Medicinal marijuana chains embrace ‘bud’ sales as Minnesota relaxes regulations
Legal medical marijuana sales officially began in Minnesota on July 1, 2015, but at the time it was signed into law by then-Gov. Mark Dayton, the state legislation that authorized those sales was widely considered the most restrictive of its kind in the nation. That's now changed.
ST. PAUL -- It was a brisk but sunny afternoon in St. Paul, the last day of February, and the young woman behind the pharmacy counter at the Vandalia Street offices of Rise Dispensaries smiled broadly behind dark eyeliner and hints of goth makeup as she handed clients fresh bits of history, one smokable marijuana roll at a time.
With little public fanfare, Rise — formerly known as LeafLine Labs — began selling rolls and jars of “buds,” or dried, raw cannabis flower, to adult medical marijuana users on the first day such sales were legal in Minnesota.
For the state’s burgeoning medicinal marijuana industry, the date marked a long-awaited breakthrough of sorts.
Legal medical marijuana sales officially began on July 1, 2015, but at the time it was signed into law by then-Gov. Mark Dayton, the state legislation that authorized those sales was widely considered the most restrictive of its kind in the nation.
A patient would have to meet one of nine major qualifying conditions to receive marijuana in a liquid, pill or vaporized delivery method. Smoking “pot” was still off the table.
State law has since loosened, at least by a pinch. Among what’s now 17 qualifying conditions, “now we have ‘chronic pain’ and that’s a big one, because there’s a lot of things that fall under chronic pain,” said Sarah Lynch, commercial general manager for Rise’s Minnesota dispensaries.
Still, the industry as a legal option remains nascent and restricted relative to many other states that have legalized cannabis, but expanding.
What had once been limited to back-alley transactions has moved into a new, more regulated and corporatized space. In Minnesota, only two companies — Rise and Green Goods — are authorized to operate cannabis dispensaries, and their approach is night-and-day compared to the illicit market.
That commercial space still includes — but isn’t limited to — products heavier on CBD, a chemical in the cannabis or hemp plant that produces relaxation without the high associated with marijuana’s higher THC levels. CBD products, which are increasingly commonplace from gas stations and coffee shops to health food stores, are legal under federal law but still restricted in some states.
At Minnesota dispensaries, customers can choose products by both CBD and THC level, mixing and matching by preference.
“With the addition of flower, Minnesota is moving into the middle of the pack on the regulated side,” said Dr. Kyle Kingsley, chief executive officer of Minneapolis-based Goodness Growth Holdings, which operates eight Green Goods dispensary locations throughout Minnesota and others throughout four other states. “There are a slew of states that have CBD-only laws, like Iowa, which have definitely restrictive limits on THC levels.”
They have participation from health care providers, Kingsley added. “Generally, it’s been a thoughtful, incremental program, and that’s a good approach if you want things to be well-regulated for patients. Things are going in the right direction.”
In Minnesota, patients or caregivers must be registered in the state’s Medical Cannabis Program, which requires annual renewal. Rise, which was acquired by Green Thumb Industries, a multi-state operator, in December, grows its product in Cottage Grove and operates six dispensaries statewide, including in Eagan and a new site in Mankato.
Shipping cannabis products into Minnesota from out-of-state is still illegal. It remains the only legal dispensary in operation in St. Paul, which hosts one of the company’s larger retail outlets.
Under state law, Rise can open only two more locations.
“We will be opening more,” Lynch said. “I can’t say where yet.”
Green Goods, its only authorized competitor, advertises shops in Minneapolis, Burnsville, Woodbury, Blaine, Duluth and a handful of sites as far outside the metro as Moorhead, Minn.
Regulations loosen, flower prices higher
Despite significant regulation, as the latest doors to open within the state’s relatively new medicinal marijuana landscape, bud sales have added both a traditional and new dimension to distribution, which is still arranged through pre-orders and sales of up to 90-day supplies. In short: buds are cheaper.
“This is new for us, having smokable flower,” Lynch said. “It’s been an extract-only market.”
