Inside South Mississippi’s cutthroat, complicated and lucrative medical cannabis industry

Less than two years after the legalization of medical cannabis, South Mississippi has developed into the state’s most competitive market.

Medical cannabis business owners from around the Coast say the industry’s regional market has more or less reached capacity. Expansion opportunities are limited by conditions unique to the industry and government policies that make owning and operating these types of businesses a headache.

Data from the Mississippi Medical Cannabis Program , an offshoot of the state’s Department of Health and Department of Revenue, shows the Coast has the state’s highest concentration of dispensaries, with 60 stretching up to Hattiesburg. The next closest region in the state, the greater Jackson area, hosts 45 dispensaries.

Medical cannabis business owners say the Coast’s market is cutthroat, citing partly from an oversaturation of businesses in the region, and a limited number of customers. Of Mississippi’s 2.9 million residents, only around 50,000 have a medical cannabis patient card. Only those with a card can legally purchase medical cannabis products.

Those who are allowed to purchase cannabis products are limited in how much they can buy at a time. There are also limits to potency.

Business owners capable of expansion suggest it’s ill-advised at this point, given the market’s current state. They say if business isn’t booming but hitting a ceiling at this stage, it’s probably an early sign of failure. Other less-profitable medical cannabis businesses are being pushed out by how competitive the local market is. Some business owners suspect the next few months will see those just scraping by shutting their doors for good.

Regardless of the type of medical cannabis business, they all share a similar message regarding medical cannabis: that it’s a misunderstood drug. And yes, they say, cannabis actually works in helping people.

Not your average mom-and-pop

Barbara Wilson filed for her own dispensary, called Bee’s Buds in Ocean Springs, on Day 1 of legalization. Her background is as a nurse. She continues nursing part-time while managing her business with her son.

Like many other Coast dispensaries, she’s tried deliberately to set up and maintain her building not like a smoke shop, but like a pharmacy crossed with a lounge.

Inside the dispensary’s display cases is paraphernalia featuring cartoon characters and dishes with vibrant colors, shapes and patterns, but that shouldn’t distract from the actual medical value of the medical products sold there, she said.

“I’ve had people that would come in here with a wheelchair and months later were using a walker and months later using a cane and now walk without anything,” Wilson said.

She told of patients with severe autism able to function at higher levels and with relative independence, patients with anger issues less prone to violence, patients prone to frequent, life-threatening seizures able to find independence and other patients with chronic pain who cite cannabis as unmatched in medical relief.

“These studies have been going on for years,” Wilson said. “One day when something happens to you or your family and you go reaching out, then you will believe it. That’s usually what happens. People have to see a family member or themselves go through a traumatic experience. Then they say, ‘Wow, I’ve been lied to my whole life.’”

The jury is still out on if medical authorities recommend the use of cannabis as medicine. The Center for Disease Control and Prevention notes apparent medical benefits offered by cannabis, but it also notes that certain ways of intake, like smoking, could be harmful. According to the CDC, most credible research is still in its early stages and so the medical application of cannabis should be approached cautiously.

Most of Wilson’s customers are elderly. She said many started off avoiding using cannabis medically but now swear by it. Some don’t like being seen going into the store. Slowly the stigma is loosening, she said, but some patients don’t want to be seen in a place that’s culturally and politically divisive. Some wait until the dispensary is empty and don sunglasses before stepping inside, only for a couple of minutes.

She said cannabis is a far-cry from alternatives like highly addictive opioids. Wilson believes that’s something of a double-standard, that opioids seem to flow so freely to patients in pain and cannabis, which she says is much safer, but heavily scrutinized. She acknowledged that cannabis, like any other drug, can be abused.

Wilson said a Bee’s Buds dispensary will be opening in Wiggins in early August. The intent is to meet the demand of customers living there that drive into the Ocean Springs location.

Coast native Liz Cavanaugh, owner-operator of Coastal Capital Dispensary in Biloxi, has been in the game since Day 1 of legalization as well.

It’s been a costly journey. Lots of other business owners she’s spoken with jumped into Coastal Mississippi’s cannabis market without any background, believing it’d be a wildly profitable venture. Those are the ones that face closure, she said.

Operation costs of a dispensary are high by default. Cavanaugh said the costs of securing licensing for the building costs $40,000 the first year and an additional $25,000 each year after. She pays $12,000 for her dispensary’s marketing and another $12,000 for social media and website advertising. The state government and social media companies have restrictions on how cannabis is marketed. Medical cannabis businesses are also subject to paying additional taxes .

As of July 23, Biloxi’s local government has barred the construction of dispensaries within the downtown limits, citing that downtown is meant to be an entertainment district and cannabis businesses hamper that.

Banking can be restrictive and more costly than traditional business ownership. The federal government still considers cannabis of all types illegal, creating monetary hurdles for businesses that hinge on its sale. Securing loans and financing as an employee of a medical cannabis business is short of impossible, most said.

