Tupelo officials, business owner talk early stages of medical marijuana industry

·5 min read

May 29—TUPELO — Elliot Johnston, co-owner of Hempsters in Tupelo, said he got into the hemp business because he enjoys helping people with pain relief.

People from all walks of life, he said, step through the door of his shop, which sells hemp-based products that contain less than 3% THC.

"I get doctors, teachers and a lot of people over 50 that come in here all the time," he said. "Most are looking for some form of (pain) relief or looking to relax."

Johnston is eager to jump into the medical cannabis business for the same reason. He was one of about 15 people who has officially filed paperwork with the city of Tupelo to begin the process of opening a medical marijuana facility.

For Johnston, these early steps in opening a medical marijuana dispensary have been a long time coming. He's closely followed the state's process of legalizing medical cannabis since 2020 and has attended every city meeting about the industry. He's even voiced his opinions on the process during some of these meetings.

As soon as he was able, Johnston sent the city of Tupelo his letter of intent to sell medical cannabis.

It's a process Johnston expects to be difficult and costly. Those looking to open a cannabis facility have a maze of state and local regulations and restrictions to navigate, along with all the other challenges facing any small business owner.

Johnston said the start-up costs for his business alone could easily top $40,000.

"I can only do as much as I can do," Johnston said of preparing his business.

Early adopters and promising starts

Tupelo City Planner Jenny Savely began taking letters of intent, official statements from potential medical cannabis business owners, the day after city officials approved their guidelines for growing and selling the legalized drug in early April.

"The process has gone really well," Savely said. "The day after (the council) approved the amendments, I got two emails before I walked into my office."

Along with those looking to open dispensaries, Savely said there have been four letters of intent submitted for cultivation facilities and five letters for processing facilities. One individual also approached the city to move forward with a research and disposal facility.

According to Savely, these letters help city officials better plan for just how many medical cannabis growers and retailers to expect, and to allow them to guide potential business owners through adhering to the city's and state's strict guidelines for these facilities.

Finding homes for these potential businesses — which are relegated to a limited number of locations — can be especially challenging, Savely said.

"These letters of intent serve to prepare the city for the future siting of establishments and allow us to keep up with dispensaries that require 1,500 feet distance between," she said.

The city's ordinance, which follows the state's base regulations, prohibits facilities from locating within 1,000 feet of "protected places," including churches, schools and childcare centers. Dispensaries also cannot locate within 1,500 feet of other dispensaries.

Savely said once a potential business owner submits a letter of intent, she meets with them to verify they can set up their facility in the location listed. Once the owner's location is approved, they can go to the state to work on licensing and other requirements.

Before opening, facilities will also have to obtain privilege licenses and building permits within the city.

Johnston said he's already facing challenges because of the strict guidelines for where dispensaries can open. Located on West Main Street, Hempsters is within the 1,000-foot range of multiple protected places, which led the city to disqualify it as a viable lot for a dispensary.

He said he and his business partner have been eyeing another property in town that would allow them to open a dispensary and move into cultivation later.

Savely said residents could expect the first dispensaries to be up and running by the end of the year. Once they are, she expects the city to receive more letters of intent for would-be medical cannabis business owners who want to see how the market plays out before jumping in.

City officials expect half-million in revenue annually

Based on the city's and state's restrictions, City Attorney Ben Logan estimates Tupelo could support a maximum of 30 to 35 marijuana facilities.

He only expects between 15 to 25 to open.

Still, Logan said an economic impact study conducted by the city placed the potential financial gain from medical cannabis facilities at more than a half-million dollars annually. It's a number with which city officials are happy.

"(The estimated revenue) is not insignificant," he said.

Using the national average of cardholders within states with programs, city officials estimated that roughly 5% of Tupelo's population would be eligible to purchase medical cannabis. They estimated the cost per ounce at $200 using metrics from other states and the street value of cannabis.

With the maximum estimated population of patients and assuming those patients got prescribed the maximum 3-ounce dose, Logan said the city stands to add about $650,000 in annual revenue.

Logan said the estimates were "fairly conservative" in that it did not account for the given commuter population of the city or ad valorem taxes.

Logan said the city generates roughly $21 million in revenue each year.

"It is not going to balance any budgets," he said of medical cannabis, "but it will bring in extra revenue for projects."

When asked what his and similar businesses might charge for medical cannabis, Johnston said he expects prices to be high, at least at first. State regulations require dispensaries like the one he plans to open to buy their product exclusively from Mississippi growers, limiting competition.

Johnston believes this will lead to an inflated market, at least early on until more people begin growing medical cannabis.

Once supply balances with demand, Johnston believes medical marijuana prices will regulate themselves.

"The market will set the prices," he said. "At first, it will be higher. Cultivators will be able to set the prices at first."

For Johnston, who said he got into the hemp business to help ease people's pain, the hope is to see medical cannabis be available to as many people as possible.

"I'm hoping it will be affordable," he said. "This can help a lot of people with medical issues."

caleb.mccluskey@djournal.com