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Sep 18, 2023

New Minnesota marijuana law forces menu choice: THC or booze, but not both

Minnesotans looking for a night out at a restaurant or bar face a choice under the state’s new marijuana law: booze or THC products, but not both. The law that took effect Tuesday legalizing marijuana

Minnesotans looking for a night out at a restaurant or bar face a choice under the state’s new marijuana law: booze or THC products, but not both.

The law that took effect Tuesday legalizing marijuana for recreational use by adults 21 and older also made changes to the state’s existing hemp-derived THC rules.

And for some establishments, that means assessing what they’re offering and how.

“If you’re coming in to experience a THC beverage, then that’s going to be your choice. But if you come in to experience an alcoholic beverage, you know, that can be their choice as well,” said David Benowitz, president of Craft and Crew Hospitality. “But in terms of mixing them, there are new laws and regulations that [they] already have to abide by. And that’s something that’s going to be new that I don’t think a lot of hospitality owners realize that is in the new regulations.”

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At some bars and breweries, such as Arbeiter Brewing in Minneapolis, patrons who opt for THC products will get a special wristband or stamp which will indicate to servers that they’re not drinking beer. And the same rule applies: no mixing and matching.

Minnesota was the first state to legalize marijuana after first allowing broad access to hemp-derived THC products. State lawmakers opened the door last year to a swath of legal THC edibles, seltzers and gummies. The law made Minnesota the first to green light the sale and use of those items where alcoholic beverages were already on offer.

As part of an attempt to add some guardrails this year, lawmakers passed new regulations that more clearly define what restaurants, bars and breweries can serve. The latest update limits use of both hemp-derived THC products and marijuana to adults age 21 and older, but it says establishments can’t serve someone both alcohol and THC products during the same visit.

“If you as a bartender or an owner of a bar know that a customer has consumed an alcoholic beverage within five hours of them coming to your place, you’re not legally allowed to sell them a THC beverage or a THC product,” said Minnesota Licensed Beverage Association Executive Director Tony Chesak.

Chesak said bartenders and servers will be on the line to decide whether they can serve THC products without putting customers or their businesses at risk.

“If I’m up in Brainerd and stop over at my good friend’s over at Cragun’s and have a beer and I drive down to a bar in Minneapolis, four hours later, how would the bartender in Minneapolis know that I had a beer four hours before?” Chesak said. “It’s pretty difficult to gauge that type of consumption level.”

The cannabis law’s authors said the language adding a buffer period between serving a customer alcohol and THC is meant to mitigate risk for customers and for businesses. It will be up to the state Office of Cannabis Management to enforce it.

While restaurants may have had internal limits on how many THC drinks or edibles a person could eat in one sitting, there wasn’t as clear a line for allowing a glass of wine or a beer and then a THC seltzer later on.

Now, with a five-hour mandatory separation period, restaurant and bar owners are adding extra training for employees to detect signs of impairment. And they’re reassessing what they can offer customers.

Benowitz said that while he doesn’t expect the law change to affect much in terms of THC product offerings or customer interactions in his restaurants, it might catch some by surprise.

Others said they’re not willing to take the risk.

“There’s not enough juice for the squeeze,” said Oak Eatery owner and proprietor Dawn Nelson.

Nelson said that with liability questions for restaurant owners and potential insurance price hikes on the horizon for keeping hemp-derived THC on the menu, she’s planning to drop THC seltzers this fall.

Her Medina restaurant doesn’t see much demand for the products now, Nelson said. And with the ongoing state of flux around state and local regulations on THC edibles, she said she’s willing to sit it out for now.

“There’s going to be probably training programs down the road, but to start out, I think until there's a real request for it, I think I’ll probably just take it off the menu all together, just so they can figure things out,” Nelson said.

Business owners still have questions about how the law will be enforced and how they can stay in compliance, said Jill Sims, the director of government relations at Hospitality Minnesota. And those might take some time to resolve.

“I think there’ll be some conversations going into the next legislative session on how we can sort of make some fixes to make things a little bit clearer for operators,” Sims said.

The state’s Office of Cannabis Management, which will be responsible for enforcing the law and other regulations on cannabis products, is still being built out. The new director and staff, once hired, will flesh out more guidance for businesses and consumers in coming months.

For business owners who plan to stick with hemp-derived THC products — or add them to the menu — new expenses also come into play.

Many are reporting surging insurance costs for offering the products, even though they’re derived from hemp.

“In most [liquor] liability policies, it says right in there that THC consumption on premises or the sale of this stuff is still at the federal level a ‘no no.’ And there’s no liability coverage for it,” Chesak, with the MLBA, said.

“As of right now, there doesn’t seem to be a whole lot of choices,” he continued. “So my fear has always been that if there's no liability coverage for a product, and you carry that product, that there could be legal ramifications or things that could happen to a license holder if somebody uses the product irresponsibly.”

Benowitz said his insurer initially estimated that it would cost an extra $10,000 a year to cover the restaurants for carrying hemp-derived THC seltzers and desserts.

“Because it was so new to the market, there aren’t a lot of carriers that are comfortable with it,” he said.

But the insurer ultimately paired with another firm that was able to offer a lower rate — close to $2,500 a year — instead. And Benowitz said sales of the products will more than make up for that price.

He said many of his fellow Twin Cities restaurant leaders are facing similar budget questions as their insurance policies come up for renewal this year.

Derek Gruber is a managing director at Cox Insurance who works with Twin Cities breweries that produce hemp-derived THC drinks along with their beers. He said that few standard insurance carriers have developed policies in Minnesota that cover hemp-based THC products.

“I think most of them are having this wait-and-see approach. And maybe that’s the rub,” Gruber said. “They’re all waiting and seeing, but no one’s jumping in first.”