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Medical Marijuana

A new economic high? Medical cannabis could prove profitable for Mississippi

As a growing number of patients are procuring their registration cards to participate in Mississippi’s medical cannabis program, approximately 50 licensed cannabis cultivator companies are trying to navigate how to get their crops to consumers. 

The industry is expected to be operational in early 2023, but in a tightly regulated market, many micro-growers are feeling pressure to figure out how to comply with state regulations while still making a profit. 

Lorri Williamson, who is a part of New Altitude Farms, was a professor at the University of Mississippi for 23 years, teaching mainly in the criminal justice department. Her husband, Mike, however, comes from a long line of farmers in Water Valley; they have been living on his family farm since they’ve been married. 

Over a year ago, he declared he was done growing cotton. Theirs has always been a frugal farm, Lorri Williamson said, and their cotton picker was too old to get repaired because the parts were no longer being manufactured. A new machine would cost approximately $1 million.

Knowing that this was too expensive an investment, they began looking into growing cannabis instead. 

Water Valley farmer Mike Williamson has stopped growing cotton and begun growing cannabis. Photo courtesy of New Altitude Farms

The micro-growers licensing has a two-tier system, with an application fee of $1,500 and an annual fee of $2,000 that entitles the grower to no more than 1,000 square feet of cultivation in Tier 1. For Tier 2 growers, this cultivation can span from 1,000-2,000 square feet, with a $2,500 application fee and a $3,500 annual fee. 

Attorney Slates Veazey, who is specializing in cannabis law in Jackson, believes this tier system is what evens out the market for micro-growers.

“I think the goal of the legislation and the regulations is to have an equal program where the different tiers of these businesses … can succeed,” he said. “For the micro-cultivators and micro-processors, it’s a lot cheaper to get a license.”

He also adds, “People like these mom-and-pop type stores … in everything whether it’s food, beverage or clothing, and I think there will be an appetite … for smaller cannabis companies.”

But micro-growers like the Williamsons aren’t sure that they can even reach the cultivating process as legislation continues to shift.

“I’d like to know why they’re (always changing the regulations). Maybe I would be okay if I knew the reasoning,” said Williamson. Two weeks prior to this interview, the Department of Revenue informed growers they would be responsible for packaging their cannabis crop in addition to cultivating and transporting via a certified cannabis transportation company. 

The state’s requirement of growing completely indoors has been a burden for the Williamsons, and even for large companies like Mockingbird Cannabis LLC. Despite an investment upwards of $26 million, Mockingbird was caught in September growing in hoop houses – plastic covered greenhouses – a potential violation which they are still in debate over with the Mississippi Department of Health.

With the help of a more experienced cannabis grower who had moved to Mississippi to work in the nascent medical cannabis industry, the Williamsons worked to convert their sweet potato shed into an enclosed grow facility outfitted with top of the line grow lights. 

“We would like to think that small farmers could do this,” Williamson said. “It’s expensive, and it probably could have been done less expensively … in a smaller way than (they) have.”

Regulations state a grow facility must be completely contained within four walls, a roof and flooring; sunlight is not permitted. Crops instead must be grown under controlled light. This was another issue for Mockingbird — they were forced to destroy more than $1 million in crops due to exposure to sunlight.

Gary Beck, co-owner of Be Green, has devised a way to utilize truck trailers as a way to sustain his mirco-growing operation. He asked that, for safety and security, the location remain undisclosed.

Beck believes that soon the federal Food and Drug Administration (FDA) will take over regulations, which is why he is currently painting the trailers FDA-compliant Battleship Gray. Though he foresees future federal involvement, as it stands now he is struggling with the state requirements.

Currently, the Mississippi Department of Health and Department of Revenue are charged with establishing oversight of the new industry; however, they are still in the staffing process and are struggling to keep up with the momentum of the burgeoning industry.

“(The lawmakers) don’t know what they’re doing. They keep changing (rules) continuously, which is really unfair because people like me who are taking their last dollar as my investment … they haven’t given us specifications. They may add or change something in the middle (of building).”

The lawmakers, he says, are pulling legislation from neighboring states without regard to tailoring it for Mississippians. “I’m not always against the government, but I don’t like their policies and procedures when they’re not doing it. If they were here on my end doing it, they might change their mind on a lot of the regulations,” Beck added.

Attorney Slates Veazey is of a different mindset. “The good and bad from each program (from other states) helped shape what we now have as our cannabis program,” he said.

He added that Mississippi is not as restrictive as states like Alabama, which is limiting licenses to those considered most qualified according to what sometimes can be subjective standards, rather than those that meet the minimum requirements. 

Veazey also believes that Mississippi “has more safeguards in place” to prevent a tumultuous rollout, such as Oklahoma’s medical cannabis program, which he calls “the Wild West.” Oklahoma has been critiqued for its lax laws on licensing, which has led some to call into question the validity of its medical intent.

Beck’s main issue is with the Standard Operating Procedure, or SOP, which is the step-by-step process outlined for operating a cultivation business.

“If you’re (applying) yourself, trying to save money … for the structures and equipment, it’s time-consuming,” he said, adding that a lawyer is practically required, in his opinion, to sort through and research the regulations, which could hinder some people’s entrance to the market.

