Earlier this week, leadership from both chambers of the Mississippi Legislature agreed to a draft bill for a Mississippi medical marijuana program. Lawmakers have asked Gov. Tate Reeves to call them into special session on October 1 to consider the legislation, which would then be subject to change or vote by the full Legislature.

The draft legislation is currently titled the Mississippi Medical Cannabis Act (the “Act”). Here is the full version of the draft. The 144-page draft bill will, among other things, authorize additional agency regulation, prohibit outdoor growing, permit smoking of medical cannabis, allow counties and municipalities to opt out of the program, impose state sales and excise taxes, and will provide certain safe harbor protections to employers and financial institutions.

Highlights on the draft legislation include:

Section 2: Definitions

• “Cannabis cultivation facility” – an entity licensed and registered to cultivate and harvest cannabis indoors.
  • No similar definition includes outdoor growing. Accordingly, it appears outdoor growing is prohibited.
• “Debilitating medical conditions” – includes a broad list of diseases and an unspecified group of diseases or treatments that may cause certain symptoms or side effects.
• “Chronic pain” – either the cause of pain or relief from the pain is impossible or unachievable after reasonable efforts by a practitioner.
• “Mississippi Medical Cannabis Equivalency Unit” (MMCEU) - equal to (i) 3.5 grams of medical cannabis flower; (ii) 1 gram of concentrate; or (iii) 100 mg of THC.

Section 3. Authorization to Use Medical Cannabis

• In order to use medical cannabis, an individual must be diagnosed by a physician as having a debilitating medical condition, receive written certification of such diagnosis from the practitioner, and have been issued an ID card from the Mississippi Department of Health (MDOH). Notably, continued usage requires six-month follow-up visits to evaluate treatment.

Section 4. General Responsibilities of Departments

• The Mississippi Department of Agriculture and Commerce (MDAC) will handle licensing, inspection and oversight of cannabis cultivation facilities, cannabis processing facilities, cannabis transportation entities, and cannabis disposal entities. MDAC is authorized to contract some of this work out to public or private entities.
• MDOH will handle licensing, oversight and inspection of cannabis testing facilities and research facilities, licensing for patients and caregivers, registering of practitioners, and selection, certification and oversight of seed-to-sale tracking system.
• The Mississippi Department of Revenue (MDOR) will handle licensing, inspection, and oversight of dispensaries.
• Agencies will start accepting applications for licenses and practitioner registrations no later than 90 days after effective date of the Act.
• MDOH has ultimate authority for oversight of the administration of the program.

Section 5. Protections for the Medical Use of Cannabis

• It is Mississippi public policy that contracts related to these activities are enforceable and will not be deemed unenforceable just because those activities may be prohibited by federal law.

Section 6. Seed-to-Sale Tracking System

• This section establishes a statewide seed-to-sale tracking system and details the type of information to enter into the system and how to enter that information.
• This section provides that banks and financial institutions may access certain information from this tracking system for people and entities with whom they have a business relationship to comply with federal regulations.

Section 7. Limitations

• The Act does not:
  • Require any type of medical benefits/insurance to reimburse for expenses incurred by individuals or entities that participate in the program;
  • Require an employer to permit, accommodate, or allow medical use of cannabis, or modify working conditions due to such use;
  • Prohibit an employer from hiring, discharging, disciplining, or taking another employment action based on that individual’s use of medical cannabis;
  • Prohibit or limit drug testing policies;
  • Interfere with any federal restrictions or requirements such as Department of Transportation regulations;
  • Allow adverse employment action against an employer by an employee based on an employment action tied to the employee’s use of medical cannabis;
  • Impact an employer’s workers’ compensation premium discount due to having a drug-free workplace program;
  • Impact an employer’s workers’ compensation defense due to a positive drug test or a refusal to submit to a drug test; and
  • Impact a parolee’s or probationer’s conditions or obligations.
• Smoking cannabis in public is prohibited.

Section 8. Discrimination Prohibited

• Discrimination is prohibited in these ways:
  • No custody or visitation rights decisions based on cardholder status;
  • No school, landlord, or employer can be penalized or denied a benefit for enrolling, leasing to, or employing a cardholder;
  • No gun ownership restrictions based on being a patient or registered caregiver; and
  • Schools, childcare facilities, and temporary care providers can administer medical cannabis just like any medical prescription.
• The bill does not create a private right of action by an employee against an employer and does not affect any existing legal relationship between an employer and employee.

Section 9. Addition of Debilitating Medical Conditions

• A Mississippi resident can petition the MDOH to add a condition to the list of debilitating medical conditions.

Section 10. Acts Not Required and Acts Not Prohibited

• Property owners can allow guests, clients, customers or other visitors to use medical cannabis on or in their property; and
• Landlords can allow, though are not required to allow, cultivation, processing, testing, research, sale or use of medical cannabis on a rental property.

