Minnesota is poised to make recreational cannabis legal in the state after the Senate passed the measure last Friday. The bill still needs to be reconciled with a House bill in conference committee and is expected to get Gov. Tim Walz’s signature. 

Some hemp producers are worried new cannabis regulations will impact their business and force farmers to choose between sticking with hemp-only derived products or transitioning into a whole different cannabis business. 

Three years ago, Stephen Cornell, owner of Cornell Urban Agriculture in Minneapolis, quit his corporate job and put everything on the line to start his hemp business. Cornell is one of the few in the state to grow hemp indoors. He produces everything from hemp-derived ice cream to healing creams and microgreens.

But Cornell says a bill to legalize cannabis in Minnesota could disrupt all his hard work. 

“People like me are going to have to play the risk again. We’re going to have to go all in on cannabis or we’re going to have to stick with hemp,” Cornell said. 

This puts hemp growers in a tough spot, choosing one or the other. Lawmakers explain that hemp-specific businesses cannot sell cannabis, but licensed cannabis businesses could deal hemp with the added cost of federal taxes. 

“Under federal law, if you’re making an illegal product, you can no longer deduct your business expenses from your federal taxes,” said Rep. Zack Stephenson, DFL-Coon Rapids. 

The bill would impose an 8-10% tax increase. Cannabis sellers worry the cost will pass down to the consumers. 

“Then you’re taking away a lot of this hemp medicine that’s available to the consumers, and you know we want to keep that competitive in the marketplace,” Cornell said.

Lawmakers argue the tax increase is needed to carry out these regulations to keep consumers safe. 

“Last year, the government legalized hemp-derived low dose that if you consume them, you get high the same way you get high from derived cannabis, so we think it makes sense for the same consumer protection, health and safety protections to apply to those hemp-derived products,” Stephenson said. 

Despite differences, Cornell admits it’s a step in the right direction for the state. 

“I’m really excited about the fact that they’re putting more of the emphasis on getting rid of the black market,” Cornell said. 

Lawmakers are optimistic about differences in the House and Senate versions will be worked out before the Legislature adjourns on May 22. If that happens, both chambers will have to sign a final version before sending it to Gov. Walz to sign into law. If the bill becomes law, this means cannabis would be legal to possess this summer.