ALBERT LEA, Minn. (FOX 9) – The first business licensed to retail cannabis in Minnesota is still fighting for the right to open in the city of Albert Lea.

Costly combat

Winning and losing:

A judge recently gave him a big win, but the city is not giving up, no matter the cost.

Jacob Schlichter excitedly showed off his Smoking Tree space in June, the week he got the state’s first cannabis retail license.

Three months later, it’s almost as empty.

“We were set to open the next day after getting that state license and city registration,” he said. “And all of that fell apart.”

Albert Lea’s city council blocked his business license, which has prevented him from opening.

It wasn’t mentioned at the time, but city leaders later said Schlichter’s 2017 misdemeanor conviction for contributing to the need for child protection or services gives them pause.

That charge doesn’t disqualify a cannabis business applicant and it’s older than the seven-year lookback for background checks.

“You can bring up something from a decade ago, from when I was a young adult, couldn’t even drink, and act like that’s the same person I am today,” Schlichter told FOX 9. “But at the end of the day, the only one breaking the law would appear to be the city.”

Smoking cash

Judging the battle:

A judge ruled last week that Schlichter was unquestionably the first Albert Lea retailer with a state license, so the city broke its own first-come, first-served ordinance when it denied his license.

The court ordered Albert Lea to issue the business license or come back Oct. 13 and explain why it hasn’t complied with its own rules.

City manager Ian Rigg tells us the city is choosing the second option, so the only thing burning out of Smoking Tree is cash.

“No doubt about that,” Schlichter said. “But I think what people are going to be more concerned about is how much of our taxpayer money is going to go to funding what I believe to be a very frivolous defense.”

There is a potential cost to Albert Lee taxpayers in fighting the lawsuit. Schlichter’s attorney has asked for damages and the initial court ruling says he has suffered a financial injury.

Outside lawyers were also hired to work the court case. Rigg tells FOX 9 their liability insurance provider hired an outside attorney and the city hasn’t received any bills yet, so the cost is unknown.
But back on July 28, when the city council voted to deny Schlichter’s business license, the city’s attorney said a lawsuit could reach six figures if they tried to block cannabis altogether.

“We would expect to spend, a legitimate defense of that lawsuit would cost easily $100,000,” said Joel Holstad.

Who got licenses?

‘Straw man’ selected:

The city opted instead to keep its licenses capped at two and it gave them to the second and third businesses licensed by the Office of Cannabis Management.

Neither of them has an opening date, but we know one of them is owned by a New Mexico man and the other by a woman from Washington state, at least on paper.

OCM accused her of being a social equity straw man who was one of 240 applicants who entered the license lottery on behalf of another out-of-state operator.

If Schlichter wins in court, he could become the city’s third licensee, and would open about 1/4 mile from her business.