MN cannabis license lottery: Lawsuit filed to halt drawing
ST. PAUL, Minn. (FOX 9) - A lawsuit was filed in Ramsey County to block the cannabis license preapproval selection lottery and another similar lawsuit is excepted to be filed related to the lottery.
The lottery is set to take place on Tuesday, Nov. 26.
Lawsuit after lottery application denial
The first lawsuit was filed Thursday after Cristina Aranguiz and Jodi Connolly were denied by the Minnesota Office of Cannabis Management (OCM) entry into the state lottery that would allow the two women to obtain retail and delivery cannabis licenses.
According to court documents, OCM allegedly did not "adequately disclose" the reason why the office denied the women's application for the lottery, with the lawsuit claiming Connolly didn't receive a denial email from OCM at all.
READ MORE: Weeding out bad actors? Cannabis license lottery entrants chosen
Instead, after hearing about application denials from other applicants, Connolly checked the application portal and found her application was denied. OCM didn't give Connolly any explanation, documents or additional instructions on what to do next, the lawsuit claims.
Aranguiz received a denial from OCM, but claims the explanation was not detailed and "made no sense in light of statutory requirements," court documents said. The office said she failed to disclose partnership agreements or "promissory notes".
The lawsuit claims that Aranguiz doesn't have any of those documents, and there's "no reason" those documents should exist since she's the sole owner of the business applying for a cannabis license.
READ MORE: MN Office of Cannabis Management shares data on social equity license applications
According to court documents, the women claim the reason OCM may have denied their applications is that they were social equity applicants. This means they were able to apply for cannabis licenses by selling options for future ownership interest in their business in exchange for application assistance and for payment of $100,000 if the options were exercised.
Connolly and Aranguiz are seeking an emergency order to compel OCM to halt social equity lottery proceedings until the resolution of the lawsuit. They are also seeking a reversal of OCM's denial of their applications.
The women are also asking OCM to let them fix any issues with their application and contest any disputed issues. They also say they are looking for an award of attorney fees, costs and disbursements that were incurred during the lawsuit.
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How many social equity applicants were denied?
A total of 1,169 social equity applications for Minnesota's cannabis lottery were rejected, and about 640 will head to the lottery for about 280 licenses.
Similar lawsuit to be filed against OCM
North Star Cannabis Law told FOX 9 they intend to file a temporary restraining order against OCM seeking to halt the cannabis license lottery, which they claim OCM accelerated to Tuesday, Nov. 26.
Initially, industry experts expected OCM to schedule the lottery for early December.
What they're saying
On Nov. 19, OCM Interim Director Charlene Briner told FOX 9 in a statement, after application rejections went out, that "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."
"We remain committed to weeding out bad actors who seek to overwhelm the system at the expense of legitimate, prospective business owners," Briner said in a statement regarding the lawsuit filed by Aranguiz and Connolly.
In a statement on Friday, the OCM said it stands by the process used to review applications for license preapproval, and looks forward to holding the lottery as scheduled.