THC drink makers fear new Minnesota rules could tank market

Minnesota hemp and cannabis businesses are warning state regulators that new rules set to take effect next year could devastate local companies, shutter breweries and pull popular THC-infused products off shelves.

About 60 industry representatives gathered on Wednesday to meet with Office of Cannabis Management officials and press for changes, following a Sept. 23 letter in which a coalition of manufacturers, distributors and retailers urged OCM Director Eric Taubel to delay enforcement of the new law for six months.

The THC beverage market that defined Minnesota’s early-stage cannabis industry and paved the way for recreational legalization is now one of the most competitive in the nation. It could face serious contraction when the new labeling and testing laws go into effect Jan. 1.

“This could be an existential risk to many Minnesota businesses, including craft breweries and retailers that rely on these products,” said Glenn McElfresh, co-founder of the Plift hemp-infused beverage brand. “We’ve really got to find a solution in the coming weeks.”

At the center of their concerns is a requirement that all low-potency hemp edibles be tested at Minnesota-licensed labs. The requirement is part of a state law created to ensure consistent product safety and consumer awareness across hemp and cannabis products.

Currently, two labs are licensed, which is not enough to handle testing demand, industry leaders say.

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McElfresh, whose company is based in Chicago, drove to Minneapolis for the meeting and left somewhat reassured.

“I’d be lying if I said I wasn’t scared,” McElfresh said. “Fear is one emotion that I am definitely feeling. I saw that in other business owners, but the OCM saw that, too. So, I’m hopeful and cautiously optimistic that we’re going to get something done here in the next few weeks before we start to see more negative effects in the market.”

THC-infused drinks have exploded in popularity in Minnesota since 2022, when the Legislature passed a law allowing the sale of products containing THC, with cans popping up on shelves in restaurants and grocery stores, and breweries embracing the beverages.

“Minnesota is the single most competitive hemp beverage market in the country,” McElfresh said. “And if you can make it here, you can make it anywhere.”

THC drinks started appearing in liquor stores like Total Wine & More and Top Ten Liquors once recreational cannabis was legalized in 2023.

Now, under Minnesota Statute Chapter 342, all businesses that hope to continue to sell THC drinks have until Oct. 31 to apply for lower-potency hemp edible licenses.

That’s a big change from having no license requirement, though Halper said all Top Ten Liquor locations will complete the licensing process this month.

For the licenses, manufacturers must pay $1,250 up front and $1,000 to renew; retailers $500 per location up front and $250 annually.

“It has been the Wild West for the last two years, but that is changing,” said Jason Tarasek, a Minnesota attorney who represents cannabis businesses who attended the meeting. “I don’t know if everyone who’s been selling these products is going to pay for a license.”

The THC drink retailers and businesses argue in the letter that without clarifications and adjustments to Minnesota law, the industry faces testing bottlenecks, labeling challenges and major economic fallout.

“That contributes to price increases and it hurts businesses,” he said.

With so many players in Minnesota, only having two labs could cause big bottlenecks.

The strict labeling law could cause brands to stop selling in Minnesota. Plus, it causes immediate problems since the labels can’t be printed until license numbers are issued, the beverage makers said. That could give big players with more resources an advantage.

Halper said some hemp beverage brands outside Minnesota are unwilling to ship to his stores because they “don’t know what’s going on in Minnesota.”

The letter said three out-of-state beverage companies plan to stop selling in the state later this year.

In a presentation during the Wednesday meeting viewed by the Minnesota Star Tribune, the state cannabis office provided the companies some clarification.

Until the end of 2025, businesses with low-potency hemp edible licenses can sell products under either the old rules or the new rules. Starting in 2026, all new products must follow the new rules, but older products tested before 2026 can still be sold until they expire or sell out.

Several business leaders, including representatives from Surly Brewing Co., Total Wine & More and Crooked Beverage Co., signed the letter to the state cannabis office. Copies were also sent to Gov. Tim Walz and legislative leaders from both political parties.

The coalition said a six-month extension of the compliance deadline to July 1 would provide critical planning time. Despite their concerns, the businesses stressed their willingness to collaborate with the OCM, lawmakers and other stakeholders.

“We know that they’re restricted in their abilities because they’re regulatory, not legislative,” said Halper of Top Ten Liquors. “We just want them to delay the date so that we can go back with the legislators and fix it, but not create mass chaos.”

But Tarasek, the attorney, said some owners fear their businesses won’t survive the changes.

“OCM is essentially throwing up its hands and saying, ‘Sorry, this is what the Legislature passed,’” he said.

McElfresh said he hopes the OCM will help companies form “some sort of bridge” to the beginning of the 2026 state legislative session, which does not begin until February.