EDITOR’S NOTE: This is the last in a series of stories on medical marijuana, which was passed into law in Mississippi on Feb. 2. Part I focused on what medical marijuana users will need to know. Part II was on manufacturing and distribution of medical marijuana. Today’s story looks at the economic impact of medical marijuana.
The arrival of medical marijuana in Mississippi, signed into law on Feb. 2 by Gov. Tate Reeves, was hailed both as a new means of pain relief for thousands of people and an economic shot in the arm for the economy.
But there may be another benefit that has gone largely unnoticed, one that Golden Triangle Development LINK CEO Joe Max Higgins realized two years ago, when groups anticipating the arrival of medical marijuana began searching for sites for marijuana grow facilities.
“We had people coming in looking for 50,000 square feet up to 200,000 square feet. I realized this is a good thing because the buildings they were looking at have been dormant and vacant for years,” Higgins said. “They’re not really the world-class buildings today’s industry would want to occupy. One of the things that is happening is the ceiling heights industry want are going higher, up to 38 feet. But a lot of these old buildings are 22-foot. That’s not a problem for grow houses. So, because of that, it gives us the ability to market some of these older buildings.”
Higgins said there have been groups looking at grow sites in all three Golden Triangle counties.
While finding new use for old buildings is a plus, the real benefit, Higgins said, will be an infusion of capital in the projects.
“The capital investment is high,” Higgins said. “For the biggest operations, 200,000 square feet, you’re looking at a capital investment of $150 million to $175 million. You can sort of use that number as a scale. The other thing is that it’s safe to say nobody’s going to offer any tax abatements for these operations, so they’ll be paying full school and city/county taxes. It could be a pretty big shot in the arm.”
Likewise local utilities will feel the impact, especially where grow facilities are concerned.
“We had a group here (in May) and they were saying they needed 60 megawatts of electricity,” Higgin said. “To give you an idea of how much that is, PACCAR uses 15 megawatts. For Columbus, that power will help make up for some of the big factories that have shut down like Seco or Omnova. One fairly large grow house can add to their bottom line.”
Ken Newburger, executive director of the Mississippi Medical Marijuana Association, a lobbying and advocacy group founded in 2020, said statewide, the biggest economic factor will be in capital investments.
“It’s a huge amount of capital,” Newburger said. “That’s especially true for grow facilities. That’s where we’re seeing the biggest investments. We’ve seen some investment in dispensaries, but the big money is going toward growth facilities.”
By law, all medical marijuana consumed in Mississippi must be grown in the state.
How big will medical marijuana become?
When looking for a comparison for what medical marijuana might mean to the state, Arkansas is a good example.
Arkansas opened its first medical marijuana dispensaries in 2019. Since then, Arkansans have spent $330.4 million to obtain 48,914 pounds of marijuana.
Initially it was anticipated that when the market matured, there would be about 40,000 to 50,000 people with health conditions that would permit them to qualify for a medical marijuana (MMJ) card, allowing them to purchase products at dispensaries. But although not all dispensaries are open yet, the number of active patient cards has grown steadily during the pandemic with the Arkansas Department of Health (ADH) reporting 77,029 active patient cards in early June.
Those numbers have translated into health revenue for the state. Since 2019, Arkansas has collected more than $30 million in tax revenue.
“I think Mississippi could do even better than that,” Higgins said.
In Arkansas, medical marijuana is subject to a 6.5-percent sales tax and a 4-percent excise tax. Mississippi’s taxes will be at a higher rate — 7-percent sales tax and 5-percent excise tax. In addition, Arkansas has caps on the number of grow facilities and dispensaries that can operate. There are no such limits on those facilities in Mississippi.
Newburger said that while Arkansas may not be a precise comparison, the revenue created will be substantial.
In estimating those revenues, Newburger’s group based its figures on 147,000 customers (4.7 percent of the population) using just under one pound of medical marijuana per year.
“I think when we have a fully mature market — four or five years — you’ll see between $35 million and $50 million tax revenue,” Newburger said.
In his talks with prospective growers, Higgins said a good rule of thumb is one employee per 1,000 feet of grow space.
“You can do the math,” he said. “For a big operation, that’s 150 to 200 employees.”
The pay rates are good too.
“They’re talking about $50,000 per year jobs,” Higgins said. “The catch here is that the employees have to be background-checked and drug-tested. The employee pool may be people in jobs where they’ve already had that — truck drivers, teachers, jobs like that. You may see people leaving their jobs to get into the marijuana market.”
Dispensary jobs, too, may pay better than most retail jobs.
“From the people we’ve talked to, the dispensary jobs pay between $15 and $20 per hour,” Newburger said. “They are looking for people who know the products and what’s best for the patient depending on their medical conditions. I know that we’ve heard from a lot of people who left Mississippi to get into the business in other states who want to come back. There’s going to be a premium for people who know the business.”
Slim Smith is a columnist and feature writer for The Dispatch. His email address is [email protected]