Joint oversight: Recreational cannabis bill amendment would give local governments some say on enforcement, licensing

A change to the massive recreational marijuana bill in the Minnesota House was meant to soften objections by the state’s cities and counties.

It hasn’t. At least not yet.

The change would allow cities and counties to have dual licensing powers over retailers of cannabis products within their jurisdiction. While locals would have to issue licenses to any retailer licensed by the state, they could use their local license to enforce state rules on sales.

Cities and counties could also charge a small license fee — no more than $200 — that would be charged on top of the state’s $250 license fee. And their co-jurisdiction would not apply to growing or manufacturing businesses located within city or county boundaries.

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“The state does the lion’s share of the work on this,” Rep. Zack Stephenson, DFL-Coon Rapids, said of his legalization bill, House File 100. “The local jurisdiction has no discretion. If the state grants a license, the local unit of government must also issue a license.”

State Rep. Zack Stephenson

MinnPost photo by Peter Callaghan

State Rep. Zack Stephenson

“They are better situated to do the enforcement,” he said of the cities and counties. “Because you need both licenses, if a local unit of government catches a retailer selling to kids or selling products that are not approved (by the state) they can yank the license and shut down the store.”

Only public-facing licensees would need local licenses under the new language — cannabis retailers, cannabis microbusinesses that can both grow cannabis in small quantities and sell to customers, low-potency hemp-based edibles retailers and medical cannabis retailers.

The amendment also makes a major change to enforcement of state laws on marijuana. Not only can cities and counties license these new stores and enforce laws, in several areas they are required to lead on enforcement. They must do compliance checks, they must do checks on age verification rules, they must conduct stings to assure no minors are buying products, and they must do inspections at least once a year.

Locals are allowed to fine retailers up to $2,000 for each violation.

“His amendment is basically a way to say, here are some teeth for local governments to say we’ll have a quasi license and you can be temporarily suspended until the state can deal with it,” said Matt Hilgart, a lobbyist for the Association of Minnesota Counties.

But they can’t, as city and county lobbyists have requested, completely opt out of retail sales. As of now, there is no clarity whether they can enforce general zoning ordinances or limit the number of stores in any area of cities or counties. This is especially an issue in border towns that might have customers try to make purchases from neighboring states.

The bill does have restrictions on location stores near schools, parks and playgrounds. But those are put in play when the state considers licenses, though cities and counties can comment on license applications.

Matt Hilgart, a lobbyist for the Association of Minnesota Counties, testifying before the House State and Local Government Finance and Policy Committee on January 31.

House Media Services screen shot

Matt Hilgart, a lobbyist for the Association of Minnesota Counties, testifying before the House State and Local Government Finance and Policy Committee on January 31.

The reluctance to give cities and counties too much authority and any licensing is based on a basic premise by sponsors: Too much burden on new cannabis businesses could increase costs and put them at an economic disadvantage to illegal sellers.

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“It’s a battle right now,” said Hilgart. “The skepticism that too much local government involvement will deter businesses from setting up shop and potentially create an illicit market and us saying we don’t think that is founded.”

The law changes by Stephenson do allow cities and counties to pull licenses and close stores. But those decisions must be quickly reviewed by the state, which can reverse those decisions or change punishments. 

While they support the changes, lobbyists for the state cities and counties associations say they are not enough.

“We see the amendment as a step in the right direction,” said Alex Hassel, a lobbyist for the League of Minnesota Cities. The local registration is similar to what is now required of other retailers and gives cities a way of knowing which stores are properly registered and which might be illegal pop-ups. But the ultimate authority over who is licensed, how many stores are licensed and where they locate is with the state, not the cities.

The cities also appreciate the authority to do compliance checks,  having testified at committee hearings that residents expect city officials to respond to complaints about businesses acting illegally. But the requirements in the amendment add to city to-do lists and will bring extra costs that aren’t covered by license fees.

Alex Hassel, a lobbyist for the League of Minnesota Cities: “We see the amendment as a step in the right direction.”

House Media Services screen shot

Alex Hassel, a lobbyist for the League of Minnesota Cities: “We see the amendment as a step in the right direction.”

“That’s a big lift for local governments,” Hassel said.

Hilgart said the amendments only respond to some of the concerns raised. The counties have been pushing for local control, a strong state regulatory framework and “some recognition of local government costs.”

The counties agree with the premise that the new businesses should have relatively low licensing and taxation costs to compete with illegal sellers. So rather than have additional taxes at the local level as happens in some other states, the counties are proposing appropriations from the state.

“We’re paying for all of our state agencies in this bill,” he said, referring to appropriations for the new Office of Cannabis Management along with money for the departments of agriculture, economic development, public safety, corrections and others.

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He wants the bill to recognize local costs and provide perhaps two to four percent of the revenue from a proposed 8% excise tax to cities and counties.

If Stephenson — along with the lead Senate sponsor Sen. Lindsey Port, DFL-Burnsville — are not interested in local government opt outs, “will you at least let us exhibit our local zoning authorities to their full capacity and have some kind of reasonable limitation on license numbers?” Hilgart asked.

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