Out at a farm near Farmington, a dozen greenhouses sit on 12 and a half acres of land that have been left untouched for over a year.
Overgrown weeds poke out of a clear tarp that just barely covers the greenhouse roofs. Tangled hoses are piled on the floor by one of the doors. Bundles of blue wire hang from the ceiling in the main corridor, where a new security system was supposed to be installed.
Regulatory problems, namely getting local signoff, have the plans stuck in place. That’s led to litigation and is among a series of lawsuits cropping up around Minnesota as the still-forming legal marijuana industry is getting off the ground. Clashes between local authorities and would-be cannabis operations are leading to rearranged plans, court fights or resignation that some might not come to pass as planned.
In the case of the Farmington fields, things are in limbo.
“It’s honestly depressing,” said Josh Kasprzyk. “We’ve invested millions here.”
Since 2019, Kasprzyk and his business partner, Richard Brama, have grown hemp at the farm to produce low-dose THC products under BKR Brands. The plan had always been to cultivate recreational cannabis there once it became legal in Minnesota and lease some of their space to other license holders.
“We were transparent [with the township] about what we were attempting to do,” Brama said. “We felt like we had a really good relationship with the community.”
But when the time came to pivot into the adult-use market, the duo ran into issues with the local township. They spent about half a year working with Eureka Township — which has jurisdiction in this instance — but couldn’t get approval for their cultivation plans.
Now, Kasprzyk is suing the township for barring their operation.
“It's absolutely been very painful for us personally, for our business, employees, and our families,” he said.
Denied approval
Last year, Kasprzyk and Brama stopped cultivating hemp at the farm to prepare for the shift into cannabis. In early 2024, they got approval from Eureka Township to construct two buildings where he planned to grow indoors for hemp and later for cannabis.
Kasprzyk then secured one of 50 cannabis cultivator licenses through a lottery held by the Minnesota Office of Cannabis Management last June. Everything seemed to be on track, except for the local township.
It started out as Eureka requiring them to obtain an interim use permit.
“Instead of bringing us into a conversation to see how we could make this work together in a partnership, they passed a special use permit without informing us knowing that we had put all this money into the infrastructure anticipating adult-use cannabis,” Brama said.
The operators applied for an interim use permit, a process that cost more than $100,000 between architects, lawyers and site planning. They were also invoiced by Eureka about $24,000 for legal research.
After months of back and forth on building codes and other disputes, Kasprzyk told the town they would scratch plans for the two new buildings and use the existing land they had used for hemp. But the town ultimately denied their permit last November.
“The township had multiple reasons the proposed project did not meet the criteria for issuing an IUP, including but not limited to the incompatibility with the neighboring property, the adverse effect on the neighboring property and the traffic concerns,” said Jason Kuboushek, the township’s attorney.
In its denial letter, the town cited concerns with increased traffic on a nearby public road, neighbors who were worried about their property value dropping and an “unwillingness” to comply with local building codes and other rules.
“The law is clear that they can't deny us because we're asking for cannabis, as long as we meet the conditions,” Kasprzyk said.
State law says cities and counties can only govern time, place and manner of a cannabis business and enact “reasonable restrictions,” but cannot prohibit it. Despite that, several municipalities have passed ordinances that zone out or restrict cannabis.
In response to allegations that Eureka is acting in defiance of state law and is biased against cannabis, Kuboushek said cannabis businesses are allowed in certain locations but “for the reasons set forth in the resolution, this was not the right location.”
A few other lawsuits are pending challenging similar decisions by local governments. Minnesota’s cannabis agency says it cannot compel a city or county to action even if it’s not complying with state law.
“The office has recommended that license applicants seek legal counsel about their options if they believe their local government is not complying with the law,” said Jim Walker, an agency spokesperson.
The agency is monitoring ongoing cannabis lawsuits and court decisions.
In Albert Lea, a dispensary owner argues the city unlawfully denied him registration for his retail cannabis store after a past criminal conviction involving a minor became the center of controversy. And a farmer in Silver Bay is fighting against an ordinance that explicitly prohibits local approval of all cannabis businesses.
House DFL Speaker Zack Stephenson, one of the major sponsors of cannabis legalization, said he anticipated conflicts with local governments. He’s confident lawsuits like Kasprzyk’s will be successful.
“We wanted a uniform approach across the state, so cities have very little discretion when it comes to these businesses. And yet they are. Some of them continue to try and push the envelope,” he said.
Other efforts are underway at the Capitol to focuses on local government’s ability to approve a cannabis business. Rep. Jessica Hanson, DFL-Burnsville, is pushing a bill that would allow the OCM to waive the requirement of getting local government certification and may issue a license to an applicant if a municipality does not issue certification within 30 days of receiving a copy of the application. The prospective business owner still has to comply with local zoning ordinances and state fire and building codes.
A companion bill is also making its way through the Senate.
Early struggles
That leaves Minnesotans like Kasprzyk and Brama with losses they’ll never be able to recover.
They estimate damages could stretch into the millions if they can't get crop into the ground. That’s from the farm sitting idle, missing out on getting into the market early and an ongoing lawsuit with the township.
“They went behind our backs, pulled the rug out from underneath us, and put us in a position where not only could they have bankrupt our businesses, but they could have bankrupt us personally,” Brama said.
Many say the most crucial time to get into the market is the first 12 to 24 months, which is the goal for most prospective cannabis business owners. The adult-use market is still in its early stages, but is slowly shaping up with at least 180 businesses licensed and more than $64 million in retail revenue.
Supply is still extremely limited and Minnesota only has four licensed cultivators so far.
The pair say they have lost the opportunity to take advantage of that window where their business would be the most successful. Fortunately, Kasprzyk and Brama found a new cultivation facility in St. Paul and have about another year before the market matures and profit margins slim down.
The difference between Eureka and St. Paul is night and day. Their focus now is getting the facility ready to grow cannabis.
“Our hope is to get operational within three to four months,” Brama said.
He also hopes they win the lawsuit so they can still grow cannabis at the farm in Farmington, like they originally planned eight years ago.
“The damage has been done,” Brama said. “And so at this point, I'm hopeful that we can continue to find a path forward in Farmington, that’s the goal.”
MPR News political correspondent Dana Ferguson contributed to this report.
