A second company that wants to grow cannabis on the Iron Range in time for the beginning of retail sales in the spring of 2025 has requested financial help from the state agency charged with spurring economic development in the mining counties of northern Minnesota.
M.N. Technology of Cohasset has submitted a pre-application for financing from the Iron Range Resources and Rehabilitation agency. Agency staff are working with the company to consider help, which usually includes below-market-interest loans, some that can be forgiven if a certain number of jobs are created and sustained.
One officer in M.N. Technologies said it will ask the economic development agency created to diversify the economy in the state’s iron and taconite mining region for a similar level of assistance it gave a Missouri-based company last month.
RELATED: State pledges up to $15 million in forgivable loans to Missouri-based cannabis company
“We just want fair,” said Craig Maturi, vice president for operations for the Harris Township-based company. “We want a fair chance and a fair shot like we were supposed to get.”
The new application raises questions about whether the IRRR will take a stake in two different companies to build grow operations within three miles of each other. The comparison between M.N. Technology and the similar proposal that went before the IRRR also highlights one of the concerns raised by Gov. Tim Walz and others in the fledgling cannabis industry — that a goal of the new law was to spur small businesses from Minnesota.
M.N. Technology, whose officers are two married couples who live in Itasca County’s Harris Township — Mandy and Andy Nintzel and Jamielee and Craig Maturi — are also working with the city of Cohasset to purchase land in a city-owned business park and to create a tax increment financing district. The proposal, according to materials submitted to the city, would be to build a structure in the city that would include a 30,000-square-foot marijuana growing area plus space for processing of the plant.
At full operation, the business would employ about 70 people. No retail sales are included in the plan.
The IRRR would provide no further information about what it calls a pre-application. But the company told Cohasset city officials that it would purchase land in the city’s industrial park for the grow operation plus space for support functions such as product curing, packaging and quality control.
While recreational cannabis is now legal in Minnesota and the state will issue licenses to grow and sell it in time for an expected start of non-tribal retail sales in the spring of 2025, it is still illegal federally. That makes it difficult to borrow money, and much of the money for cannabis businesses comes from personal wealth or private investors. Loans from government agencies, therefore, are a significant potential source of money.
House File 100, which legalized, taxed and regulated recreational marijuana recognized that by creating a special fund. Called CanStartup, it can loan up to $150,000 for eligible businesses. The entire program was funded at $6 million over the first two years of legalization while other programs to help train people to enter cannabis businesses and to navigate the complexities of the industry received an additional $6 million.
That is a small amount compared to what the IRRR pledged to HWY 35 last month. The advisory board made up mostly of Iron Range legislators, voted 8-5 to support a pair of loans — $10 million from an IRRR-controlled fund and $10 million from a fund distributed by the state Department of Employment and Economic Development — to HWY35. That company, led by a Missouri-based cannabis entrepreneur, proposed a $67.8 million investment in cannabis cultivation as well as manufacturing of products such as edibles and oils.
The proposal also envisions a second phase to double the plant canopy from the currently allowed 30,000 square feet to 60,000 square feet, something the new Cannabis Management office can allow if demand requires more cultivation.
Along with a TIF deal worth $2 million, the government financing would make up a little less than one-third of capital needed for the project. Backers said the rest would come from private investors. Of the $20 million in state funds, up to $15 million could be forgiven in $5 million increments if the company employs 150, 175 and 350 people. Its officers told the IRRR board it expected up to 400 employees if it is allowed to expand to a 60,000-square-foot plant canopy. That is about the size of a football playing field, including end zones.
HWY35 is led by Jack Mitchell, who has both medical and recreational operations in Missouri. In Minnesota, he and a Minnesota-based business partner John Hyduke have created a cannabis trade organization with a board populated by people connected to their businesses. Hyduke is chair and Mitchell is vice chair.
Maturi said he was told by IRRR staff that M.N. Technology should join that group.
