On July 1, 2022, Minnesota passed a law regarding hemp-derived THC products. Unlike the 15 states that have banned Delta-8 sales by law or administratively, Minnesota took a more permissive approach, especially when it came to which retailers can sell hemp-derived THC. The rule allowed low-dose edible hemp-derived THC products to be sold at mainstream retailers, including convenience.

Don’t let the “low-dose” label fool you: The 5 mg of THC per-serving threshold set by Minnesota effectively allowed retailers to sell edibles at an intoxicating level similar to what’s found in a dispensary. Minnesota followed the lead of states like Louisiana, where dispensary-level servings of hemp-derived edibles are also allowed (though Louisiana’s state senate is attempting to roll back those permissions).

“One of the beneficiaries is convenience stores as well as minorities and other communities that have traditionally been left out,” said Lonnie McQuirter, director of operations for Minneapolis-based 36 Lyn Refuel Station. “Hopefully Minnesota leads as an example of what good policy looks like.”

While many cited the rushed nature of the 2022 hemp law, when the state passed a broader adult-use cannabis law this summer, it doubled down. Under the 2023 law, retailers will continue to be able to sell low-dose hemp THC edibles so long as they register with the state and collect taxes on them.

Here’s a look at how Minnesota’s THC law came to be, how retailers in the state are already benefitting and what it means for the future of cannabis in convenience.

The Surprising Road to THC Legalization in Minnesota

The first thing to understand when discussing cannabis regulations in Minnesota is that there were actually two important bills: one regarding hemp-derived THC edibles and updates included in the broader cannabis legalization bill.

The hemp-derived bill, Minnesota Statute 151.72, passed on July 1, 2022, allowed the sale of what the state defined as hemp-derived “edible cannabinoid products” (including beverages) so long as certain standards were met. Specifically, non-dispensary retailers were limited to “low-dose edibles,” meaning products containing no more than 5 mg of hemp-derived THC (such as Delta-8 or Delta-9) per serving and no more than 50 mg of hemp-derived THC per package.

“We have seen several legal states try to restrict Delta-8,” added Brendan Mitchel-Chesebro, an analyst for the cannabis market research firm BDSA. “Minnesota is a unique case.”

What makes Minnesota truly unique is that 5 mg/50 mg threshold.

“Minnesota surprised many by taking this forward-looking approach to how to regulate hemp-derived THC products,” said Jonathan Havens, a partner at Saul Ewing Arnstein & Lehr LLP who has advised a number of cannabis brands and retailers. “Most other states follow the standard set forth in the 2018 Farm Bill—that products contain 0.3% THC or less. But they don’t address amount per serving.”

That 5 mg serving is very similar to what’s offered in dispensaries selling marijuana products: “Our consumer insights data shows that most consumers, even experienced ones, they don’t want a 50 or 100 mg edible,” says Mitchel-Chesebro. “It’s that 5 to 10 milligram range that most people are looking for.”

By allowing for 5 mg of hemp-derived THC—which should be noted requires a lot of hemp to achieve—Minnesota opened up a new (legal) opportunity for retailers previously locked out of that space.

McQuirter believes the legislators in his state understood (or came to understand) that hemp-based THC products were already in the market. Attempting to ban them now would only fuel illicit activity.

“I sometimes struggle to give any politician credit, but one of the things they were mindful of when it came to the taxation and the licensure of edibles was that there exists a market already—it’s just not a legal one.”

There was initially a good deal of confusion about how the hemp law came to pass, with some accusing it as happening in the 11th hour and even state representatives wondering if they had accidentally legalized marijuana. When the amendment unanimously passed the Minnesota House, Sen. Jim Abeler (R) joked “that doesn’t legalize marijuana? We just didn’t do that, did we?”

Yet when the state did legalize marijuana this summer with HF 100, it doubled down on the low-dose hemp-based THC edibles rule: expanding it to allow liquor stores (who were previously not allowed to sell) into the space and requiring retailers selling hemp-derived THC to register with the state and start collecting taxes.

The opportunity for convenience retailers to sell THC is absolutely a win—but experts warn that there will be a process to doing so.

“The law from last year and this new law should not be taken to mean that any old retailer that wants to sell these products can do so,” Havens said, citing registration, labeling, manufacturing and other requirements outlined by the state. “Minnesota has created a runway for the non-dispensary retail sale of hemp-derived THC products. Not an unregulated runway, but a runway nonetheless.”