Section 12. Issuance and Denial of Registry ID Cards

• MDOH will begin issuing ID cards to qualified patients and designated caregivers no later than 60 days after the act’s effective date.
• Application for ID cards requires physician certification within 60 days, an application fee, personal information, and a designated caregiver, if any.
• MDOH will grant or deny applications within 30 days.
• Qualifying patients younger than 18 years of age may receive an ID card with parental consent and parental service as designated caregiver.
• Entities serving as designated caregivers to numerous qualified patients need only one ID card.

Section 13. Registry Identification Cards

• ID cards will contain personal information, status as patient or caregiver, a verifiable number identification, photograph of cardholder, warnings about harm related to cannabis use, MMCEU limits, and expiration date.

Section 14. Annual Reports

• The program will be reviewed annually by the governor and Legislature, based on annual reports submitted by the MDOH, MDAC, and MDOR.

Section 15. Verification System

• MDOH will maintain a confidential list of all persons to whom registry ID cards have been issued.

Section 16. Notifications to Department and Responses

• Cardholders must update agencies of personal information/status changes.
• There is a process to receive a new ID card if lost or stolen.

Section 17. Reporting Requirements for Dispensaries

• Dispensaries will be required to report certain information every 24 hours to the Prescription Monitoring Program set forth in MS Code Ann. § 73-21-127.

Section 18. Licensing of Medical Cannabis Establishments

• Cannabis cultivation facility license application fees are as follows:
  • Micro cultivators:
    • Tier 1: canopy of 1,000 sf or less subject to one-time, non-refundable license application fee of $1,500 and annual license fee of $2,000.
    • Tier 2: canopy of over 1,000 sf subject to one-time, non-refundable license application fee of $2,500 and annual license fee of $3,500.
  • Cultivators:
    • Tier 1: canopy of 2,000 sf – less than 5,000 sf or less subject to one-time, non-refundable license application fee of $5,000 and annual license fee of $15,000.
    • Tier 2: canopy of 5,000 sf – less than 15,000 sf subject to one-time, non-refundable license application fee of $10,500 and annual license fee of $25,000.
    • Tier 3: canopy of 15,000 sf - less than 30,000 sf subject to one-time, non-refundable license application fee of $20,000 and annual license fee of $50,000.
    • Tier 4: canopy of 30,000 sf - less than 60,000 sf subject to one-time, non-refundable license application fee of $30,000 and annual license fee of $75,000.
    • Tier 5: canopy of 60,000 sf - less than 100,000 sf subject to one-time, non-refundable license application fee of $40,000 and annual license fee of $100,000.
  • Cultivation facility cannot have canopy that is larger than 100,000 sf.
  • Micro-processors:
    • Tier 1: facility annually processing 2,000 lbs – less than 3,000 lbs of dried biomass cannabis material subject to a one-time, non-refundable application fee of $2,500 and annual license fee of $5,000.
    • Tier 2: facility annually processing less than 2,000 lbs of dried biomass cannabis material subject to a one-time, non-refundable application fee of $2,000 and annual license fee of $3,500.
  • Processors: facility annually processing more than 3,000 lbs of dried biomass cannabis material subject to a one-time, non-refundable application fee of $15,000 and annual license fee of $20,000.
  • Dispensaries: subject to a one-time, non-refundable application fee of $15,000 and annual license fee of $25,000.
  • Transportation entities: subject to a one-time, non-refundable application fee of $5,000 and annual license fee of $7,500.
  • Disposal entities: subject to a one-time, non-refundable application fee of $5,000 and annual license fee of $7,500.
  • Testing facilities: subject to a one-time, non-refundable application fee of $10,000 and annual license fee of $15,000.
    • Cannot employ individual also employed or has ownership at any other medical cannabis establishment.
  • Research facilities: subject to a one-time, non-refundable application fee of $10,000 and annual license fee of $15,000.
• No individual or entity can have direct or indirect ownership or economic interest in:
  • More than one cultivation facility license;
  • More than one processing facility license; or
  • More than five dispensary licenses.
• The Act does not cap the total amount of licenses available in Mississippi at large. In other words, there is no limit on the number of cultivation or processing facilities or dispensaries in the state.
• There are residency requirements for cultivation facility and processing facility licenses.
  • These requirements will stand repealed on December 31, 2022.
• Owning a license under the Act should not disqualify or negatively impact that owner in engaging in any other type of licensed business under state law.
• Requirements for applying for medical cannabis establishment license include:
  • Entity’s legal name;
  • Physical address, which cannot be within 1,000 ft of a school, childcare facility, or church;
    • This requirement is waivable by the school or church.
  • Names of officers/board members;
  • Operating and record-keeping procedures; and
  • Sworn statement certifying compliance with local ordinances.
• Licensee applicants will not be disqualified based on involvement or location on Mississippi Band of Choctaw Indian Reservation Lands.

