The hidden Midwest cannabis powerhouse
By Kaitlin Domangue
Many people are surprised to hear I live in Missouri.
I usually hear something like “I didn’t realize Missouri even had a cannabis industry” when I tell them where I’m from.
One man I met in Los Angeles told me he’d never even heard of Missouri. But that he’s heard of Michigan. And he’s heard of St. Louis… lol.
It’s true. Missouri doesn’t have the most robust market, but that’s primarily because we are a medical-only state. Recreational cannabis is expected to be on the ballot in this year’s mid-term elections.
Still, Missouri’s cannabis industry is strategically positioned to be much greater than it already is.
State voters said yes to medical cannabis (66% of us!) in 2018 and I was thrilled to be part of that group. My husband Tony and I eagerly watched the votes roll in after praying all day it would be legalized.
Missouri’s legalization is also what sparked Tony and I both to join the cannabis industry – but that’s a Twitter story for another time 🙂
The Missouri market drama
Like many other newly-legal states, Missouri’s market rollout had a lot of drama.
There have even been a few federal probes into our licensing process. Questions arose over inappropriate donations being made within certain Missouri jurisdictions. Chicago and El Monte have similar tales.
One sworn deposition testimony of Joseph Campbell surfaced in January. Campbell is the owner of Titan Fish, a real estate development firm that worked with medical cannabis operations in Independence, Missouri.
An FBI spokesperson said they couldn’t confirm or deny the existence of an ongoing investigation, but the deposition named Independence Mayor Eileen Weir as complicit among other prominent city decision-makers.
Lawsuits were filed immediately after Missouri’s approved medical cannabis licenses were announced in 2019 and 2020.
Sarcoxie Nursery, an applicant who ultimately wasn’t awarded a cultivation license, battled the state of Missouri for two years. The suit claimed the state’s cap of 60 cultivation licenses is unconstitutional.
A Missouri appeals court rejected this suit in May, ending this lawsuit’s saga.
The hidden strength of Missouri’s cannabis market
I, of course, don’t advocate for “pay-to-play” schemes. But, I think people are quick to lump together Missouri’s bad eggs & schemes with the law itself – which isn’t a bad law, despite some challenges.
I believe the foundational reason for our strength is the legislation we have.
Quick stats about Missouri’s program:
A little over 2% of Missouri’s total population has a medical cannabis card. There are approximately 136,000 registered medical cannabis patients in the state.
73% of Missouri adults consume or are open to consuming cannabis
Nearly one in ten new Missouri jobs came from the state’s medical cannabis industry in 2021.
Missouri’s medical market has seen over $336 million in medical cannabis sales since the first dispensary opened in October 2020.
The Missouri Veterans Coalition, which receives a portion of cannabis revenue, cashed a $2 million deposit from cannabis business application fees alone – before sales even started
Not bad for an industry that got started during a global pandemic. And, Missouri’s launch is among the top 5 fastest medical cannabis program implementations in the United States.
Missouri advocates have long criticized the law’s cap on licenses, but a free market isn’t always the right choice. Let’s look at Oklahoma –
There’s no cap on licenses and there’s no application period, applicants can apply at any time. As a result, Oklahoma has approved 8,306 licensed operators since 2019.
Then there’s supply and demand. The wholesale price of cannabis sat between $1,000 and $2,800 a pound in 2018, dropping dramatically from its $4,000/pound height. There’s no shortage of cultivators.
Oklahoma operators can enter a vertical license for less than $10,000, a far cry from other states’ application and entry fees.
It’s a hard weight to balance.
Oklahoma’s light regulations are great for consumers and great for new entrepreneurs. The light regulations are proving to be not so great for a mature industry where participating businesses are profitable long-term.
Oklahoma has collected $332 million in sales and excise taxes since 2018. Missouri has collected $336 million since 2020.
Missouri’s population is twice the size of Oklahoma’s, but we have significantly fewer licenses.
Missouri’s Department of Health and Senior Services allows for:
- 60 cultivation operations
- 192 dispensaries
- 86 manufacturing facilities
- 10 testing labs
Compare that to Oklahoma’s 8,000+ licenses and a population half the size of Missouri. The competition and mad dash for market share in Oklahoma are out of this world. There are also out-of-state giants who come in and dominate the market, pushing local operators out.
Part of Missouri’s licensing process was shady. There’s no doubt about that. But, it could have been a lot worse.
The limited number of licenses, and designated application window, ensure greater profitability for each operator than Oklahoma’s market does.
The future of Missouri cannabis
Missourians are expected to vote on recreational cannabis this year. Advocacy groups were collecting signatures in 2020, but the pandemic made that an impossible task.
Legal MO 2022 is the most likely initiative to make the November ballot. The group has already collected around 390,000 signatures – over 200,000+ more signatures than the required 180,000 to get on the ballot.
Of course, LegalMO 2022 doesn’t come without its fair share of critics. Some are concerned this bill would prevent smaller & newer entrepreneurs from entering the space.
LegalMO 2022 guarantees most recreational licenses go to medical businesses that are already in operation. There will be a lottery process for the remaining licenses, forming “microbusinesses” through a lottery process.
Missourians will know whether or not Legal MO 2022 makes the November ballot by early August.
The Green Paper is also hosting a St. Louis event on July 29th and I’ve invited my friends at LegalMO as guests! If you’re in the area, stop by for light bites, a cannabis-friendly Happy Hour, and an open arcade.
LegalMO’s bill attaches a 6% sales tax to cannabis transactions. The group predicts its framework will generate an estimated $40.8 million in annual revenue and $13.8 million in additional local government revenues.