New law overhauls medical and adult-use cannabis supply chain

A new cannabis law will merge the medical and adult-use supply chains and create a new macrobusiness license.

Sponsored by Rep. Jessica Hanson (DFL-Burnsville) and Sen. D. Scott Dibble (DFL-Mpls), most of the law goes into effect Aug. 1, 2026.

However, a prominent portion of the law takes effect Jan. 1, 2027: elimination of the medical cannabis combination business license, creation of a macrobusiness license in its place and amending statutory provisions to reflect the changes.

Those include requiring a cannabis macrobusiness to obtain a medical cannabis manufacturing endorsement and at least one other medical cannabis endorsement.

A macrobusiness with a retail operations endorsement will be allowed to operate up to eight retail locations. If it has more than five locations, at least three will need to be in areas identified by the Office of Cannabis Management as high medical need areas. A macrobusiness with retail and medical cannabis retail operations endorsements will be required to carry and make available at each retail location all high medical need products identified by the office. Cannabis testing facilities will be allowed to prioritize the testing of high medical need products.

Under the new law, macrobusinesses that cultivate cannabis indoors will be allowed to cultivate up to 38,000 square feet of plant canopy.

Other provisions in the law will:

• effective Jan. 1, 2027, legalize a “ratio hemp-infused cannabis product” that contains no more than 100 milligrams of cannabidiol, cannabigerol, cannabinol or cannabichromene per serving, a maximum of 10 milligrams of THC per serving and 200 milligrams of THC per package for edibles and a maximum of 10 milligrams of THC per serving and two servings per container for beverages;

• simplify the Office of Cannabis Management’s annual market analysis of the cannabis industry and annual report to the Legislature;

• modify local control provisions that pertain to interim ordinances and reporting to the office;

• modify a local government's ability to cap local registration by the number of residents;

• effective May 27, 2026, allow the Office of Cannabis Management to revoke an applicant’s qualified applicant status if it determines the applicant isn’t eligible for a license under state law. The office can then deny final license authorization if the applicant’s location would violate local zoning ordinances or state fire or building codes;

• amend the true party of interest standard to allow a person who contracts with a city or county to operate a maximum of 10 municipal cannabis stores and allow a person to hold up to 33% ownership of up to four social equity businesses;

• give the Office of Cannabis Management the authority to inspect unlicensed facilities where lower-potency hemp edibles are manufactured, processed or sold and allow the office to assess civil penalties to those facilities;

• require a cannabis cultivator, macrobusiness, mezzobusiness or microbusiness with a cannabis cultivation endorsement to choose to cultivate either indoors or outdoors;

• require the Office of Cannabis Management to publish a report by Jan. 15, 2027, with recommendations on administering a psilocybin therapeutic use program;

• allow a person, cooperative or business that holds a hemp business license to hold a cannabis license; and

• require local governments with retail registration authority that perform compliance checks to annually submit data on those checks to the Office of Cannabis Management.

HF4203/SF4401*/CH123

SF4401* / HF4203 / CH123