that would’ve awarded marijuana licenses in Minnesota. This is a huge setback for regulators in the state, who are prepping for legal sales come 2025.
The lottery would’ve awarded preapproval licenses to business owners who met the criteria for social equity applicants, giving them a head start before the normal licensing period began in 2025. However, after the Office of Cannabis Management dismissed over half of applications for not proving proper documentation as required, lawsuits were filed.
In their suits, the plaintiffs claimed that they were wrongfully excluded from the lottery and requested a court order to stop the licenses from being awarded.
On Monday, Judge Stephen Smith obliged, issuing a stay so the plaintiffs could file a petition with the state’s Court of Appeals. In his order, the judge explained that the circumstances presented by the timing of the cannabis management office’s decisions and the filing of these lawsuits meant that a reasoned and fair decision by the Court of Appeals couldn’t be made if the lottery wasn’t halted.
One of the plaintiffs, Cristina Aranguiz, explained that the judge’s decision was a victory for accountability, transparency and fairness in the state’s marijuana industry. She noted that it also demonstrated that the court recognized the importance of making sure that every qualified social equity applicant was afforded an equal chance to succeed.
Marijuana regulators had accused Aranguiz of being part of a scheme to use other applicants to acquire an unfair advantage in the lottery.
In a statement, the Office of Cannabis Management revealed that regulators were disappointed by the judge’s decision but maintained that the review process used for the lottery was rigorous to guarantee fairness, as the law intended.
An agency spokesman added that the state’s approach was focused on protecting the integrity of social equity licensees, with the reviewing process used helping to prevent and identify bad actors from accessing the system. The spokesman added that they remained committed to launching a sustainable, equitable, and responsible recreational marijuana marketplace in the state.
In total, 282 licenses were to be awarded, ranging from microbusiness licenses to retail dispensary licenses to cultivator licenses. If picked, licensees would have guarantees from the state that they could operate as they continued to build their businesses.
Cultivators who were pre-approved would’ve also been permitted to start growing the crop to ensure they had enough supply to meet demand when dispensaries opened to the public. It is important to note though that none of the pre-approved businesses would’ve been allowed to operate earlier than next year when the regulation-making process is concluded.
Marijuana companies, such as Aurora Cannabis Inc. (NASDAQ: ACB) (TSX: ACB), and others from around the region will be watching how the legal medical marijuana program in Minnesota rolls out amid the legal challenges that are causing delays in some critical activities.
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