Minnesota Regulators’ Crackdown on Hemp Flower, Sees Results
June, 2024 - United States of America
As we previously wrote about here, the Minnesota Office of Cannabis Management (“OCM”) partnered with the Department of Health to launch an interagency effort to halt the sale of illegal hemp flower. In less than two months since that crackdown was initiated, OCM inspectors have confiscated and destroyed nearly 73 pounds of hemp flower throughout the state. According to a report issued this week, OCM inspectors have confiscated 12,094 “units” of flower – units ranging from bags, jars, and pre-rolled joints – that have an estimated retail value of over a quarter of a million dollars. The confiscations occurred across 58 different retail locations across the state.
The market being served by the hemp flower products is the result of an inadvertent gap created by Minnesota’s 2023 cannabis law. That law attempted to provide temporary state regulation of hemp products while the new OCM was being established. The law gave the OCM oversight over the hemp-derived market but did not give it control over raw flower, only hemp-infused products like drinks and gummies. Some retailers took advantage of that gap by selling raw hemp flower, which has intoxicating effects similar to marijuana. This was accomplished because inspectors were not able to take samples of the raw hemp flower for testing. Therefore, if retailers told inspectors the products were legal hemp, inspectors were forced to take their word for it. That all changed in March when the OCM and Department of Health finalized their interagency agreement where medical cannabis inspectors from the Department of Health were essentially deputized by the OCM to enforce the ban on raw flower sales until licensing occurs next spring. That agreement gave inspectors the authority to confiscate and test raw flower products.
While the interagency agreement has been successful in identifying and removing illegal products from the marketplace, it remains to be seen what, if any, consequences violators will face. The OCM has threatened fines in excess of $1 million, but as of yet, no fines or citations have been issued. Further, the new amendment to the cannabis statute says the OCM cannot issue a cannabis business license to “any person or business who violated this chapter after August 1, 2023.” It remains to be seen if these illegal hemp sales will result in license disqualifications in the future, but the cost-benefit analysis around selling illegal hemp products has certainly changed now that enforcement has started.
David Standa ([email protected]) continues to follow the Minnesota cannabis industry closely. Feel free to contact him directly with any questions about the low-potency hemp market or the upcoming recreational preapproval application window.
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