BRAINERD — Cannabis business licenses are on track to be issued on a first-come first-served basis in Brainerd.

City Council members voted Monday, April 21, on the first reading of an ordinance that would see permits issued based on who applies first and in accordance with the city’s maximum license number of two.

Finance Director Connie Hillman told the council the Minnesota Office of Cannabis Management issued new rules last week and said it would start notifying applicants that same day to begin working with local governments for licensing and zoning. There’s a potential, she said, for some retailers to be open as early as May.

The state is leaving it up to municipalities to create a process for selecting applicants if there are more applications than businesses allowed in the city. Brainerd’s maximum is two businesses. State regulations require the allowance of at least one cannabis business per 12,500 people in a municipality. With Brainerd’s population exceeding 14,000, the minimum the council must allow is two.

Microbusinesses will be the first type of licenses issued by the state. If the applicants are a microbusiness with retail endorsement, all of the city’s registration could be used before any of the mezzobusiness or retail businesses can even apply. To remedy that issue, Hillman said the council could consider removing the maximum allowed in the city.

A microbusiness is described as a smaller storefront or producer, while a mezzobusiness is a medium-sized business with a thriving storefront. A cannabis business with a license or endorsement authorizing the retail sale of cannabis flower or cannabis products may only sell immature cannabis plants and seedlings, adult-use cannabis flower, adult-use cannabis products, lower-potency hemp edibles and hemp-deprived consumer products that are obtained from a licensed business.

Hillman told council members they had several options for the permit process, including first come, first served; merit-based; rolling; or lottery. Staff’s recommendation was first come, first served if the cap were to stay in place.

Council members expressed frustration about changing rules at the state level, feeling they are left scrambling at the last minute to figure out their regulations.

Council President Mike O’Day said he would not like to see the cap lifted and would love to see a merit-based system but realizes that could be a lengthy, complicated process.

Council member Gabe Johnson asked what a merit-based system would look like. Hillman said she included an example from Anoka — the only other city she knows of to adopt that system so far — in the council’s packet. She said she believes it would be time-consuming and is not sure staff have the capacity to gather all of the information needed in a timely fashion. A merit-based system could open the city up to potential issues as well, she said. The reason staff recommended first come, first served, Hillman said, is to have an ordinance on the books sooner rather than later, as applications could come in the near future.

“So the state trips over its own feet for two years, and we have five minutes to make a decision?” Johnson said.

He said he feels lifting the cap would be premature, as he does not know how these types of businesses will impact the community in the future. He added he would ideally like to see a method that gives preferences to local businesses.

Council member Jeff Czeczok clarified that if a business with a license decided to quit, that permit could then be given to another applicant. He also said he believes a merit-based system would be the best way to go but knows that is time-consuming and is not sure if the city is even qualified to determine the merits.

Council member Kelly Bevans asked about the permit fee. While council previously set a fee, Hillman said new guidance from the state does not allow a municipality to charge more than 50% of the state’s permitting fee. The previous fee the council agreed to was $500 initially and $1,000 for renewal.

Bevans said the reason he asked was to determine if the council set a high fee — like $10,000 or even $150,000 — to ensure serious businesses are applying for the license.

Bevans then made a motion to move forward with a first-come, first-served license system and approve the first reading of a draft ordinance prepared by staff outlining those guidelines. That motion eventually passed unanimously, after Kevin Stunek changed his “no” vote to a “yes” vote, realizing part of the motion was to dispense with the actual reading of the ordinance, which requires a unanimous vote.

Stunek has staunchly opposed the idea of allowing cannabis business in the city at all.

Hillman then asked council members if they wanted to host a public hearing on the topic, which is not required for the ordinance. The earliest a public hearing could take place is at the council’s May 19 meeting. If there is no hearing, the council could have the second reading of the ordinance and subsequently approve it at its next meeting on May 5.

Bevans motioned to forego the public hearing. Czeczok seconded the motion, and O’Day said he was on board with that as well.

Johnson said he’d vote no, as he loves public hearings and thinks the council ought to hear from the public on marijuana sales in the community. O’Day and Bevans noted the time crunch the city is under.

That motion passed 6-1, with Johnson opposed.

The issue is planned to be on the council’s next agenda May 5.

THERESA BOURKE may be reached at
theresa.bourke@brainerddispatch.com
or 218-855-5860. Follow her on Twitter at
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.