Minnesota Should Allow Marijuana Businesses To Offer Employee Stock Ownership Plans, Lawmakers Say (Op-Ed)

Minnesota cannabis ESOP. It sounds like a mouthful, like a dish you order because the chef swears it’ll change your life. But this one might. Minnesota’s cannabis market is wobbling on its barstool—pummeled by 280E, pinched by unclear federal hemp rules, and told to smile for the camera while it pays more than its fair share. Payroll you can’t deduct. Rent that counts against you. Effective tax rates flirting with 70 percent. That’s not a business plan; that’s a slow bleed. So here comes a gritty, practical fix from an unlikely bipartisan duo: open the door for employee stock ownership plans in cannabis. A Minnesota cannabis ESOP won’t solve every problem, but it hits where it hurts—cannabis taxation—and gives small operators a fighting chance in a storm that doesn’t care how good your product tastes.

Cutting 280E Down to Size

The boogeyman has a number: 280E. It’s the IRS clause that treats state-legal cannabis shops like they’re still doing business in a back alley, forbidding normal deductions and turning profit-and-loss into a punchline. Here’s why ESOPs matter. When a company is 100 percent employee-owned through an ESOP, that entity can operate in a way that sharply reduces or eliminates corporate income tax liabilities—federally and often at the state level—because the ESOP trust is treated like a qualified retirement plan. Translation: the tax man finally stops double-dipping your fries. You still pay excise taxes. You still cover payroll taxes. You still compete. But the most brutal edge of 280E—those impossible income tax bills—gets sanded down. Minnesota lawmakers have a bill on the table, HF3330/SF3520, that would let cannabis businesses choose this path. The next session opens February 17. That’s the runway. Tight. Real. And maybe just long enough for liftoff.

Ownership With Teeth

ESOPs aren’t charity. They’re a hard-nosed bet that the people who do the work should own the result. Rutgers research says employee ownership can build durable, multigenerational wealth, especially for workers who’ve been on the wrong end of the drug war and the wealth gap. That’s not a press release. That’s a blueprint for equity that doesn’t rely on lotteries, carve-outs, or a thousand pages of rules nobody reads. Minnesota already gets this—more ESOPs per capita here than anywhere else. So why not use the tools we’re already good at? Put budtenders, growers, drivers, and bookkeepers on the cap table. Write a future where the shop that survives the first winter isn’t just another roll-up acquired by a distant fund, but a local business owned by the folks who lock the doors at night. Other states have started down this road—Maine, Illinois—because mature markets are learning the same truth: under 280E’s shadow, ownership structure isn’t just an HR perk. It’s strategy.

And the strategy isn’t unfolding in a vacuum. Reform is a moving target, and state playbooks are rewriting themselves in real time. Virginia’s policy architects are drawing new lines in the sand, pushing a retail framework under a pro-reform administration—a story worth watching in Virginia Marijuana Commission Unveils Plan To Legalize Adult-Use Sales Under New Pro-Reform Governor. Texas, of all places, just widened the medical lane with a fresh batch of licenses, a subtle but significant signal captured in Texas Officials Approve Nine New Medical Marijuana Business Licenses As State Expands Patient Access. The broader health-policy current is choppy too—see the complicated clash of veteran care, mental health, and controlled substances in VA Rejects Psychedelic-Focused Veterans Group’s Grant Application For Suicide Prevention Program. And if you think cannabis is a safe partisan harbor, read the tea leaves in Trump And Republicans Could ‘Steal Marijuana Reform’ From Democrats, Progressive PAC Warns. In that context, a Minnesota cannabis ESOP isn’t just tax planning. It’s a political judo move: bipartisan, worker-forward, fiscally pragmatic. It keeps ownership local while the national tide sloshes between red and blue.

Here’s the gut-check. The Minnesota cannabis market needs immediate ballast: lower effective tax burdens, protection for small operators, and a path to legal cannabis revenue that rewards sweat equity, not just cap tables with a New York ZIP code. ESOPs do that. They align incentives; they stabilize payroll; they turn employees into owners who stick around when the easy money dries up. No gimmicks. Just structure. Pass HF3330/SF3520, pair it with smart licensing and real banking access, and you get a market that can breathe—one that can pay its bills, invest in product, and show up for communities that believed legalization wouldn’t be another broken promise. If you care where this industry lands, watch the calendar and call your reps. And if you’re ready to explore the legal hemp side while the policy gears grind, finish the night by browsing our latest craft selections right here: https://thcaorder.com/shop/.