Cities expose legal gray areas of Minnesota cannabis law
September 22, 2025
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.
Related: Albert Lea at odds with state law after City Council denies cannabis license
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.
Related: Blazing new trails: These 13 Minnesota cities are considering municipal cannabis stores
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.
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