Albert Lea City Council blocks first non-tribal cannabis dispensary, a move at odds with state lawBy

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July 31, 2025

Jacob Schlichter received the first state cannabis license to open a non-tribally owned dispensary in Minnesota. He secured building space, renovated it and paid a city fee to open his doors as soon as the city approved his registration — the final step in the process.

But in a surprise, the Albert Lea City Council rejected his plan on Monday, creating a setback that puts the city at odds with state law.

Schlichter, whose business, The Smoking Tree, is now on hold, said he was frustrated by the decision, which he said came at the 11th hour. 

"It kind of just feels like they're moving the goal post at the last second," he told WCCO on Wednesday. 

The motion to approve his business failed on a vote of 3-4. During the meeting, opponents raised concern about the legal framework approved by the Minnesota Legislature, which gives cities some tools to regulate cannabis businesses, like where and when they can operate and restricting proximity to parks and daycares.

But law prohibits local governments from banning cannabis retail stores from their communities: there must be one dispensary for every 12,500 residents. Albert Lea adopted a limit to have two businesses in their city and set other ordinances related to cannabis businesses.

"I do not like the way the state Legislature and the governor has rammed this down our throats with very little say in the whole process, all because they're hungry for more revenue," said Rich Murray, the mayor.

Schlichter said he understands the concerns and wants to continue to work with the council to find a resolution. He already paid the $500 fee to operate and thought Monday's action would be perfunctory with little discussion.

"I'm kind of shocked because it seemed genuinely like the City Council had very legitimate concerns with how the state handled everything," Schlichter said. "But perhaps there's a better avenue to address these concerns that doesn't end up intentionally or unintentionally making me — a local small business owner — collateral damage."

City staff shared with the council that denying Schlichter a permit to operate runs afoul of state law and could open the door to lawsuits and endanger $6 million in state funds the city receives in local government aid.

"There are potential real consequences," said Ian Rigg, the city manager. 

In a statement, the Minnesota Office of Cannabis Management acknowledged the situation but said that the agency "does not have legal authority to compel a local government to comply with the law."

That leaves Schlichter with the option to sue. He did not say he plans to do that, expressing discomfort because litigation would be costly to the city and, therefore, the taxpayer.

"I've had many other licensees reach out to me and say, 'I'm kind of scared now. What if my city council votes me down, after I jump through all the hoops and pay for my city registration, and now I have to hire an attorney to prove my point to get my license?'" he said. 

The issue is up for discussion again at a council meeting on Aug. 11. 

So far, state regulators have issued eight licenses, with others going through the final steps, as Minnesota's legal market begins to come online two years after the Minnesota Legislature approved marijuana for recreational use.