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2 <br /> <br />Two of the license categories, microbusiness and mezzobusiness, allow for cultivation, <br />production and retail sales, at different intensities. Both license types were limited to the <br />City’s industrial districts because of the multiple use potential. Licensed businesses within <br />these categories must also receive an “Endorsement” from the Office of Cannabis Management <br />(OCM) to operate a specific use such as retail on a site. <br /> <br />The City recently rejected the certification of a microbusiness proposing to operate a cultivation <br />business because of its location within a rural zoning district. The owner has since met with <br />City staff to discuss the operation, which is currently a hemp growing operation in the City. <br />While the owner has a microbusiness license from the state, they are only seeking the <br />cultivation endorsement for the specific site. The owner has been joined by another interested <br />party in seeking an amendment to the zoning ordinance to allow both microbusiness and <br />mezzobusiness in the R, Rural District, limited to cultivation. <br /> <br />ANALYSIS <br /> <br />While microbusiness or mezzobusiness licenses allow multiple activities they are required to <br />obtain a specific endorsement for each activity. A list of endorsements available for both a <br />microbusiness and mezzobusiness is included as Attachment A. <br /> <br />Under the State’s cannabis licensing requirements, the intensity of endorsed uses for <br />microbusiness and mezzobusiness is less than or equivalent to what is already allowed under <br />the specific license type. For example, cannabis cultivation, a permitted use in the City’s R, <br />Rural District, allows for up to 30,000 square feet of plant canopy indoors and 2 acres of mature <br />flowering plants outdoors. A microbusiness with a cultivation endorsement is limited to 5,000 <br />square feet indoors and one-half acre outdoors. A mezzobusiness with a cultivation <br />endorsement is limited to 15,000 square feet indoors and one acre outdoors. <br /> <br />The purpose of microbusiness and mezzobusiness licenses is to create opportunities for small <br />scale operators, by allowing a company to control multiple stages of its supply chain (vertical <br />integration). Under Minnesota's regulatory framework, entrepreneurs can grow, process, and <br />sell their own cannabis products, offering a path for smaller businesses to compete with larger <br />commercial operations. This intent is also reflected in the State’s application and licensing fees <br />which are significantly lower than other license types. <br /> <br />After review by the City Attorney, it was determined that the statutory requirements allow for <br />microbusinesses and mezzobusinesses to be zoned based on each endorsement received. <br />Under the proposed ordinance a microbusiness or mezzobusiness specific endorsement would <br />be the determining factor on zoning conformance. Accordingly, a cultivation endorsement <br />would be required to operate in a R, Rural District and the business would be limited to that <br />use. <br />Page 4 of 52