Smoke and mirrors: Albert Lea blocks first cannabis dispensary plan

A Struggle for Cannabis Business Approval in Albert Lea

At the back of the Albert Lea City Council meeting on Monday, Jacob Schlichter observed as council members voted against registering his cannabis dispensary, The Smoking Tree. This decision marked a significant setback for Schlichter, who had already received a cannabis microbusiness license from the Minnesota Office of Cannabis Management (OCM) on July 17 after a year-long application process. He completed his city registration shortly thereafter, expecting to open his business with a soft launch on Tuesday.

Instead of preparing for the launch, Schlichter spent Tuesday consulting with an attorney to explore legal options. “Everyone [in the cannabis industry] is panicking,” he said about the council’s decision. “Does this set a precedent of cities and counties denying things they don’t want? And saying, ‘Hey, have fun trying to sue.’ ... That’s a huge pay-to-play type of behavior.”

Despite holding a state-issued license, Schlichter was unable to begin operations until securing local retail registration. In May, he signed a lease for his store in a strip mall on Bridge Avenue near Interstate 90. The shop was fully equipped with shelves and decorations but remained empty due to the city’s refusal to register his business.

Minnesota legalized recreational marijuana two years ago, and The Smoking Tree was one of a small number of microbusinesses to recently gain state approval. Schlichter expressed hope that the issue could be resolved without legal action against the City Council. However, the city’s denial of his license contradicted state law, which states that local governments cannot prohibit businesses that meet OCM and local requirements. According to Albert Lea City Manager Ian Rigg, Schlichter’s application met all necessary criteria.

The city has a limit of two cannabis retailers, based on the requirement that local governments must approve at least one cannabis business for every 12,500 residents. State law also allows cities and counties to restrict the locations of such businesses and their proximity to sensitive areas like schools, parks, and churches.

During the meeting, Mayor Rich Murray voiced his opposition to having cannabis businesses in the city. “I do not like the way the state Legislature, and the governor, has rammed this down our throats with very little say in the process — all because they’re hungry for more revenue,” he said.

City Attorney Joel Holstad warned the council that defying the state statute could lead to litigation. “If we were to try to block it, we would be sued by the state of Minnesota. ... A legitimate defense of that lawsuit would cost easily $100,000 with not an impossibility of winning, but a highly unlikely chance of prevailing,” he stated.

Schlichter reached out to the OCM regarding the denial. In an email reviewed by the Minnesota Star Tribune, OCM Compliance Supervisor Kirk Johnson informed Schlichter that the office does not have legal authority to compel local governments to comply with state law or mediate disputes between license holders and local governments. Instead, the office advised him to seek legal counsel independently.

Schlichter feels caught in the middle of a dispute between city and state governments. “I feel like I’m collateral damage,” he said. Rigg noted that the state government could impose consequences on Albert Lea for failing to approve the license. In addition to potential lawsuits from Schlichter or the state, the city could risk losing a portion of its local government aid funding.

“I don’t want anyone to have any kind of illusions that we had any significant control or much say,” Rigg said about cannabis businesses.

The council voted 4–3 against registering The Smoking Tree, with Murray and Council Members Rachel Christensen, Keith Van Beek, and Larry Baker voting no, while Council Members Jason Howland, Reid Olson, and Brian Anderson voted in favor.

Despite the setback, Schlichter plans to invite members of the City Council to visit The Smoking Tree. “Albert Lea is my home,” he said. “The last thing I want to do is sue my own city and waste taxpayer dollars.”