Judge orders Minnesota to delay its cannabis license lottery

ST. PAUL, Minn. (FOX 9) - Minnesota’s first cannabis lottery will not happen as scheduled on Tuesday morning. A judge granted a temporary pause after several people filed lawsuits claiming they were unfairly excluded.

The state seemed to be moving really slowly since legalization last year, but then everything accelerated last week.

Now, there’s doubt again about when the state might start issuing licenses.

Dream turned nightmare

"This is a dream of mine and a dream of many others who are part of this denial process and just looking for a fair shot," said Sam Milstein.

A cannabis license seemed like a no-doubter for the Hopkins native.

The state had more of the type of license he wanted -- to transport cannabis -- than it had social equity applicants.

So spending thousands to do his application right felt like money well spent.

"We had spent so much time and put so much effort into the application itself," he said. "Dotted every I crossed every T. I just thought that there was no way."

So he was shocked when the Office of Cannabis Management told him last week he was denied access to the lottery.

Lottery legal issues?

He’s one of at least nine hopeful business owners who sued OCM after it announced Thursday it would hold the lottery five days later.

They argued they should’ve had a chance to correct minor issues, some of which they believe were errors by OCM — like a sole proprietor rejected for not having a trade name, which state law says is not required for sole proprietors.

The state denied more than 1100 lottery applicants, leaving about 640 with a chance at 280 licenses.

'Everybody is frustrated'

"OCM has put all of these applicants, including the ones that were approved in a horrible spot," said Courtney Ernston, of North Star Law Group, who argued on behalf of six rejected plaintiffs, but also represents businesses approved for the lottery. "And everybody is rightly very frustrated."

On Monday, a judge agreed the lottery shouldn’t happen yet.

He sent the cases to the Court of Appeals — a big win for the rejected applicants, but a potentially life-altering blow for people like Devon Beste, who thought he might be on the road to riches Tuesday.

He complained that out-of-state interests tried to set up profitable businesses in Minnesota only to gum up the works for him and hundreds of others.

"Everything being up in the air, I don't know," said Beste. "I probably won't sleep much tonight just because of it. And, you know, I'm still optimistic and hope for the best."

OCM: Standing by process

An OCM press release Monday said they’re disappointed, but they stand by their process.

"The review process also revealed a high number of applications that were inconsistent with the protections in law designed to prevent predatory practices, ‘zone flooding’, and other attempts to game the system to gain unfair or illegal advantage," interim director Charlene Briner said last week.

Attorneys for six of the plaintiffs tell us their clients are all from Minnesota and are not straw owners.

How to fix it?

They say OCM could make their lawsuit disappear pretty easily.

"I think that they can make this go away by creating a reasonable process by which people can be heard, have five minutes to fix these applications and some kind of short review window," said Jen Randolph Reise.

But the agency has refused so far and industry insiders worry the lawsuits could hold up licensing and legal sales for months.