III.3. Cannabis Regulations Update and Discussion; Krzos
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CITY OF HOPKINS
Memorandum
To: Honorable Mayor and Council Members
Mike Mornson, City Manager
From: Ryan Krzos, City Planner
Date: October 7, 2025
Subject: Cannabis Regulations Update and Discussion
_____________________________________________________________________
PURPOSE
Staff seeks City Council feedback on a series of changes to the cannabis ordinance for
clarity and consistency. The City Council may also discuss the current limit on cannabis
dispensaries in Hopkins and provide direction to staff on whether to pursue an
amendment adjusting the number permitted.
INFORMATION
Background
The Minnesota Legislature legalized recreational cannabis in 2023 and established the
Office of Cannabis Management (OCM) to regulate licensing. In December 2024, the
City of Hopkins adopted Ordinance 2024 -1216, which created a local registration
process for cannabis retailers in alignment with state law.
As part of that ordinance, the City established a limit of three retail locations within
Hopkins. This cap was determined based on considerations including community scale
and expected market capacity.
Since adoption, the City has received significant interest from retailers and thus far
seven applications for registration. Considering this interest, it may be an appropriate
time to City can discuss the current cap. In addition, staff have identified several minor
housekeeping updates to Ordinance and are looking for input to draft a formal
amendment.
Discussion
Regulatory Context
• State law does not require cities to impose a numerical limit on dispensaries but
allows them to do so, provided there is at least one registration for every 12,500
residents.
• Cities may rely solely on zoning, spacing, and performance standards to regulate
location and density.
Planning & Development
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Comparative Review
• Neighboring communities have taken varying approaches: some have set caps,
while others rely on zoning standards alone.
o For example, Minnetonka, Edina, Eden Prairie, and St Louis limit
dispensaries to the statutorily required minimum (1 per 12,500 residents),
while Golden Valley, Bloomington, Burnsville and Minneapolis have no
caps.
Community Impact Considerations
• Public Safety:
o Retail businesses generally are associated with a greater number of
service calls as compared to other commercial uses.
• The Police Department noted that the city has three specific
tobacco stores that have generated 92 calls for police service in the
last year. Many of the calls are trespassing calls, which originate
from store thefts and other disturbances. Other calls to these
locations over the last few years include: burglaries, assaults, fraud,
robberies, property damage, disorderly conduct, alarms, etc.
From the police department service level, we would anticipate that
these cannabis shops will generate at least as many calls for police
service. The Police Department recommends no more than three in
our community.
• Cannabis retailers conduct principally cash transactions; however,
State Administrative Rules establish safety protocols for the
physical space of the retailer relating to access, storage, video
surveillance, alarm systems, and lighting.
• Economic Development:
o Retail cannabis operations generally provide new local business activity
and employment.
o In 2024 Hopkins had a healthy retail vacancy rate between 3.1-3.3%. An
oversaturation of retail locations could tie up retail space with businesses
that may end up folding, leading to unhealthy vacancy rates in the
meantime.
o Cities were previously incentivized to host more cannabis retailers through
shared Cannabis Tax revenue, but this aid was repealed in the 2025 state
budget.
• Access and Equity:
o Registration maximums may limit participation by smaller businesses, as
larger firms generally have access to capital markets and insurance
providers, which can be difficult to navigate given the Federal status of
cannabis. Firms that can navigate that environment are potentially better
suited for a first-come first-served registration process.
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Policy Options
1. Maintain Current Limit. Continue with the adopted number.
2. Increase Limit. Expand the number of dispensaries permitted.
3. Remove Limit. Allow market demand to dictate the number, while regulating
through zoning, spacing, and the State’s licensing standards.
Housekeeping Changes
In addition to the discussion on the number of dispensaries, Staff has identified several
minor housekeeping updates to Ordinance. These changes do not alter the general
policy direction but improve readability, consistency, and alignment with state law.
Proposed updates include:
• Timeline for Final Approval: State law allows businesses with preliminary
license approval to seek local registration before final licensure. Preliminary
license approval expires after 18 months. Does the Council wish to require a
shorter timeframe after applying for registration that applicants have to complete
the steps necessary for final approval (e.g., 6 months)?
• Amendments to Applications: State Statute is silent on whether applicants
may amend submitted registration applications. Staff currently interpret that
amendments are permitted. Does the Council want to formally allow applicants to
amend their applications?
• Lottery for Future Openings (Optional): Once the maximum number of
registrations is issued, should the City establish a lottery system to fill any slots
that become available (e.g., if a registration lapses or is revoked)?
FUTURE ACTION
If the City Council directs staff to move forward, staff will prepare draft ordinance
language reflecting the proposed housekeeping changes and, if applicable, the
Council’s preferred approach to the retail registration cap. This Ordinance would require
formal Council action.