Purpose of the Bill

This bill aims to modify and clarify provisions related to employee stock ownership plans (ESOPs) within the cannabis industry in Minnesota. It intends to define the duties and limitations of individuals and entities concerning ownership and control in cannabis businesses.

Main Provisions

• Definitions and Terms:

  • Control: Defined as the power over management or policies of a cannabis business.
  • True Party of Interest: Includes any individual with a stake or control in a business. It clarifies who is not considered a true party of interest, such as those receiving fixed rents, employees without control, and passive investors.
  • Trustee: A person or entity managing assets in a trust for beneficiaries, including specific roles like a fiduciary or trust protector.

• Application and License Limits:

  • Individuals cannot be a true party of interest for more than one application per license type unless exempted by certain conditions.
  • True parties of interest and trustee exceptions apply to those holding up to 10% ownership, ESOP trustees, and specific business roles under an ESOP structure.
  • Restrictions on the number of licenses a person or entity can hold are directly influenced by their role (e.g., cooperative member, manager).

• License Ownership:

  • Different types of cannabis businesses, like microbusinesses and mezzobusinesses, have specific limitations on the number of licenses they can hold.
  • Restrictions are in place for holding multiple licenses, cross-ownership, and the number of businesses within certain regions (e.g., not more than one retail business per city).

Significant Changes

• The bill introduces detailed definitions around who can be involved in cannabis businesses, distinguishing between active managers and passive investors.
• It tightens regulations on ownership and control within cannabis businesses, particularly around ESOP structures, and expands the roles included within the “true party of interest.”
• New clauses allow some license holding flexibility for ESOP-related positions, like trustees, while enforcing stricter control on ownership to prevent monopolies within the cannabis industry.

Relevant Terms

employee stock ownership plan, ESOP, cannabis business, true party of interest, control, trustee, ownership restrictions, license limitations, management policies, passive investment.