Council approves agreement for medical cannabis facility
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 By  María Camp Published 
4:29 pm Sunday, December 11, 2022

Council approves agreement for medical cannabis facility

The Russellville City Council authorized Mayor David Grissom to enter into a lease purchase agreement between the City of Russellville and Natural Relief Cultivation LLC, for a medical cannabis manufacturing facility, during its Dec. 5 meeting.

Grissom said the property is located on Highway 24 East.

“This is all contingent on them getting a license,” explained Danny McDowell, attorney for the City of Russellville, “and I’m anticipating it’s going to be very competitive to get a license. I think there’s a total of six of these type licenses that will be issued in the State of Alabama.”

McDowell explained if the company is able to get the necessary license, then the lease option comes into effect for a period of three years, after which the company will have an option to either be given the property, if they meet certain benchmarks, or to purchase it at a cost of $500,000, which he said “equates to almost $18,000 an acre.”

McDowell said there are “roughly 28 acres involved,” noting the contract says it’s for “28, more or less.” He said the total is probably a little less than 27 acres.

Benchmarks for the company to acquire the property include making a minimum of $25 million in improvements to the property, as well as hiring a minimum of 250 full-time employees making at least $15 an hour.

“One of the important ingredients in this is, and I don’t know of any other industrial contracts – certainly none in Franklin County – that have ever done this, is that we get a percent of the profit from now on,” added McDowell, “as long as they’re in business there.”

McDowell explained this element is established in the contract as 1 percent of the net profit.

“We normally wouldn’t use that phrase (net profit),” he explained, “because you can always adjust net profit so that you really don’t have any, but with this particular (contract), we’ve had them commit to saving gross receipts from all sources, except those deductions that are currently allowed for this kind of business under Section 280.E of the Internal Revenue Code.”

McDowell said the code “basically says there’s very few deductions they can take from that,” adding that the contract stipulates that even if the code provision is changed to allow for more deductions, the agreement between the City of Russellville and the company dictates that what counts as net profit will be decided based on the current rule and will equal whichever is higher, a minimum of $50,000 a year or 1 percent of the net profit as defined in the contract.

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