On the heels of the 2018 Farm Bill, some states have opted to regulate hemp-derived cannabinoid consumer products. One of the early movers in this area is the State of Minnesota. The regulations in Minnesota for hemp-derived cannabinoid products (as well as licensing for them) are changing, with licensing opening up this fall. Interestingly, Minnesota has adopted a sort of hybridized cannabis and hemp program, in which cannabis licensees can also access and sell “lower-potency hemp edibles” (“LPHE”) made outside of the heavily regulated cannabis license supply chain.
Registration and Licensing Conversion for Making and Selling Lower Potency Hemp Edibles
One of the major changes coming for LPHEs makers and sellers regards registration and licensure. If you want to produce and/or sell LPHEs in Minnesota, you need to register with the Office of Cannabis Management (“OCM“) beforehand. And, yes, that also goes for those making and selling hemp derived THC beverages, and it applies to anyone selling hemp derived cannabinoid products to Minnesota consumers online. LPHE registration (which closed on April 14, 2025 but is re-opening from June 2 through August 31, 2025) is a key prerequisite for licensing conversion for existing LPHE registrants (whether they registered with the OCM prior to April 14 or if they register within this upcoming window). If you miss this upcoming summer window, fear not, you can still apply for a LPHE license this fall, but you can’t operate until the license actually issues to you.
Existing LPHE registrants still have to apply for formal licensure this fall, but they can continue to operate in the interim under Minnesota Statutes, section 151.72 until licenses from OCM are issued. At that point though, all LPHE license holders must operate in compliance with Minnesota Statutes, chapter 342, and existing LPHE registrants can start acting under the new laws now if they so decide. Commending operations under chapter 342 means that LPHE licensees must source their hemp products from licensed manufacturers or cannabis businesses or use authorized wholesalers if importing hemp products from out of state.
Hemp businesses that don’t have a pending LPHE license application this fall will have to cease operations. Pre-licensure inspection may also be required (as determined by the OCM) unless you’re a registered hemp retailer that’s already undergone inspection as part of the initial registration.
License Types and Conditions
There are going to be three types of LPHE licenses in Minnesota: manufacturer, retailer, and wholesaler. The application fee for each is $250. For manufacturers, their initial and renewal licensing fee is $1,000. For retailers, it’s $250 per location, and it’s $10,000 for wholesalers.
The LPHE licenses have some tied house rules. While an LPHE operation can vertically integrate between the three license types available (while also holding licenses to prepare and sell food, tobacco-related licenses, and licenses to manufacture or sell alcoholic beverages), LPHE licensees cannot simultaneously hold any kind of cannabis business license. And LPHE licensees cannot “offer, give, accept, receive, or borrow money (or anything else of value) or receive credit from another hemp business license holder, except for the lawful sale of LPHE products”. LPHE licensees also cannot offer or receive benefits in exchange for “preferential retail treatment”, which means fee slotting is off the table and the OCM is going to be watching for other kinds of anti-competitive behavior between LPHE licensees. There are also a number of endorsements available and/or required for LPHE licensees including for delivery, on-site consumption, and for the import of out-of-state LPHEs. Finally, LPHEs must comply with applicable local laws around building, fire, and zoning regulations, and LPHE retailers must secure retail registration from their local governments before commencing sales. And regarding local control, local governments cannot either limit the number of local retail registrations they issue or prohibit the possession, transportation, or use of LPHEs within their borders.
LPHE manufacturer licensees are also going to be required to execute labor peace agreements (“LPA”) in order to secure state licenses. LPAs have been a touchy topic in the cannabis world and they will likely be the same for LPHE licensees, many of which will be breweries that may balk at the idea at having to have an LPA.
Operations
Minnesota’s contemplated LPHE supply chain is as follows:
- Hemp plants are cultivated and processed by a grower licensed by the Minnesota Department of Agriculture;
- The resulting hemp plant parts and concentrate can be sold to cannabis microbusinesses, mezzobusinesses, manufacturers, wholesalers, or to LPHE-manufacturer license holders;
- The hemp yields are then manufactured into artificially derived cannabinoids or into LPHEs by an LPHE manufacturer or a licensed cannabis microbusiness, mezzobusiness, or cannabis manufacturer (so long as they all have the proper endorsements from the OCM);
- The LPHEs are then sold to either an LPHE retailer, wholesaler, or to a licensed cannabis retailer by an LPHE manufacturer or wholesaler, cannabis microbusiness, cannabis mezzobusiness, cannabis manufacturer, or cannabis wholesaler license holder (and any LPHEs imported from out of state must go through a licensed LPHE wholesaler or a cannabis wholesaler with an importation endorsement);
- LPHEs can only be sold to consumers by an LPHE retail license holder or by a licensed cannabis retailer, cannabis microbusiness (with retail endorsement from the OCM, cannabis mezzobusiness (with the proper retail endorsement from the OCM), or medical cannabis combination business; and
- On-site consumption of LPHEs is permitted within a licensed retail establishment so long as the retailer also holds an on-site consumption endorsement from the OCM, and LPHE beverages can be sold at off-site events if the event is authorized by local government and the event organizer holds an “on-sale” license issued by the OCM and so long as the event isn’t longer than 4 days.
Product Restrictions
The substantive changes between section 151.72 and chapter 342 are not hugely vast; there are many similarities between the two. At the same time, Minnesota will now have five generally recognized types of hemp products under chapter 342: artificially derived cannabinoids, hemp concentrate, hemp derived consumer products (that cannot exceed .3% total THC, and which can only be made and sold by cannabis business license holders), hemp derived topical products, and LPHEs. Previously, the law only addressed non-intoxicating cannabinoid products and edible cannabinoid products.
Current potency limits on LPHEs that will remain are that:
- For non-beverage: serving sizes cannot exceed 5 milligrams of delta-9 THC, 100 milligrams of CBD, CBG, CBN, or CBC, or .5 milligrams of any other cannabinoids, and package sizes cannot exceed 50 milligrams of delta-9 THC and 1,000 milligrams of CBD, CBG, CBN, or CBC; and
- For beverage: serving sizes cannot exceed 10 milligrams of delta-9 THC per single container, 200 milligrams of CBD, CBG, CBN, or CBC, and .5 milligrams of any other cannabinoids.
And for all products, the ratio of delta-9 THC to all other artificially derived cannabinoids cannot exceed 95% purity.
Additionally, all LPHEs cannot contain any cannabis plants or derivatives of any kind, and they cannot be or appear to be lollipops or ice cream or bear the likeness “or contain characteristics” of a real or fictional person, animal, fruit, or be modeled after any type of brand of products “primarily consumed by or marketed to children”. Synthetic cannabinoids also aren’t allowed and existing, finished candy and snack foods cannot be infused with cannabinoids of any kind. All LPHE products must also be tested by a licensed cannabis testing facility and must meet all testing standards derived by the OCM, which have differing and increased requirements from section 151.72.
Getting Ready for Registration and Licensing
Minnesota is tightening up and expanding its hemp consumer products game. This means that existing registered hemp product makers and sellers need to update their current operations and internal order of operations to inevitably comply with chapter 342, and it also means that they need to ready themselves for license conversion this fall (for example, if you’re required to ink an LPA, start looking for a willing union now). For those looking to get in on Minnesota’s hemp industry, you get a second bite of the apple starting on June 2 through August 31, and you should be preparing your registration information now pursuant to section 151.72. If you’re waiting until fall to apply for your LPHE license, be sure to factor in potential delays before commencing operations, since you won’t be able to open your doors until you comply with local laws and have actually secured a state license.
[View source.]
