Change of Business Ownership and Control

Minnesota law only allows for licenses to be transferred. However, the prohibition on pre-licensure transfer does not mean that an applicant cannot make changes to their ownership structure. There are different requirements for changing ownership of a business, depending on if the changes are being made prior to obtaining a cannabis business license, or if they are being made after a license has been issued.

Preliminarily Approved Applicants (Pre-Licensure)

An applicant is preliminarily approved once their criminal background check is completed, and, where applicable, they have entered into a labor peace agreement with a bona fide labor organization. By statute, applicants cannot transfer ownership of their application before receiving a license. This means that a preliminarily approved applicant cannot sell the majority ownership interest to a third party.

However, qualified and preliminarily approved applicants can make changes to their ownership structure pre-licensure, so long as they do not do any of the following:

• Make any transfer of an ownership interest that changes the individual that holds a majority ownership interest of the cannabis business.
• Make any change of ownership or control that requires a new business registration with the Minnesota Secretary of State.
• Make any transfer of ownership that causes a social equity classified application to no longer qualify as a social equity application.
• Add any owners that are ineligible to hold a cannabis license based on criminal or civil offense history.
• Create any ownership structure that is in violation of the true party of interest provisions contained in Minnesota Statutes, section 342.185.

Note that it is the applicant’s responsibility to maintain compliance with ownership structure requirements in Minnesota Statutes, sections 342.14, 342.15, 342.16, 342.17, and 342.185 and failure to do so will result in your application not proceeding.

Notifying OCM of changes

While an applicant can make changes to their ownership group prior to licensure, OCM will only review changes to your ownership once the site registration is submitted in your application. Site registration is the step you take when your business is ready to operate. This step is when your business demonstrates compliance with all applicable rules and regulations, and you alert OCM of the local jurisdiction in which you intend to operate.

When an applicant starts the site registration process, they will need to upload the change of ownership documents into Accela along with their final plans of record. The link to the change of ownership documents is located at: https://mn.gov/ocm/businesses/licensing/final-plan-of-record.jsp under the section Change of Ownership and Control. OCM will not review any changes to the ownership group until an applicant is ready to become operational and has submitted their final plans of record and site registration.

Active License Holders

An active license holder has two options for changing ownership of their business.

1. Adding additional owners. Similar to pre-licensure a license holder may adjust the ownership structure of the existing license. Changes to the ownership structure must be reported to the office. It is the applicant’s responsibility to maintain compliance with ownership requirements in Minnesota Statutes, sections 342.14, 342.15, 342.16, 342.17, and 342.185, and failure to do so may result in revocation of their license.
2. Transferring the license. A license holder changing the individual who holds a majority ownership interest can transfer their license pursuant to section 342.12 with prior written approval of OCM and subject to the following requirements:
   • Transfer of a license that was issued as a social equity license must be reviewed by the Division of Social Equity.
   • Licenses with a social equity classification may only be transferred to another verified social equity ownership group during the first three years of operations. After three years, a social equity license can be transferred to any entity, including a non-social equity ownership group.
   • You cannot make any change of ownership or control that would require a new business registration with the Minnesota Secretary of State.
   • You cannot add any owners that are ineligible to hold a cannabis license based on criminal or civil offense history.
   • You cannot create any ownership structure that is in violation of true party of interest provisions contained in Minnesota Statutes, section 342.185.

Notification of changes or transfer alone does not constitute prior written approval. A license transferee cannot conduct any business related to the license until OCM has provided written approval for the transfer (section 342.12).

Notifying OCM of changes

Notify the licensing division at licensing.ocm@state.mn.us that you are requesting written approval for a transfer of a license. Please note that review and approval times may vary depending on application volumes.

OCM will then provide you access to our licensing system to upload necessary documents. Please be prepared to submit all application documents that will change as a result of this transfer, including but not limited to ownership and control documents, final plans of record, and required criminal background checks. If there are significant changes to the final plans of record, this may also require an inspection.