“Us being naive, we tried to join them but no one would call us back,” Maturi said. “Of course they knew who we were but we didn’t know who they were.”
Mitchell’s operation in Missouri was the subject of recent reporting by the Kansas City Star about a plan to create a cannabis-themed entertainment district called Smokey River Cannabis. The plans were withdrawn after the newspaper detailed connections between the town’s government and the project’s backers.
A day after the IRRR board approval, Gov. Tim Walz raised questions about the deal that focused on why one potential company in the new recreational cannabis business would get state help. Walz also questioned why a large out-of-state company would get preference when the state law legalizing recreational marijuana wanted it to promote small, state-based businesses.
After Walz raised his questions, DEED released a statement that said its participation in the HWY35 proposal and funding was not final and that it would be conducting its own investigation of the proposal.
RELATED: DEED says funding for Missouri-based cannabis operation not a done deal
Maturi said interest in M.N. Technology increased after media reports about HWY35 and Mitchell appeared following the IRRRB vote. He said the officers received interest from potential investors. M.N. Technology (which stands for the names of the officers, Maturi and Nintzel) alluded to the HWY35 plan in an announcement about the company and its plans.
“Keeping everything as local as we can is just good for business,” said Mandy Nintzel, the chief executive officer of M.N. Technology. “The cannabis industry has large multi-state operators who use big business tactics to pursue licenses in every state that becomes legal. They push out local businesses and residents pursuing licensing to build monopoly-style control of the entire multi-state cannabis industry.”
Craig Maturi described M.N. Technology as “the little guy, what the bill was supposed to be for versus an out of state company.”
During the meeting of the IRRR board on Oct. 17, one member who supported the HWY35 loan asked how the board might respond to additional requests for help.
“If 20 of these show up and say, ‘Hey, we want the money too, we want the deal.’ I can promise you that it would be difficult to fund 20 at this level because I would call it saturation,” said Rep. Roger Skraba, R-Ely. “It’s no different than if 20 mining companies came to us and said we want help starting 20 mining companies, or 20 logging companies.
“We can’t do it all. But we can do some.”
But Maturi said he and his partners have been told that only one company will receive IRRR funding from money that comes from a tax on taconite production.
Max Peters, the city administrator for Cohasset, said the city has been working with M.N. Technology about both the sale of industrial park land and the tax increment financing proposal. The city has also been helping the company seek financing and incentives from the IRRR, the Itasca County economic development board and DEED.
Cohasset has a population of 2,807 and was disappointed last year when a large, $440 million wood products plant was shelved, despite a loan from IRRR. But that loan of $15 million was smaller than the agency has pledged to HWY35. The city is also facing the eventual closure of the Boswell coal plant and is part of an energy transition district aimed at replacing those jobs.
Peters said he expects the request from M.N. Technology to the IRRR would be proportional to the HWY35 request — about one third of M.N. Technology’s $34 million project cost. The TIF district could produce another $900,000 to $1 million over nine years.
Peters highlighted the local connections of the backers of the Cohasset proposal. The Maturis own a building insulation company as well as a Grand Rapids coffee and nutrition shop and a real estate business. Mandy Nintzel is a registered nurse and Andy Nintzel owns a business that makes wakesurfing and boating products.
Andy Nintzel has studied at a cannabis college in Holland and will be vice president of cultivation. The company is being advised by a Boulder, Colorado, consultancy called Canna Advisors. It also has directors who have worked in cultivation, microbiology and environmental operations and safety.
But Peters said the city will be watching the IRRR response to the request from a second cannabis cultivator.
“I’ll be shocked if they put two facilities a few miles apart from each other,” he said of HWY 35 in Grand Rapids and M.N. Technology in Cohasset.
“Certainly, as an area, we would like one. Two would be better. But is that even realistic?” It puts IRRR in the position of picking a winner between two proposals, and it would be using financial resources that would not be available to other jobs proposals, Peters said.
The city council authorized a letter of support for the plan.
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