Abstract Regardless of the crucial role of civil society in social innovation, European Union (EU) social innovation concepts emphasized market-economic features rather than social by prioritizing social business over social movements. By emphasizing the economic features of social innovation, social enterprises, as ventures with both social and economic goals, are frequently associated with social innovation, especially in the developed economies. As an EU member country, Slovenia needed to adjust its policies to the EU social innovation concepts. Bearing in mind the EU interpretation of social innovation and the significance of state policies for its development, our aim is to investigate the policy framework conditions for the development of forestry-based social innovation initiatives in Slovenia. We found out that the prevalent economic understanding of social innovation reflects in Slovenian policy documents by equating social innovation with social enterprise. In this sense, the view of social innovation as both growth engine and a way for solving societal problems translates into explicit statements on social innovation in cohesion policy documents and progresses by operationalization of social innovation through indicators solely on social enterprise. Within the regulatory framework on social entrepreneurship, social enterprise is defined strictly with respect to legal forms, activities, profit sharing and governance, imposing barriers to the registration and development. Similarly to cohesion policy, the Rural Development Programme embraces a market-oriented understanding of social innovation and focuses explicitly on social enterprise. Forest policy documents do not explicitly mention social innovation or social enterprise. This is reasonable for documents adopted before 2011 when social innovation and social enterprises became a part of the prevailing discourse in Slovenia. However, newly adopted forest policy documents also do not integrate either social innovation or social enterprise. As forestry-based social innovation initiatives cannot be officially recognized as such, there are two possible ways for them to develop. The first applies to market-oriented, forestry-based social innovation initiatives that offer new products or services. Such initiatives can register as social enterprises and mobilize resources they can access within the social entrepreneurship regulatory framework and the Rural Development Programme measures explicitly addressing social enterprise. The second way addresses forestry-based social innovation initiatives that are not market-oriented. Those initiatives will have to navigate through policy framework conditions for resources available through the Rural Development Programme and forest policy instruments that target cooperation and networking.