Medical cannabis businesses can’t be within 1,000 feet of a school, childcare facility or church, and state-mandated background checks are required for owners and staff.

Fines accompany any mistake businesses are found responsible for, like accidentally selling a customer more than their allotment of cannabis medicine. Most were fined in the first few months of operation, Cavanaugh said. They were new and just didn’t know any better.

Successful dispensaries average around 50 to 60 customers a day, she said. Those struggling will only see around 5 to 10. She said Coastal Capital has gotten close to 100 a day this July, which has been the dispensary’s best month on record.

Why they’re in the industry

He’s not in it for the money, said Tommy Krumland, owner of Southern Therapeutics in Gautier. He operates a cultivator, what the state essentially classifies as a cannabis growing facility.

In many regards, he said, the plants he grows are monitored and inspected more closely than food items that can be bought at the grocery store.

Krumland is in the business because he said he’s seen the way it helps its users. It’s profitable enough, but he’s constantly threatened by morphing regulations and broad ignorance to what he does for a living, he said.

That’s also the case for Evan Daily, the owner-operator of The Magnolia Healing, a dispensary, and Greenhouse Social, a processor, in Ocean Springs. The state classifies processors as businesses and/or labs that take raw cannabis products to convert into vape cartridges, gummies or other types of processed products.

Krumland and Dailey said they’ve already upfronted the money and effort to start their own businesses, hire his staff and build connections. But their margins are still challenged and have been slowly squeezed. Neither can imagine selling out because of how much they’ve put in already.

Besides, Dailey said, it’s really not about the money. He got into the industry as a veteran. He’s found that cannabis helps many veterans in pain, if he can help them get over the stigma.

His mission is providing high quality and safe products. Having both a storefront and manufacturing, that’s entirely in his control.

About half of Krumland’s facility is empty space that he’s planning on renting out because he can’t justify the cost of expanding and he’s already hitting his demand for the product he grows. He can only sell to Mississippi dispensaries. There’s also a highly regulated protocol for transporting products to his vendors.

To many politicians who simply don’t know much about the industry, Krumland said, cannabis may as well be heroin.

Different from ‘gas station weed’

Elizabeth Feder-Hosier, a family law attorney, is entering the medical cannabis industry as a consultant, creating a business in early July called Mississippi Microdose. Navigating the laws is often confusing patients, who are predominantly elderly.

“There’s a lot of precarious nuances,” she said. “People need this service and I’d like to provide it.”

She explained that there’s a difference between cannabis sold in dispensaries and what some gas stations and shady businesses try selling as recreational cannabis.

Usually they’re trying to sell products that contain Delta-8, she said, a synthetic compound designed to imitate the psychoactive part of cannabis that gives users a “high.” The 2018 Farm Bill legalized hemp federally, consequently making Delta-8 legal, albeit dubious.

She noted that Delta-8 isn’t regulated by the Federal Drug Administration. Those across the Coast in the cannabis industry caution the use of those products because it’s hard to say what’s in them.

“They’re putting whatever on the shelves as far as that gas station-weed stuff goes,” Logan Tull, a director at Greenhouse Social said. “You think you’re getting super strong effects and thinking that it’s something healthy, but it’s just a completely different product. It might be giving you the effect, but it’s definitely not healthy for you.”

“And you never know where it’s come from,” Dailey added.

What’s troubling, dispensary owners said, is that some of their patients with medical cards at the limit of their allotment will sometimes intentionally buy questionable Delta-8 products because there’s no other way for them to mitigate the pain.

Patient education

Business owners said lots of those who could benefit from their products are intimated to get started with medical marijuana. There’s an entire vocabulary that seems unapproachable. Terpenes. Distillate. Flower. Joints.

Most of the Coast’s medical cannabis businesses are family-run, owners said. Most of their patients are over 50 years old.

Dailey said he knows nearly all of his customers by name. He’s decorated his dispensary, the very first in Ocean Springs, with a retro music theme to put his older customers at ease. There are no silly questions, he said, he just wants to help.

He believes the Coast’s dispensaries, especially the newer ones, need to be deliberate to prioritize directing customers to the right product, not just upselling them. It’s all a part of treating medical cannabis like any other medication, he said.

Cannabis business owners said that unless (others said until) cannabis is legalized, their businesses will probably stagnate. Not alarmingly, but certainly in a way that broadly hampers major growth. Most believe there’s a better chance the federal government will pass legislation that legalizes cannabis before Mississippi gets to it. If that happens, everything’s going to change.

Cannabis business owners say they’re trying to destigmatize the drug and have the community view it as medicine. It’s not easy, but they’re all in it because they’re passionate.

“Even on the most stressful days, we’re still growing pot,” Krumland said.