Testing the THC Waters

Minnesota retailers like McQuirter are well down that runway when it comes to hemp-derived THC edibles, legally selling low-dose products in their stores.

One major challenge has been education of both store staff and consumers, especially in regards to how edibles work.

“It’s not like drinking a beer or taking some pain meds,” McQuirter said. “The chemicals take longer for you to metabolize.”

Fortunately, McQuirter said his staff is pretty excited about the opportunity and eager to learn. To better understand the flavor profile of some of the products offered, McQuirter tries to get “virgin” (THC-free) samples for his staff to try.

Another major challenge is age-gating. Selling age-restricted products is nothing new for the channel, but age-gating is particularly important for demonstrating cannabis can be responsibly sold outside of dispensaries. For McQuirter, this means keeping products behind the counter and embracing TruAge technology.

“It’s really pretty frictionless,” he says, adding that his store had 100% compliance on cannabis sales (as well as alcohol and tobacco). “As soon as you swipe it, it’s already pulling up whether it’s the right age or not.”

Though it’s early days, McQuirter says his hemp-derived THC sales have been impressive.

“It has certainly made up for our decline in the traditional combustibles in tobacco last year,” he said, reporting his edibles customers buy between $75-$400 worth of product on a regular basis. “That definitely helps on the revenue side.”

BDSA data shows that convenience may be particularly suited for cannabis products due to the ease of location: Mitchel-Chesebro said “one of the biggest drivers of where people get their cannabis is just where it’s convenient for them. Is it close to my home or my office or my gym? That’s where people are going to be buying it.”

McQuirter has seen this play out in his store.

“One of the surprising things has been where someone is willing to try a product,” McQuirter said. “When their chosen outlet to go purchase these products isn’t the co-op, isn’t the neighborhood grocery store—it’s the convenience store.”

Looking to the Future

As exciting as the opportunities in Minnesota and other states with permissive THC laws are, we’re still a ways off from full cannabis sales at convenience. But data from other states that have legalized suggests having more retail locations early on will benefit the state of Minnesota.

For any state that attempts to ban products like Delta-8, illegal sales have been a problem.

“With the adult-use markets, we have a pretty good sample of what works as far as cutting into that illicit market and what doesn’t,” said Mitchel-Chesebro, pointing to New York and Missouri as examples.

In New York, priority was placed on social equity—which resulted in a very slow roll out of retail locations. In the interim, hundreds of unlicensed stores opened, selling (and continuing to sell) untested and untaxed marijuana products without penalty. “New York’s seen really slow sales for a new market,” Mitchel-Chesebro said. “They have a huge problem with their illicit market.”

Missouri took a different approach: The state legalized in December 2022 and opened over two hundred adult-use dispensaries in February of 2023.

“Missouri saw (cannabis) sales triple month to month,” said Mitchel-Chesebro. “That can tell you something about what retail availability does to cut into the illicit market.”

Granted, BDSA data tracks marijuana sales at dispensaries. But a prohibition or limiting of hemp-derived THC sales will also fuel a black market of those products. By comparison, Minnesota is now collecting tax revenue on hemp-derived THC edibles. It’s possible that if Minnesota’s more permissive retail stance works to curb black market sales and/or raises impressive tax revenue, other states may use the North Star State as a blueprint.

Certainly the process of how Minnesota’s hemp and cannabis bills came to be should serve as a blueprint for retailers: McQuirter said retail engagement played a huge role in the positive outcome of both bills.

“A lot of the groups convenience retailers are affiliated with had a really active voice with a lot of the policymakers,” he said, adding that state representatives were very open to meeting directly with retailers.

Another example retailers should replicate for future THC opportunities: demonstrating the industry’s excellence in age verification of cannabis and other products.

“Our industry takes responsible retailing seriously and we appreciate that opportunity to participate in this emerging market in Minnesota,” said Jon Taets, director of government relations at NACS. “We hope that this market will serve as an example of how the convenience retailing industry can partner with states as they explore new legal product sales such as cannabis.”

“We don’t want to miss out as convenience operators in the markets that it makes sense,” McQuirter adds. “There is an opportunity for convenience stores to really demonstrate that we are one of the best outlets for selling these types of age-restricted products.”