GRAND RAPIDS — The Iron Range Resources and Rehabilitation Board approved a multimillion-dollar loan request to a Missouri company for a cannabis cultivation and manufacturing facility in Grand Rapids.
In a two-phase project, Highway 35 LLC plans to rehabilitate a former Grand Rapids mill into a cannabis growing and processing facility. The site was once home to the company Ainsworth, which closed the lumber mill in 2008. It’s been dormant since, despite various attempts to redevelop the property over the years.
IRRRB Commissioner Ida Rukavina said the $10 million direct loan through the state agency will be part of multiple public funding streams to put the Iron Range ahead of other regions of the state in this new industry, as well as create jobs and diversify the region's economy.
"The Highway 35 project will create many benefits for Grand Rapids and for northeastern Minnesota.
Regarding jobs, the cannabis industry will likely grow quickly in Minnesota and as a result will create full-time jobs,” said Rukavina during a special meeting of the IRRRB on Tuesday, Oct. 17.
“A manufacturing facility of this size and scope will greatly increase the tax revenue for Itasca County, Grand Rapids and the surrounding area, benefiting the entire taconite assistance area,” she added.
The Missouri-based company plans to create up to 400 jobs, with the first phase of 200 new jobs part of the IRRR direct loan agreement.
“The opportunity to create positive economic impacts in northeastern Minnesota and, in particular the Grand Rapids and greater Iron Range communities, for generations to come is both thrilling and rewarding."John Hyduke
State Sen. Justin Eichorn, R-Grand Rapids, was among the three board members to vote against it, on moral grounds as well as his issue with public dollars subsidizing this burgeoning industry.
“I think there needs to be some additional discussion about this before we go forward, and I’m not a complete ‘no’ on you doing your project,” Eichorn said. “I’m certainly willing to help in other ways, but I don’t think it is fiscally responsible for this agency to encumber that kind of money this early before we even know what the regulatory outlook is going to be.”
State Rep. Spencer Igo, R-Wabana Township, was among the five board members who voted in favor, emphasizing the Iron Range has an opportunity to create among the first cannabis products to hit the mainstream Minnesota cannabis marketplace.
Igo said he voted against Minnesota legalizing marijuana in the last session. But with all the community support around this facility, the region will be invested in its success, he said.
“This means that we’re going to be represented in our values and we can get a bill that not only just works for the greater Twin Cities metro, which is where this project will go if we don’t make investments like this today,” Igo said.
“The Iron Range can take a step at leading. ... This is all coming in tandem. What the northeastern Minnesota range is saying is — all its projects like these and the others — we’re this close to start rolling down that hill and really getting our region to economic prosperity.”
Pending approval of all the necessary permits from the state's Office of Cannabis Management, the Highway 35 facility is expected to begin plant renovations in mid 2024, becoming fully operational by January 2025.
The board voted 5-3 in favor of the $10 million direct loan, with the city of Grand Rapids expected to enter into a $2 million tax-increment-financing agreement with the business. The project leaders also reported they intend to seek a $10 million Minnesota DEED 21st Century direct loan.
Aside from Eichorn, voting against were Rep. Ben Davis, R-Mission Township, and Sen. Robert Farnsworth, R-Hibbing.
“Marijuana is a highly addictive drug — I know that from personal experience. That's where I'm coming from and that's why I will be voting no on this project today,” Davis said.
“I understand it's legal and I will never stand in the way of a business wanting to do something that's legal to prosper themselves, because I'm absolutely for free market capitalism. But that does not mean I need to put my stamp of approval on us taking $10 million of the people's money and basically subsidizing this industry.”
The U.S. Centers for Disease Control cites a study estimating about 3 in 10 people who use marijuana have a marijuana use disorder. Another study estimates people who use cannabis have about a 10% chance of becoming addicted.
Highway 35 LLC investor John Hyduke said launching the cultivation and manufacture of cannabis products as a new industry in Minnesota is exciting.
“The opportunity to create positive economic impacts in northeastern Minnesota and, in particular the Grand Rapids and greater Iron Range communities, for generations to come is both thrilling and rewarding,” stated Hyduke in a news release after the meeting.
“We will revitalize the 138-acre former Ainsworth site into a high-tech, state-of-the-art, cannabis cultivation and manufacturing facility that our communities will be proud of and that will serve as an industry leader for the state of Minnesota.”
Tribal governments have had a head start in the cannabis industry so far in Minnesota, with Red Lake opening a recreational dispensary on Aug. 1, and White Earth opening a dispensary shortly thereafter.
Recreational dispensaries aren't expected to open off tribal lands until early 2025. Highway 35's project does not include plans for a retail space.
