Mississippi Cannabis: Let’s Talk About Licenses

On February 2, 2022 Governor Tate Reeves signed Mississippi’s medicinal cannabis bill and made it law. Under the new law, “certain patients who have debilitating medical conditions,” will be allowed to possess up to “three and one-half (3.5) grams of medical cannabis flower, One (1) gram of medical cannabis concentrate, or one hundred (100) milligrams of THC in an unfused product.” Mississippi officials are expected to start “accepting online license applications for patients, medical practitioners, cannabis cultivation facilities, and others by June 2022.” That leaves most prospective cannabis businesses with a short window to start planning for their applications.

Highlights from the law include multiple tier including micro-licensing for cultivation and processing facilities which allows for different market entry price points based on size. Another important aspect of the law is that vertical integration allows for one entity to grow, process and sell cannabis and cannabis products in up to five dispensaries.

The Countdown Begins

“After one hundred twenty (120) days from the effective date of this act (Feb 2, 2022), the MDOH shall begin licensing and registering cannabis cultivation facilities, cannabis processing facilities, cannabis testing facilities, cannabis research facilities, cannabis disposal entities and cannabis transportation entities. After one hundred fifty (150) days from the effective date of this act, the MDOR shall issue licenses for medical cannabis dispensaries as provided for in this chapter within thirty (30) days of receipt of the application from an applicant or within thirty (30) days after the initial one-hundred-fifty-day period, whichever is the later date.”

License Types and Costs 

1. Cannabis cultivation facilities
   1. This is a business entity licensed and registered by the Mississippi Department of Health that
      1. acquires,
      2. grows,
      3. cultivates and
      4. harvests medical cannabis in an indoor, enclosed, locked and secure area.
   2. Cannabis cultivation facility license application fee shall be subject to the following tiers
      1. Micro-cultivators
         1. Tier 1. A cannabis cultivation facility with a canopy of one thousand (1,000) square feet or less shall be subject to a one-time nonrefundable license application fee of One Thousand Five Hundred Dollars ($1,500.00). The annual license fee shall be a nonrefundable fee of Two Thousand Dollars ($2,000.00).
         2. Tier 2. A cannabis cultivation facility with a canopy of more than one thousand (1,000) square feet but not more than two thousand (2,000) square feet shall be subject to a one-time nonrefundable license application fee of Two Thousand Five Hundred Dollars ($2,500.00). The annual license fee shall be a nonrefundable fee of Three Thousand Five Hundred Dollars ($3,500.00).
      2. Cultivators
         1. Tier 1. A cannabis cultivation facility with a canopy of not less than two thousand (2,000) square feet but not more than five thousand (5,000) square feet shall be subject to a one-time nonrefundable license application fee of Five Thousand Dollars ($5,000.00). The annual license fee shall be a nonrefundable fee of Fifteen Thousand Dollars ($15,000.00).
         2. Tier 2. A cannabis cultivation facility with a canopy of not less than five thousand (5,000) square feet but not more than fifteen thousand (15,000) square feet shall be subject to a one-time nonrefundable license application fee of Ten Thousand Dollars ($10,000.00). The annual license fee shall be a nonrefundable fee of Twenty-five Thousand Dollars ($25,000.00).
         3. Tier 3. A cannabis cultivation facility with a canopy of not less than fifteen thousand (15,000) square feet but not more than thirty thousand (30,000) square feet shall be subject to a one-time nonrefundable license application fee of Twenty Thousand Dollars ($20,000.00). The annual license fee shall be a nonrefundable fee of Fifty Thousand Dollars ($50,000.00).
         4. Tier 4. not less than thirty thousand (30,000) square feet but not more than sixty thousand (60,000) square feet – Thirty Thousand Dollars ($30,000.00). The annual license fee shall be Seventy-five Thousand Dollars ($75,000.00).
         5. Tier 5. not less than sixty thousand (60,000) square feet but not more than one hundred thousand (100,000) square feet- Forty Thousand Dollars ($40,000.00) one time fee with annual fee of One Hundred Thousand Dollars ($100,000.00).
         6. One hundred thousand (100,000) square feet or more  Sixty Thousand Dollars ($60,000.00) one time fee and One Hundred Fifty Thousand 1259 Dollars ($150,000.00) due annually.
2. Cannabis processing facility license application fee shall be subject to the following tiers
   1. Micro-processors have two tiers
      1. Tier one allows a processor to process less than 2,000 pounds of cannabis biomass material at a one time cost of $2000 and an annual fee of $3500.
      2. Tier 2 allows  processing up to 3000 pounds ($2500/$5000)
   2. Processors
      1. Processing not less than 3000 pounds ($15,000/$20,000)
3. Cannabis disposal entities have a one time fee of $5,000 and $7,500 due annually.
4. Cannabis Transportation entities has a one time fee of $5,000 and $7,500 due annually.
5. Medical cannabis dispensaries have a one-time nonrefundable license application fee of Fifteen Thousand Dollars ($15,000.00) and an annual fee of Twenty-five Thousand Dollars ($25,000.00).
6. Cannabis testing facilities
7. Cannabis research facilities

License Caps 

No individual or business entity shall have a direct or indirect ownership or economic interest of greater than ten percent (10%) in:

1. More than one (1) cannabis cultivation facility license;
2. More than one (1) cannabis processing facility license; and
3. More than five (5) medical cannabis dispensary licenses.

Vertical integration therefore looks like one cultivation combined with one processing license and up to five dispensaries. There are no numerical limits to the licenses.

Qualifications 

An individual applicant for a cannabis cultivation facility, cannabis processing facility, medical cannabis dispensary, medical cannabis transportation entity or medical cannabis disposal license shall be a natural person who:

1. Is at least twenty-one (21) years of age;
2. Has not previously held a license for a cannabis cultivation facility, cannabis processing facility, medical cannabis dispensary, medical cannabis transportation entity or medical cannabis disposal entity that has been revoked;
3. Has not been convicted of a disqualifying felony offense;
4. If possessing a professional or occupational license, that the license is in good standing
5. Has submitted a sworn statement indicating that he or she is a true and actual owner of the entity for which the license is desired, and that he or she intends to carry on the business authorized for himself or herself and the entity and not as the agent for any other entity
6. Has no outstanding tax delinquencies owed to the State of Mississippi;
7. Is not serving as a member of the Mississippi Senate or Mississippi House of Representatives through December 31, 2022 and
8. Is not the spouse of a person serving as a 1343 member of the Mississippi Senate or Mississippi House of Representatives through December 31, 2022.

Applicants for cannabis cultivation facility licenses and cannabis processing facility licenses also have resident requirements to meet:

1. If a natural person, proof that the person has been a resident of the State of Mississippi and a citizen of the United States of America for at least three (3) years prior to the application date or
2. If a business entity, proof that at least thirty-five percent (35%) of the equity ownership interests in the entity are held by individuals who have been residents of the State of Mississippi and citizens of the United States of America for at least three (3) consecutive years prior to the application date.