Legislative Update: Cannabis

The new Mississippi Medical Cannabis Act, SB 2095, raises some interesting zoning issues. First, the Act describes where cannabis facilities can be located by reference to areas of municipalities and counties zoned commercial, industrial and agricultural. There are no statewide zoning or other definitions of these terms; each municipality and county that has adopted zoning has its own code and its own definitions. There are uses defined as commercial in some of the rural county codes that would not be allowed in commercial districts in municipalities with very restrictive zoning ordinances. Uses permitted in a commercial zone in Tunica County may not be permitted in a commercial zone in the City of Madison. This may cause municipalities with more restrictive ordinances to opt out of the Act. According to a Mississippi Department of Revenue map[1] dated July 1, 2022, 86 cities and 19 counties in Mississippi had opted out of having cannabis dispensaries. Second, some municipalities and many counties in Mississippi have not adopted any zoning restrictions. The Act may encourage those municipalities and counties to adopt zoning ordinances to try to control the location of cannabis facilities. Third, the Act permits a municipality or county to grant a variance to permit cannabis uses in commercial zones. A variance traditionally is for exceptions to dimensional restrictions, like setbacks or height restrictions, while a use permit allows use that otherwise would not be allowed in that district. Allowing cannabis facilities in commercial areas arguably is more like a use permit than a variance. The practical significance of this distinction is that many zoning ordinances make it easier to get a variance than a use permit in terms of notices, hearings, and which bodies need to approve the action. For example, a local planning board may be able to give final approval for a variance, but the mayor and board of aldermen may need to approve a use permit. It will be interesting to see how these issues affect the implementation of the Act. The Act was signed by the Governor on February 2, 2022, and became effective on passage.            

Note: The development of cannabis facilities is raising many issues for real estate lawyers. For example, title insurance generally is not available for cannabis facilities. The lack of access to the banking system raises challenges for closings. Also, leases for cannabis facilities require need special provisions regarding compliance with laws, landlord access, and permitting, among other issues.

[1] https://www.dor.ms.gov/dispensary-opt-out-map, viewed July 5, 2022.