Jay Sachetti joined Jeff O’Brien, partner at Husch Blackwell and Dyanne Ross-Hanson, president of Exit Planning Strategies talked about the market for mergers and acquisitions, exit planning opportunities for companies that don’t end up for sale and how companies can maximize their eventual sale price during an early October panel at the first Upsize on Tap event at Summit Brewing Co. in St. Paul.
When the state Legislature passed a law requiring employers to provide paid leave and safe time for employees, Justin Bieganek started hearing differing details from friends, colleagues and peers.
1, Minnesota House File 100 stipulates that the existing market for hemp-derived THC food and drink will be allowed to continue as long as businesses register with the Minnesota Department of Health by October 1.
2, Vapes, flower and other products with hemp-derived THC remain illegal and THC-P was outlawed as part of the bill. The latter is a potent synthetic that has led to reports of illnesses.
3, The final bill also allows liquor stores to sell lower-potency hemp edibles and beverages. This had previously been banned.
4, This legislation has effectively opened up an entirely new industry with the legalization of recreational cannabis while also preserving the growing THC beverage industry, which has quickly become popular in Minnesota.
On May 30, 2023, Gov. Tim Walz signed into law House File 100, which legalizes recreational cannabis in the state of Minnesota.
The new law, while ending the prohibition of cannabis in this state, also preserved the unique tetrahydrocannabinol (THC) beverage market, which arose out of legislation passed in 2022 whereby Minnesota became the only state to regulate hemp THC separate from marijuana.
Under the 2022 law, Minnesota’s breweries were permitted to produce non-alcoholic beverages infused with 0.3 percent THC derived from hemp, in the form of CBD, delta-8 and delta-9.
These so-called “cannabinoid beverages,” while not as potent as full-strength cannabis, have proven to be extremely popular with consumers, so much so that HF 100 was amended to preserve this market for Minnesota breweries.
“Cannabinoids” are a group of substances found in the cannabis plant. The main cannabinoids are THC and cannabidiol (CBD). However, according to the National Institutes of Health’s website, besides THC and CBD, more than 100 other cannabinoids have been identified.
Industrial hemp production became legal in the U.S. with the passage of the Agricultural Improvement Act of 2018, known colloquially as the “2018 Farm Bill.” The 2018 Farm Bill amended the definition of marijuana under the Controlled Substances Act to exempt “hemp,” as follows:
The term “hemp” means the plant Cannabis sativa L. and any part of that plant, including the seeds thereof and all derivatives, extracts, cannabinoids, isomers, acids, salts and salts of isomers, whether growing or not, with a delta-9 tetrahydrocannabinol concentration of not more than 0.3 percent on a dry weight basis.
The law explicitly preserved the authority of the U.S. Food and Drug Administration (FDA) to regulate products containing cannabis or cannabis-derived compounds under the Federal Food, Drug & Cosmetic Act (FD&C Act).
The Alcohol and Tobacco Tax and Trade Bureau (TTB), the federal agency charged with regulating the manufacture of alcoholic beverages, defers to the FDA on whether the use of hemp ingredients would violate the FD&C Act.
As such, and aside from three hemp seed ingredients, the TTB will reject any application for an alcoholic beverage formula containing hemp ingredients, including CBD, delta-8 and/or delta-9. However, a brewery producing a non-alcoholic beverage is not required to receive formula approval from the TTB, and so long as such beverage is not sold outside the borders of the state where the brewery is located, the FDA does not have jurisdiction under the Interstate Commerce Clause of the U.S. Constitution to prohibit production of such beverage.
The impetus for last year’s legislative action was a Minnesota Court of Appeals opinion in a criminal matter which many felt was erroneous. In its ruling on an appeal of a criminal conviction where the defendant had in his possession vape cartridges containing THC derived from hemp, the Court of Appeals in State of Minnesota v. Loveless held that the term “dry weight” being used to measure whether a product contained the legal amount of 0.3 percent THC implied that liquid products containing any amount of THC were not exempt under Schedule I of the Minnesota Controlled Substances Act. This ruling has since been overturned by the Minnesota Supreme Court.
The Loveless ruling had an immediate adverse impact on the sale of hemp products in Minnesota, so much so that the Minnesota Board of Pharmacy issued a temporary ruling.
This ruling was effective until the Legislature could meet and pass corrective legislation to overrule the Loveless decision (which would be the quickest fix for the decision, given the timing of the appeal to the Supreme Court) — allowing the sale of liquid products containing not more than 0.3 percent THC derived from hemp.
Following the Board’s temporary ruling, the Minnesota Legislature passed legislation aimed at overruling Loveless. The new law, however, went much further than simply allowing the sale of liquid cannabinoid products. Instead, the sale of consumable products containing up to 0.3 percent THC derived from hemp, including gummies, beverages and other edibles, were now legal.
Moreover, no license was required to manufacture and sell these products. The only restrictions were that the products had to be limited to 5 milligrams per serving and 50 milligrams per package, childproof packaging must be used and sales could only be made to residents who were 21 years or older. Additionally, and unlike the other 49 states, on-premises consumption of such products was permitted.
The existing market for hemp-derived THC food and drink will be allowed to continue as long as businesses register with the Minnesota Department of Health by October 1. The health department will regulate hemp-derived cannabis products until 2025.
As is the case now, only food and beverages with hemp-derived THC in amounts up to 5 milligrams per dose are allowed — with a limit of 50 milligrams per package for edibles and a new 10 milligram per-package limit for beverages.
Vapes, flower and other products with hemp-derived THC remain illegal.
One immediate change would specifically outlaw THC-P, an extremely potent synthetic cannabinoid that has led to reports of illnesses nationwide. HHC and THC-O are also explicitly banned; only delta-8 and delta-9 THC derived from hemp are allowed.
The Office of Cannabis Management would take over the licensing, regulation and enforcement of the low-dose hemp-derived market on March 1, 2025.
One final — and significant — provision of HF 100 vis-à-vis the existing THC beverage market is that, under the new law, lower-potency hemp edibles and beverages have been added to the short list of items liquor stores are allowed to sell. Until this law change, the Minnesota Department of Public Safety’s Alcohol and Gambling Enforcement Division (AGED) had taken the position that cannabinoid beverages could not be sold in liquor stores.
House File 100 has opened up an entirely new industry with the legalization of recreational cannabis. Fortunately, the new law preserved an already growing industry by continuing to allow the production of the THC beverages which Minnesota consumers have quickly come to embrace and enjoy.
