When the Minnesota Office of Cannabis Management opened applications for prospective cannabis entrepreneurs, they did not require those individuals to have identified and secured a site location in order to apply and become pre-approved. This has led to a unique challenge and one that is significantly slowing the launch of the cannabis market. As applicants arrived to the step at which they were required to submit site plans, their applications almost entirely stopped moving forward.
When Aurora was founded in 2023, we were quickly met with a really tough decision. We had identified a property that matched our plans and was in our desired location, but we knew it could be a long time before we’d be able to actually use it. We ultimately signed the lease and, as a result, operated the business at a loss for over two years. However, we now hold an approved grow location in the Twin Cities in the same location as our approved retail store. Very few, if any, other businesses have been able to accomplish this yet. Here’s how we did it, with some extra color from lessons-learned in the process:
Step one is to pick a geographic location and do not budge from it unless you have no choice. This is not a small, sidebar task. If you think this will be really easy, pick a different path. It requires a lot of digging and you will only be successful if you can do it yourself or you have ridiculous wealth because lawyers and accountants aren’t cheap. Therefore, your bandwidth requires you to focus on a very specific area. A city or a township or a 5 mile radius; something relatively small. This is even more important now that the market has launched. Pick a spot and dig in your heels.
Now, research that local area of government and understand exactly where they stand on cannabis. Research their city council or township meeting minutes, dig through any city codes that mention cannabis, find out what their zoning and setback restrictions are for your intended property use and find out what they’ve released on cannabis retail registration. Meet the city manager and mayor and understand if they’re going to work with you or against you. Get to know who answers the phone at City Hall. I describe this process based on how it works within city limits, but similar processes can be applied to county or township offices in small towns.
This probably goes without saying, but none of your local research will mean much unless you also have read and understood MN Statutes Chapter 342 and the Minnesota Cannabis Rules. I’m not going to pretend like I know every section but I definitely know the sections that apply to us and I know how the state is applying the rules in practice. This is really important because you just have to know what your rights are in the State. It will empower you when you speak to officials if you know what you’re talking about and can prove it.
After you know where and how cannabis businesses are allowed to open in your location, dig deep into your county’s Geographic Information System (GIS) system. Scott County, MN makes it pretty easy to find and use – I know it’s not always like this everywhere. I can’t help with that part. Regardless, property records are public information you have a legal right to attain. Exercise that right.
You can find everything you need to know about any property in these systems – property owners, sales information, zoning, tax, etc. This will allow you to tie specific properties that are in properly-zoned locations to specific owners that you can contact. It’s actually amazing the amount of information to which we have access for free – use this to your advantage wherever you can. Identify individual properties that could be a match and then go for a drive. We found that most of the “match” properties could be ruled out for one reason or another just by seeing it. Eventually, if you’re persistent enough, you’ll find at least one that could work.
Our story on this is actually pretty crazy. We’ve mentioned our ties to Prior Lake a lot but I don’t know if people understand how rooted we are in this community. We’ve lived here a long time, went to high school at PLHS, and we have kids here now that are in local schools and tons of activities so we meet everybody here. We were driving around one day looking at places to consider and drove up to 16535 Anna Trail SE, knowing it used to be the Crossfit gym. This was not a property on our search list, but we drive by it all the time and just decided to look. It seemed about right from the outside and was obviously vacant, had a bunch of crappy tags from kids who had broken in, and looked beat up and run down. We looked it up in the GIS and found that it was owned by a different local business that was owned by a family we knew from high school. I had just coached the owner’s grandson in hockey the previous season and I went to college. It’s a small world, especially if your network is intentionally pretty small. I sent a text and lined up a tour.
At this point, we engaged a commercial real estate firm. A friend of ours from another weird hockey connection helped us get specifics together for a lease and how it could work – AREA Commercial Real Estate, in case you still need somebody – and the pieces moved very quickly thereafter. There were some pretty important details in this step, especially considering it’s still a Schedule 1 drug. Very few banks will underwrite a tenant who plans to grow or sell cannabis. Therefore, you’re probably going to have to find a building that is owned outright and has no property liens. In other words, you probably don’t need to bother with big, new industrial properties or places with big FOR LEASE signs from big commercial firms. You’re going to have to dig deeper than that. A lot of the places we initially contacted were an outright “No” from the owner before we even saw the property.
I have seen a lot of different ways real estate investors have gotten creative on this topic recently. One way is building specific business parks in which all of the properties are intended to be set up for grows in a location that’s easy to approve. The building is a blank slate for you to lay out and the local officials are happy with cannabis business focused in that area. It’s a cool idea if you’re looking for an easier route. A lot of that GIS digging can definitely be bypassed if you’re happy in one of these locations and you can afford the price.
Another way is when property owners work with their local officials themselves to get local approval, then list the property for lease as a preapproved location. This is also a great way to avoid a ton of difficult, high-risk work, but also comes with a price. It’s impossible to say how much more but it’s definitely more.
Ultimately, the ability to secure and approve a location has been elusive to most businesses thus far. It’s a complicated problem to solve, but if you put the pieces together in an orderly fashion, you can do this without paying a fortune in consulting. Pick a spot, research it until you’re comfortable, identify individual properties in that location, and narrow it down from there. On the other end of that work, there’s still plenty of time for your business to cement its status in Minnesota’s quickly-growing cannabis industry.