Section 19. Local Ordinances

• Localities may regulate time, place, and manner of cannabis establishment operations.
• Localities cannot enact ordinances that conflict with the act or prohibit dispensary operations.
• Zoning:
  • Dispensaries may be limited to commercial-use zones.
  • Cultivation facilities may be limited to agricultural or industrial use zones.
• Localities may require local licenses to operate and charge fees consistent with other fees charged to non-cannabis businesses.

Section 20. Requirements, Prohibitions, and Penalties

• This section lists limitations and screening protocols for employees of cannabis establishments.
• A cardholder cannot get more than eight MMCEUs of allowable cannabis per day, or more than 32 MMCEUs of cannabis in 30 days.
• The possession limit for a resident cardholder is 40 MMCEUs.
• THC is defined as THCA multiplied by (.877) plus THC Delta 9 and all other psychoactive forms or isomers of THC added together.
  • THC potency limits:
    • Flower or stem – 30%
    • Oils – 60%
  • Products with over 30% THC must be labeled “extremely potent.”
  • Edibles must show TCH per single serving and per package.
• Cannabis products must contain label warnings, and edible products must be presented in certain forms, including in the form of geometric shapes.
• Non-resident cardholders have more limits on possession amounts and must apply for non-resident card before arriving.
• Cannabis establishments can only purchase, grow, cultivate and use cannabis grown and cultivated in Mississippi, and such cannabis cannot be transported outside of the state.
• All employees must obtain particular work permits to work in the industry.

Section 21. Agencies to Issue Rules and Regulations

• Agencies may issue additional regulations regarding the program, including labeling and marketing regulations.
• This section sets the fee schedule for ID card applications and renewals:
  • Qualifying patient - $25
  • Designated caregiver - $25 plus $37 criminal background fee
  • Renewal or replacement of ID card - $25
  • Nonresident patient - $75
  • Medicaid participant patient application and renewal - $15
  • Application fees waived for disabled veterans and first responders

Section 23. Violations

• This section imposes steep civil and criminal penalties on cardholders and establishments for violating the Act’s rules/regulations.

Section 25. Confidentiality

• This section provides confidentiality protections for data in all applications for qualifying patients and establishments and exempts such data from the Mississippi Public Records Act.

Section 26. Business Expenses, Deductions

• This section expressly states that these businesses can deduct business expenses from state income tax, notwithstanding federal law to the contrary.

Section 27. Banks to Be Held Harmless

• This section contains bank safe harbor provisions for banks to provide services to individuals dealing with medical cannabis businesses.

Section 29. Medical Cannabis Taxes

• This section imposes an excise tax on cultivation facilities based on weight of the cannabis at the time of sale or transfer:
  • $15 per oz of cannabis flower
  • $15 per oz of cannabis trim
• This section imposes a sales tax on dispensaries as specified under Miss. Code Ann. 27-65-17(1)(a), currently 7%.

Section 30. Local Government Option

• Local government (county or municipality) may opt out of the Act by a vote from the governing authorities within 90 days after the Act is effective. They must comply with open meeting requirements.
  • Local governments may later decide to opt in.
  • Qualified electors of the county/municipality can petition to have a local election on allowing these operations in the locality, despite local authorities electing to opt out.

Section 31. Judicial Review

• This section permits judicial review of any action by an agency under the Act.

Section 32. Fees, Fines, and Tax Allocation

• All fees, fines, and excise taxes collected go into the State General Fund.

Section 33. Medical Cannabis Advisory Committee

• This section creates a Medical Cannabis Advisory Committee of nine members.
• The committee will accept public comments in writing and in person at least once a year.

Section 34. Amendment to Miss. Code Ann. Section 25-53-5

• This section authorizes the Mississippi Department of Information Technology Services to contract out for IT equipment and services to help run the program.
• This section outlines procurement requirements.

The Rest of the Bill

• The rest of the bill shows where other related statutes do not apply to the Medical Cannabis Act, including:
  • Miss. Code Ann. 27-104-203, which prohibits one state agency from charging another state agency a fee;
  • Miss. Code Ann. 41-29-125, which authorizes the State Board of Pharmacy to promulgate rules and regulations relating to controlled substances; and
  • Miss. Code Ann. 41-29-139, which makes it unlawful for someone to create, possess, or distribute a controlled substance.
• However, use of medical cannabis in accordance with the program can foreclose workers’ compensation recovery under Miss Code Ann. 71-3-7 if such use was the proximate cause of the injury.

The draft of the Mississippi Medical Cannabis Act is far from law. As of the date of the publishing of this alert, Gov. Reeves has yet to call a special session. And although the governor has indicated he will do so sooner rather than later, he has voiced concerns with funding for the program.

Even if a special session is called in the near future, the full Mississippi Legislature has to agree to a bill, and we anticipate revisions — especially in light of the Black Caucus’s recent hearing on September 28 in which many of its members voiced concerns with the draft bill and some proposed drafting a new bill. There has also been pushback from Agriculture Commissioner Andy Gipson who believes the MDOH should be solely responsible for regulating the program.

We will monitor and continue updating on the progress.