And those concentrated extracts are pricier, largely because vapor oils, lozenges, sublingual sprays and capsules require more processing.
Medicinal marijuana user Todd Rosewell of Hugo said a half-gram vapor cartridge costs him roughly $55 to $65, whereas 3½ grams of high-grade dried cannabis flower sells for roughly $45 to $55, or even cheaper for lower-grade options. Given quality controls, and a lack of pesticides and contaminants, the product is both safer and pricier than the illicit market, making resales unlikely.
Still, flower is “more economical,” he said. “I just think it gives more people access. As more dispensaries open up, it’s the same as any market — more supply would drive the price down. One of the problems with the state of Minnesota is they’ve limited the market to only two companies.”
Peter Ingersoll, chair of the cannabis division for a San Diego-based commercial real estate brokerage, sees an upside to a duopoly: a professionalization of services. In Minnesota, he said, having only 17 dispensary locations “will keep the prices high, (but) better than flooding the market with hundreds of amateurs who are all going to fail,” he said.
Elsewhere, “shareholder lawsuits, half-finished projects and receiverships litter the playing field,” Ingersoll wrote, in a recent state-of-the-industry update for Sperry Commercial Global Affiliates. That said, “this industry will soon be legalized and continue to grow in the double digits for many decades.”
Federal legalization inevitable?
To date, some 37 states have legalized some level of medical marijuana use, and 18 states have decriminalized it entirely, allowing recreational use. Ingersoll said most industry pundits consider federal legalization of cannabis inevitable, though they also predict it’s still at least three to five years away, if not longer, as it does not appear to be a priority for President Joe Biden’s administration.
In Minnesota, regulation is loosening in other ways. The Minnesota Department of Health’s official list of qualifying conditions has expanded over time to span 17 categories, including cancer, HIV/AIDS, glaucoma, epileptic seizures, Tourette syndrome and terminal illness with a life expectancy of less than one year.
The state has added some conditions that are more fluid or harder to diagnose and quantify, such as intractable pain, chronic pain, post-traumatic stress disorder and autism spectrum disorder as defined by the American Psychiatric Association’s DSM-5 manual.
Still, the Minnesota Legislature has rejected more common conditions such as anxiety and depression, which some psychologists have likened to the common cold as far as their frequency in the general population.
Rosewell, 48, once traveled 100 days out of the year in his job as a national representative for a large Twin Cities manufacturing conglomerate. He decided he needed a change of pace, so he visited a friend’s marijuana farm in rural Colorado in the summer of 2020, in part to learn more about the industry.
Instead, he choked on a grilled bratwurst. His friends performed CPR, saving his life but leaving him with eight broken ribs, a punctured lung and a cracked sternum. It was, he recalled, the worst pain of his life.
After a few days on heavy pain medications, Rosewell was determined to recover without relying on morphine, or opioids such as OxyContin, “which are highly addictive, and I wanted nothing to do with that,” he said.
Within seven days, he was moving toward cannabis.
“When you take morphine or OxyContin, you can’t function,” he said. “You’re sleeping. It’s going to knock me out and I’m going to need to lay down on the couch.”
Instead, he smoked pot. “When I was prescribed that in Colorado, it was amazing,” Rosewell said. “But when I got back to Minnesota, I wasn’t able to get it. It became difficult and quite expensive to get it in any form in Minnesota, compared to Colorado or any other state where it’s been legalized.”
He turned instead to cannabis pills, and later to cannabis vaporizer cartridges and lotions. Since the legalization of smokable flower at the end of February, he’s also been purchasing marijuana buds from Rise’s St. Paul dispensary.
After months away from the workplace, Rosewell’s next goal is to break into legalized sales and distribution himself, he said.
“There’s kind of a stigma around it because of how it’s been viewed in this country over the last 100 years,” he acknowledged. “But there’s so many benefits to it; we’re just starting to scratch the surface. Obviously, there’s responsible use. We’re not talking about hippies back in the ’60s just sitting around all day. (Just look at) the amount of people who are serving time, who are minorities, for selling something that could be used as beneficial.”
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