Minnesota hemp retailers challenge new ban on mail-order THC edible sales

Nine hemp businesses are pushing back on new state rules prohibiting direct-to-consumer shipments of low-potency THC edibles.

The businesses filed a petition Friday with the Minnesota Office of Administrative Hearings, asserting the Office of Cannabis Management (OCM) did not follow proper procedure making the new rule and abruptly reversed years of accepted practice when it issued the new guidance earlier this month.

The petition asks an administrative law judge to block the agency from enforcing the ban and to declare that any such prohibition first must go through formal rulemaking.

If the challenge succeeds, it could set an early precedent for how far Minnesota’s new cannabis regulators can go in shaping the state’s emerging market.

An OCM spokesman confirmed the petition had been filed but said the agency still is reviewing it and declined further comment Friday.

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Retailers, including Crested River Cannabis Co., Blncd Naturals, Turning Leaf and St. Paul Cannabis Co., for more than three years have sold and shipped low-potency hemp products across Minnesota.

The new restriction on direct-to-consumer sales was included in an accompanying FAQ to OCM’s Oct. 10 guidance memo, citing state law requiring employees to verify customers’ ages and ensure they are not visibly intoxicated before a sale.

Attorneys for the hemp retailers argue that a shipping restriction is not noted in any Minnesota law. They contend the change will shutter direct-to-consumer sales, cut off access for rural and homebound customers and give out-of-state sellers a competitive advantage.

St. Paul Cannabis Co. owner David Mendolia said the change could wipe out about 20% of his revenue and put his shop at a disadvantage against larger competitors, according to an affidavit filed with the petition.

He said a state cannabis inspector told him in September that enforcement was imminent, a warning that’s already prompted him to consider relocating his business to survive.

“Why would we stay here and pay a license fee just to not be able to serve our own customer base?” he said.

She said not only did the OCM fail to follow procedural rules but also said the rollout continued a broader pattern of poor communication from the agency.

“The ability to sell directly to consumers is a considerable portion of the majority of hemp businesses’ sales,” Fatehi said.