Minnesota Cities Test Limits Of How Much They Can Restrict Marijuana Businesses

*“That becomes a problem, because we’re at the beginning of this industry
and this market. Time and money are at a premium.”*

*By Brian Arola, MinnPost*

Whether it comes from courtrooms or the Capitol, Minnesota’s cannabis laws
look in need of clarification in response to wide interpretations by cities.

Local governments by law can cap the number of cannabis retailers, place
restrictions on where businesses are located and set hours of operation.
Prohibition is a step too far.

Cities are using the law’s language, or finding areas not addressed by the
law, to achieve similar ends, however, raising questions that may end up
being hashed out by judges or lawmakers.

One court case involving Albert Lea’s denial of a cannabis retail license
is ongoing. A rejected applicant for a cultivation business in Silver Bay
said he’s considering his legal options.

In all, attorney Carol Moss knows of about 20 cities statewide on the
“naughty list” for ordinances she sees as contradicting state laws. A
common one, said Moss, who monitors cannabis policies statewide at the
Edina-based Hellmuth & Johnson law firm, involves buffers imposed between
businesses and churches. The law only carves out room for buffers from
schools, day cares, residential treatment facilities and certain parks.

The state’s Office of Cannabis Management offers guidance on the laws but
has no legal authority to compel cities or counties into compliance. This
leaves it up to individuals to challenge local ordinances in court.
*Timing is everything*

Minnesota’s Court of Appeals can weigh in on the legality of city
ordinances, Moss said. The process can be lengthy and costly, pricing most
people out of it.

“That becomes a problem, because we’re at the beginning of this industry
and this market,” she said. “Time and money are at a premium.”

Costs have been a barrier preventing Greg Lien from appealing Silver Bay’s
rejection of his business application. Lien intended to open a cannabis
cultivation business in the North Shore city until he got stonewalled
earlier this year.

Silver Bay passed an ordinance in January stating it would not issue a
registration or license to any retail or other cannabis business, citing a
specific part of Minnesota law found under “Minn. Stat. Sec. 342.13(i)” to
justify the ban. The section reads:

“If a county has one active registration for every 12,500 residents, a city
or town within the county is not obligated to register a cannabis business.”

Lake County, where Silver Bay is located, has only 10,855 residents.
Because another city in the county, Two Harbors, passed an ordinance
stating an intention to issue one cannabis business license, Silver Bay
appears to have interpreted the law to mean the county satisfied the
minimum.

Lana Fralich, city administrator in Silver Bay, declined to comment on the
city’s ordinance, citing pending litigation.

The “active registration” wording in state law is notable here. Two
Harbors, and Lake County, seemingly didn’t have any active cannabis
business registrations at the time Silver Bay passed the ordinance and
denied Lien’s application. Two Harbors ultimately didn’t approve a cannabis
retail license until August, meaning Lien may have been the county’s first
active registration if Silver Bay hadn’t stopped him.

Another consideration is that the part of the law allowing limits on active
registrations may not even be referring to cultivation businesses. Above
the section setting a minimum number of active registrations per a county’s
population, the law refers to caps on retail registrations.

Lien believes the city ordinance is in direct conflict with the statute. He
interprets the statute to be referring to retail rather than cultivation.
Whatever the merits of his case, he hasn’t yet figured out how to make a
costly legal fight work.

“I’m still trying to find an attorney that I can afford,” he said.
*Latitude in the law*

Albert Lea’s city leaders initially characterized their denial of a
cannabis retail license during a July public meeting as a stand against
state law. Publicly stated reasons shifted afterward to a stance on how
cities should have more leeway when considering applicants.

A lawsuit filed in the Minnesota Court of Appeals against Albert Lea in
August alleges the city council denied Jacob Schlichter’s application for
“political reasons.” His plans for Smoking Tree met all statutory criteria,
the lawsuit states.

Albert Lea’s response in court, dated Sept. 9, denied the council’s actions
were political. Denial stemmed from concerns for public safety and
Schlichter’s ability to operate in a lawful and respectful manner,
according to the city.

Schlichter has a misdemeanor conviction involving a minor on his record
from 2017, which City Manager Ian Rigg cited as a reason for the council
not to reconsider its denial of Schlichter’s application in August. The
council’s initial vote against the license, by a 4-3 margin, occurred in
late July.

Mayor Rich Murray, in August, characterized the denial as a way to protect
residents, alleging the governor and Legislature failed to do so in the
cannabis law.

“Approving this registration remains objectionable by the city based on his
refusal to follow lawful instructions,” Murray stated in a press release.
“His reaction to the denial was to harass people to the point they sought
new restraining orders after a few years of silence. The applicant has
publicly stated that he does not have to follow any of the local
requirements.”

Schlichter did not immediately return a call requesting comment.

If city leaders were concerned enough about Schlichter’s past to question
his application before the initial denial, no one voiced the sentiment on
the record during the July meeting. At that meeting, the mayor bemoaned how
the state “rammed” cannabis legalization “down our throats.” Council member
Larry Baker explained how his vote was a way to say “no” to the
Legislature, saying he was tired of control being taken away.

The city manager and city attorney, at the time, told the council it could
open itself up to a lawsuit if it blocked the application. Their stance was
the city’s hands were tied after the applicant got the OK from the state.

These statements before the initial denial could be closely scrutinized in
an appeals court, Moss said. She has experience appealing city decisions in
appeals courts, where judges consider what reasoning and info a council or
committee used when making decisions.

“All of that information is going to be used against them,” she said. “ …
The evidence he [Schlichter] will have at the court of appeals is pretty
significant, that the city council was taking into consideration things
that were improper.”

Albert Lea ended up approving two other applicants based in New Mexico and
Washington. As an aside, the Washington applicant, Cristina Aranguiz, had a
role in halting Minnesota’s social equity cannabis retail lottery in late
2024 by filing a lawsuit alleging the process unfairly denied her
application.

If the issues raised in Albert Lea and Silver Bay aren’t resolved in the
courts, legislation could refine the law to rein in the range of
interpretations by cities. A spokesperson for Rep. Jessica Hanson,
DFL-Burnsville, who co-authored the bill legalizing cannabis, stated that
discussions on specific language updates are ongoing.

*This article first appeared on MinnPost and is republished here under a
Creative Commons Attribution-NoDerivatives 4.0 International License. *

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Marijuana Businesses appeared first on Marijuana Moment.