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Voters can open a marijuana market in Missouri. Newcomers will face challenges.

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The marijuana industry in Missouri could open wide soon if voters approve a proposed amendment in the November ballot.

Modification 3 It would legalize cannabis in the state for anyone 21 or older. Companies that already have a medical marijuana license can apply to convert to a recreational license. 144 small commercial licenses will be made available to smaller operators looking to enter the market.

If the measure is passed, many of the cannabis companies located in the state will be able to increase sales as the customer pool expands. But some in the industry worry that the adjustment could create an uneven playing field for newcomers, especially as existing companies get a head start.

Missouri brought marijuana dispensaries More than 494 million dollars Chase Cookson, a professor and researcher in the Cannabis Science and Operations Program at St. Louis University, said sales could grow to as much as $900 million a year by 2025 if the market opens up.

He said the cannabis industry would attract dollars to Missouri. It is likely that people from neighboring states that do not have fully legal marijuana, including Kansas and Nebraska, will come to the state to purchase cannabis.

Even people in Illinois, who legalized recreational marijuana in 2020, are likely to run into state limits in pursuit of cheaper Missouri taxes, Cookson said. The marijuana sales tax in Missouri will be 6%, and local entities can charge an additional tax of up to 3%, subject to the amendment.

Legalizing recreational marijuana would cost the state $3.1 million initially and $5.5 million a year thereafter, According to the Office of the Secretary of State. The state expects annual revenues of at least $40 million.

there About 350 marijuana companies In state with medical licenses that will have the option to convert to a recreational license. Companies with existing licenses can request a transfer 30 days after the election if the amendment is passed. It’s likely that all of them will, Cookson said.

“I can’t think of a reason not to,” he said. “I imagine every single one of them would do that.”

Prepare to grow

Companies that already have licenses expect an increase in sales. Some are already preparing for the possibility of a bigger market.

One of these is BesaME Wellness, a cannabis dispensary at five locations in the Kansas City area. Joey Pintozzi, Vice President of Retail Operations at BesaME, expects up to three times as many customers if cannabis is fully legalized. He said the stores are currently seeing about 500 customers a day.

“We’ve had this business model for two years, and now (we will) get out of those seams,” said Bentozi.

Chase Cookson
Chase Cookson. (Contributed)

The business plans to hire more people and increase training to prepare for new clients.

For most current dispensaries, there won’t be much product shift, because most dispensaries sell cannabis products that are preferred by recreational users, Cookson said.

Some customers who currently buy marijuana illegally will start buying from dispensaries. But Cookson expects that a large portion of people will continue to buy from the illegal market.

Cookson said the regulated legal industry is likely to hold together over time if the ballot initiative is passed. Already, there has been mergers across the country. As more countries legalize cannabis, standardization is likely to continue.

“This does not bode well for small producers,” Cookson said.

Barriers to work

Marne Madison spent about $70,000 to apply for a medical marijuana license in Missouri, only to have her application rejected, she said.

She ended up going to Oklahoma to open a dispensary. There, the number of licenses is unlimited and there are fewer hoops to jump through, she said. This time I invested thousands of dollars, but it was almost done.

Marne Madison
Marne Madison. (Contributed)

“I’m actually building a business,” she said. “I don’t apply six numbers and I hope to win.”

When it costs tens of thousands of dollars to even try to get a license, it’s leaving people out, said Madison, CEO of Exit Now, a nonprofit that educates and supports underrepresented founders looking to enter the industry.

“When we talk about how we can function and be inclusive, it’s basically saying, ‘No, you don’t need to be a millionaire to be in this industry,'” Madison said.

The 144 small business licenses in the Missouri proposed amendment will be distributed to operators who meet at least one of several qualifications. These include owners who have a net worth of less than $250,000, plan to operate in an area below the 30% poverty line, or have nonviolent marijuana-related convictions.

Small licenses will be phased out across the state over about two years.

These small businesses – growers, manufacturers, and dispensaries – will only be able to do business with other small marijuana operators. John Payne, director of the Legal Missouri 2022 campaign, the political action committee that supports the proposal, said this requirement was created so that new operators could break into the market without competition from existing companies.

But Cookson and Madison said the licenses are likely to create a separate market that could put newcomers at a disadvantage.

Stock Concerns

Cookson said it’s a good idea to have the qualifications defined. But starting a cannabis business is still costly, regardless of its size, and most newcomers will have to play catch-up.

“I think anyone who looks at this rudely and has a modicum of business acumen can look at this from a distance and quickly see that there are some really important challenges for anyone getting a small business license,” Cookson said.

Cookson said customers will have to prioritize support for these smaller dispensaries, as their products are likely to be more expensive than those sold by the larger companies.

“There’s a really good chance that we’ll see a bunch of small business licenses granted that won’t actually be used at all because the person who gets them won’t be able to get start-up capital,” Cookson said. “Or they will get that capital and go on and realize that they can’t compete at the same level of these big operators.

“It’s the time-tested story of capitalism, where we have these larger operators that have economies of scale that cannot be replicated on a smaller scale.”

Payne said the small business clause in the amendment aims to get the licenses into the hands of specific people.

“As long as we get them to the people we intend to reach, that brings value to those individuals and those communities,” he said.

States that have already fully legalized marijuana, such as Illinois, New Jersey and California, have worked to create fair markets. But Cookson said disadvantaged operators often need services, including financial and commercial support, to get to a place where they can succeed.

“I don’t know I can say anyone has done it well yet,” Cookson said. “So my criticism of Missouri is in the context of understanding – no one has done it well.”

Skylar Rossi is Senior Digital Editor at Missouri Business AlertWhere this story first appeared. This story is part of the ongoing coverage of the midterm elections by members KC Media Collective.


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