Mississippi Releases Proposed Medical Cannabis Dispensary Regulations: Get Movin’

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The Mississippi Department of Revenue (MDOR) released information on Friday, April 15, regarding the licensing and operations of dispensaries under the medical cannabis regime in Mississippi. We feel like a broken record, but as more and more information is revealed, it becomes more and more evident that entities wanting to obtain a license as soon as possible must have all of their ducks in a row when they submit applications in June (non-dispensary establishments) and July (dispensaries). This point is even more applicable to dispensary applications, since no two dispensaries can operate within 1,500 feet of each other. 

What we have now learned:

  • The MDOR’s Alcoholic Beverage Control Enforcement Division will handle the licensing and regulating of medical cannabis dispensaries and the enforcement of laws and regulations applicable to dispensaries.
  • The dispensary application must include (beyond what the Medical Cannabis Act already specifies):
    • a list of all professional licenses held by each member and proof of good standing of each;
    • proof of local licensing/permitting/ordinance/zoning compliance;
    • a diagram of the licensed premises, the requirements of which depend on the stage of construction of the building;
    • an operations plan that must address specific topics;
    • a security plan;
    • a sales tax permit;
    • certificate(s) of occupancy;
    • a copy of deed if applicant owns the property
    • a copy of lease if applicant is leasing;
    • a contingent agreement between applicant and owner if purchase or landlord if lease, if purchase or lease of property is contingent on obtaining a license;
    • a property survey completed within previous year showing dispensary location does not violate geographic limits of law
      • measurements must be made using a straight-line, point-to-point method
      • when a main point of entry constitutes an end point, measurement shall begin at the mid-point of the door if a single door, and the point where the doors meet for dual door entrances; and
    • fingerprint cards for applicants and individuals with an economic interest in the entity.
  • The MDOR confirms that dispensary applicants do not need to be Mississippi residents.
  • Applicants must secure tax permits as part of the application process.
    • Cultivators charge a 5% excise tax, due when the cultivator sells to a dispensary or the processing facility or due on the transfer of cannabis between related entities.
    • Dispensaries charge the standard 7% sales tax to patients.
    • Dispensaries in Jackson and Tupelo are also responsible for special tax levies.
  • These draft regulations define “economic interest” as holding an ownership interest as a sole proprietor, partner, member, limited partner, stockholder owning at least 10% of available stock, or as any other type of interest that entitles the individual or entity to regular payments for amounts based on a percentage of revenue derived from the sale of cannabis or cannabis products in any licensed dispensary. This definition excludes the following:
    • Any investment that the investor does not control in nature, amount or timing, including mutual funds, group investments, etc.;
    • Financial institutions that have provided a loan to the dispensary where the repayment amounts for the loan are regular flat fee payments;
    • Operators under management agreements where the fee paid to management company is a flat monthly rate or is a percentage fee equal to less than 10% of the monthly gross revenue of the dispensary; or
    • Landlords that are receiving flat monthly rate lease payments from the dispensary.
  • The MDOR will inform applicants whether the application is complete or is missing information. 
    • The MDOR will issue a determination on the application within 30 days of receipt of the completed application.
  • Applications will be processed in the order in which a completed application is filed, which begins with an investigation regarding the information within the application. 
    • If the MDOR receives applications from dispensaries located within 1,500 feet of each other, the entity that first receives the license will be controlling.
  • The application fee, $15,000, and license fee, $25,000, must both be paid before the application is deemed complete.
    • If a license is denied based on the 1,500-foot distance requirement between dispensaries, both fees may be refunded.
    • If denial is based on a different reason, only the license fee will be refunded.
  • Applicants must pay license and application fees by credit card or ACH debit through NIC Licensing Solutions.
  • If the licensee’s dispensary is under construction when the MDOR issues the license, construction must be completed and the premises must open for business in accordance with all legal requirements within the license’s 12-month term to avoid nonrenewal and need to submit new application.
  • Licensees can transfer ownership interests but must complete an application and abide by other requirements to do so.
  • Licensees can relocate the dispensary but only after being granted permission to do so after submission of an application.
  • These regulations detail the security plans and measures, including alarm systems and video surveillance systems, that must be in place.
  • Certain advertising and marketing limitations and building signage requirements apply specifically to dispensaries.
  • Dispensaries are only authorized to sell medical cannabis, equipment used for medical cannabis, or related supplies and educational materials.
    • Specific excluded items include clothing, food that does not contain cannabis, beverages that do not contain cannabis, propane or butane, and vaping products that do not contain cannabis.
  • Dispensaries cannot hire management companies to manage the dispensary without first obtaining approval from the MDOR.
  • Dispensaries can only conduct certain activities during normal business hours, without separate approval from the MDOR.
  • The proposed regulations contain additional information regarding compliance with the seed-to-sale tracking system.
  • Dispensaries can only sell concentrated cannabis, edible cannabis products, and cannabis-infused products obtained from a processing facility or other dispensary licensed by the MDOH or MDOR, as applicable.
  • Certain records must be kept onsite or electronically onsite for at least three years.
  • Dispensaries can only receive or ship medical cannabis products by using a licensed medical cannabis transportation entity.
  • Dispensaries and their employees have a duty to report certain occurrences, such as the loss or theft of medical cannabis products.
  • The proposed regulations set forth a chart detailing the penalties for various offenses.