Cannabis facility planned for former timber mill in Grand Rapids, Minn.

A long-shuttered timber mill in northern Minnesota could soon be home to a $67 million cannabis-growing operation that is expected to employ 400 people in Grand Rapids.

HWY35 has received $20 million in public loans and is being headed by Missouri cannabis entrepreneur Jack Mitchell and business partner John Hyduke.

"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," Hyduke said.

Area leaders heralded the development, one of Minnesota's largest cannabis-related investments announced since legalization this summer, as a major win for the area's economy.

"It's a huge project for our region," said Rob Mattei, director of community development for Grand Rapids, in an interview Tuesday. "We have worked a long time to see that site put back to use and to create jobs and tax base for the community. We're thrilled about it."

The Ainsworth mill permanently closed in 2008, costing the city 180 jobs.

The state's new Office of Cannabis Management will still need to license the facility, a process that could take well into next year or early 2025 as the agency is set up.

Mattei said HWY35 is expected to open in the first half of 2025.

Plans call for the renovation of 240,000 square feet of the existing vacant building, according to city documents, plus $36 million worth of equipment to grow and process marijuana.

On Tuesday, the Iron Range Resources and Rehabilitation (IRRR) Board signed off on a $10 million loan for the project.

"Because the project is based in both manufacturing and agriculture, it has the potential to significantly diversify the local economy, which is one of our agency's primary goals," IRRR Commissioner Ida Rukavina said in a statement.

The Minnesota Department of Employment and Economic Development has also pledged a $10 million loan for HWY35. And the city of Grand Rapids approved $2 million in tax increment financing funding. Public money is contingent on "successful acquisition of necessary permits and licenses," according to IRRR documents.

"It's going to allow them to ramp up their operations that much quicker than they might have otherwise been able to," said Mattei, who visited some of the company backers' Missouri facilities and found a "high level of sophistication."

Interim Office of Cannabis Management director Charlene Briner said the development "speaks to the significant economic opportunities the new cannabis law may fuel."

Plans are taking shape around the state to earn a slice of what could grow to a $1.5 billion legal marijuana market by the end of the decade in Minnesota. Another 75,000-square-foot cannabis growing facility is planned down the road in Cohasset.

"The state's cannabis industry is poised for explosive growth, offering an unprecedented chance for HWY35 to become a dominant force in the emerging market," the company wrote in the project's IRRR loan application.

Mitchell was previously a board member for Missouri's cannabis trade association. His past business dealings, in and out of cannabis, have attracted scrutiny. The St. Louis Post-Dispatch reports he was fired as CEO of Thunderbird Resorts in 2012 and was later sued by the casino and hotel operator.

The Kansas City Star reported on Mitchell's connections to the leaders of a small Missouri village where he was developing a cannabis business district.

Star Tribune staff writer Ryan Faircloth contributed to this story.