Veazey even says that “while it’s not a competitive application process, there are a lot of boxes to check, and it requires a lot of prep – and money, quite frankly – to have a compliant application.” His team is composed of real estate and corporate lawyers, as well as contract specialists to assist his own clients. They also maintain a cannabis law blog, Budding Trends, where Veazey is a contributor.

Beck has already had experience in the cannabis market; in Gainesville, Fla., he was a part of a research team devoted to assisting veterans in moving away from using opioids to cannabis. He said he has benefitted from using medical cannabis, as he has chronic pain. Previously, he was prescribed upwards of 30 pharmaceutical medications but wanted to shift towards something he sees as more “natural.”

He is excited for Mississippi’s medical cannabis program, because he believes “it gives you an opportunity to do what you want for your body, not what you feel someone is trying to force feed you.”

Beck is far from the only one who is eagerly anticipating the program. When Initiative 65, the citizen-sponsored ballot initiative that would have legalized medical marijuana in Mississippi, was first proposed, some analysts projected that the state-wide industry could bring in approximately $800 million by 2024. However, newer projections based around a delayed rollout and more stringent policies are not yet available. 

As for state revenue, there is a sales tax of 7% on all dispensary sales, as well as an excise tax of 5% on the cultivators based on sale price. But said tax rates are only dependent on the success of growers. 

Further, Mississippi currently does not allow for exportation of cannabis to other states. All cannabis must be grown and sold in the state, which could create a hard ceiling on demand.

Beck is in favor of taxes because Mississippi “can finally not be last on the map economically,” he said. “Revenue-wise, if it’s used correctly, this could help our education system and our kids. There will be jobs in extraction, in transportation and in many other sectors.”

Lorri Williams and her son, Cory, are part of a family team converting their cotton farm into a cannabis cultivation facility near Water Valley. | Photo by Eva Luter

An influx of cannabis-related services has already started. Testing facilities, proper waste disposal, security, transportation and construction are necessary to support the cultivators and dispensaries. Further, cannabis-specific enterprises such as resource planning, insurance and point of sale system companies have begun to look into Mississippi for expansion. 

But for micro-growers, it’s possible that all of these sectors are going to be an economic burden. Lorri Williamson remarked that her family has “taken money out of retirement, out of savings, it’s all (their) money.” And while she wants the medical marijuana program to succeed for Mississippians and wants people to have an alternative to regular medicine, she also wants to make her money back. 

Williamson is one of many banking on cannabis cultivation to fund her and her husband’s retirement. 

Similarly, Beck says he lost a large portion of his savings during COVID to a startup he had invested in prior to the pandemic, and he has other friends in the agriculture business in similar dire straits.

“Some (of the people I know in the industry) are farmers who are getting two micro-grower licenses because they lost everything and are trying to make it back,” Beck said. “Most of them began growing hemp when it became legal, and then weren’t able to sell it.”

In 2020, Mississippi signed into law Senate Bill 2725, also known as the Mississippi Hemp Cultivation Act. While it was intended to create a hemp cultivation program, according to the Mississippi Department of Agriculture, “the necessary funding to implement the program was not appropriated by the Mississippi Legislature.” 

It is still legal to grow hemp in Mississippi, however it requires a federal license. According to Beck, many of his friends lost their investments as their crops did not have the state funding that was expected to offset initial costs and then had to sell their product at cheaper prices than were anticipated. Much of the hemp was also unsellable due to higher than regulated THC levels found in the strenuously cultivated crop.

He does not fear, nor do his friends, he says, that a similar fiasco like Senate Bill 2725 will occur with this medical marijuana program. 

Beck says this is more than a get-rich-quick endeavor for him. “If it’s only about money, you’re going to fail, from a cultivation standpoint. It takes a lot of knowledge about the industry and about farming in general. You need experienced people who have a passion for this. If you do, you’ll make a good medicine.”

As for Williamson, while she too believes this is a beneficial medicine for Mississipians, she also points to the long-time agriculture business here; it is the state’s largest industry, with more than 17% of the state’s residents employed in the agricultural sector.

“My dream would be that those of us that have lived our lives in Mississippi and put in the hard work on the farms have an opportunity to get into this business … that it can be a profitable business for them, because it’s getting harder and harder to make money on … the crops we’ve always grown. I just hope it would be an avenue for cultivators because if not, we’re going to lose a lot of small farmers.”

She also is in favor of Rule 5.1.2 Section 40, which says cultivators must have been Mississippi residents for at least three years because she’s “not keen on people coming from outside of Mississippi and opening these operations. (She) would rather it be people who have persevered on their family farms, and not people with lots of investors seeing this as a way to make money off Mississippi.”

Her concerns are valid; at the Lucky Leaf Expo, the majority of those showcasing their cannabis-related products and services hailed from places such as Colorado, California and Oklahoma. They are capitalizing on the so-called “Green Rush” for Mississippi. While it is a traveling trade show, Lucky Leaf still created a sense of unease for some who fear they might lose out on opportunities in their home state.

As Williamson put it, “I just want it to be about Mississippians being able to sustain their small family farms.”

Story by Allie Barnett

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