Missouri medical marijuana industry could grow sky high

The central flower cluster, or kola, grows in cannabis plants in one of two flowering rooms at CAMP Cannabis, as the growing facility prepares for its first harvest in north St. Louis on Friday, Feb. 4, 2022.

JEFFERSON CITY — With Missouri voters weighing legalization of recreational marijuana this fall, critics are raising questions about how the market will be structured — and the likely dollars-and-cents impact on consumers.

The petition has faced blowback from some who say the Legal Missouri campaign — primarily funded by current medical marijuana companies — gifts control of the fully legal market to that same group of entrepreneurs.

One Missouri industry insider predicted in June that changes to the market post-legalization would likely anger medical marijuana patients, who could face higher prices.

“What’s going to happen is the patients are all going to be really pissed because all of a sudden the prices are going to go up once supply and demand catches up,” said John Mueller, co-founder of Greenlight, which operates 15 dispensaries in Missouri. “That’s basically how it will probably transpire.”

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Mueller made the statement while members of the Missouri Medical Cannabis Trade Association met in Kansas City to discuss strategy. The Post-Dispatch obtained recordings from the event, lifting a curtain on behind-the-scenes talks that detail the Legal Missouri campaign’s thinking moving into the the Nov. 8 general election season.

The campaign faces resistance on two fronts: from traditional opponents of marijuana legalization and from supporters of legalization who dislike elements of the Legal Missouri 2022 plan.

News that medical marijuana patients might face higher prices at Missouri dispensaries could frustrate efforts to capture support from the roughly 200,000 active Missouri medical marijuana cardholders, a bloc that could prove pivotal to Amendment 3’s success.

Mueller, in an interview Thursday with the Post-Dispatch, backed off his prediction. “I don’t think that’s the case anymore,” he said.

Mueller said he initially believed prices would temporarily increase in the months following legalization. But he said he now thought the state had enough growing capacity and supply to meet the higher demand.

John Payne, campaign manager for Legal Missouri, said he disagreed with Mueller’s prediction from June.

“I don’t think Mueller is correct there,” he said in an email. “Prices have fallen tremendously since the first dispensaries opened in 2020, and there are new cultivators coming online with regularity.

“There will no doubt be a lot more demand once adult use sales start, but there is capacity in the system to supply it,” Payne said. “Any demand shock will be short-lived, and I would bet that by the end of the first year of adult use sales, prices will be below where they are now.”

The 39-page proposed constitutional amendment, which will appear as Amendment 3 on the Nov. 8 ballot, contains benefits for medical marijuana patients.

Under Amendment 3, patients would only need to renew their cards every three years; currently cards must be renewed every year. Nurse practitioners would be allowed to register patients, with the goal of lowering the cost of registrations, Payne said.

Patients would also be allowed 6 ounces of cannabis per month, up from the current 4-ounce limit.

In addition to regular sales taxes, medical marijuana patients only pay a 4% cannabis tax.

Under the ballot question, in addition to regular sales taxes, adult-use customers would pay a 6% cannabis tax. Localities would be able to levy an additional 3% tax on recreational sales.

Payne said there is nothing in Amendment 3 requiring lower price tiers for medical marijuana patients, though he said dispensaries could offer perks to cardholders.

“I certainly know a lot of dispensaries plan on doing those things,” Payne said, because “the medical patients are probably going to continue to be the best customers.”

A study released in 2021 from the Cato Institute suggests plunging prices — or sharp increases — wouldn’t be in store for Missouri post-legalization.

The study found that in Washington and Colorado, prices fell after voters legalized marijuana but have since stabilized, with an ounce of high-quality flower in Washington selling for about $230 compared with $240 in Colorado.

Prices in Oregon increased before the price per ounce steadied at about $210. Researchers said California prices have kept rising and are higher than in Washington.

The researchers also noted a growing price gap between higher and lower grades of marijuana.

In Illinois, consumers experienced product shortages when legal sales first began in 2020. Missouri has issued roughly three times as many cultivation licenses as Illinois permitted in 2020.

“You fix it by issuing additional licenses,” Beau Whitney, senior economist for cannabis industry research firm New Frontier Data, told the Chicago Tribune in 2020. Until then, he said, “look for continued constraints on supply, higher-than-market prices and a robust illicit market.”

Objections and a lawsuit

State Rep. Ashley Bland Manlove, a Kansas City Democrat and chair of the Legislative Black Caucus, on Tuesday announced the creation of the Impactful Canna Reform Coalition, which will work to convince voters to vote “no” on Amendment 3.

Rep. Ashley Bland Manlove

Rep. Ashley Bland Manlove, a Kansas City Democrat photographed here in 2021, recently announced the creation of the Impactful Canna Reform Coalition to oppose the Legal Missouri 2022 ballot measure.

“The capitalism monster loves to exploit you, and that is what’s happening with this petition,” Bland Manlove said in a statement.

Gov. Mike Parson, a Republican, on KMOX (1120 AM) Aug. 25 portrayed Amendment 3 as a win for corporations over everyday people.

“I’m not sure everyone understands they’re going to be doing more for the corporations behind marijuana and for the business side of it, than you ever are for yourself,” he said.

Legal Missouri also faces another obstacle before appearing on the ballot: a lawsuit by Jefferson City resident Joy Sweeney, the deputy director of training, technical assistance and community outreach for Community Anti-Drug Coalitions of America.

Gov. Mike Parson

Republican Gov. Mike Parson, photographed here in 2018, has voiced opposition to Amendment 3, saying its passage would represent a win for corporations over everyday people.

In a lawsuit filed to knock Legal Missouri off the ballot, attorneys argue the campaign didn’t actually collect enough signatures and that the wording of the measure runs afoul of the Missouri Constitution.

Cole County Circuit Judge Cotton Walker must decide by Sept. 13 whether the amendment will qualify.

Fall campaign plans

If voters approve Amendment 3, the state Department of Health and Senior Services would allow medical marijuana companies to apply for recreational licenses on Dec. 8. The state would have to act within 60 days.

That means medical marijuana dispensaries could get the green light to open their doors to people 21 and older in early February.

“Feb. 7 … that’s the date everybody in here needs to know,” Mueller in June told he audience of industry insiders, referring to when DHSS would be required to convert medical licenses to adult-use.

He said dispensaries would lower prices at the end of the year before “stockpiling” to prepare for full legalization.

“We’re all going to collectively race to the bottom here at the end of the year,” Mueller said. “And then we’re going to start stockpiling in January to get ready for February.”

He then made the statement that patients would be “really pissed” due to high prices “once supply and demand catches up.”

Mueller also made a fundraising pitch to those gathered. “You know, ($25,000) per license is probably what you should be thinking about budgeting as we’re going into this.”

Jack Cardetti, a marijuana industry investor whose Tightline Public Affairs works for the Legal Missouri campaign, told the group in June that after the campaign made the ballot, it would ramp up work to nail down endorsements and would likely hire a spokesman.

He also said the campaign could conduct a poll after Labor Day, which would help determine how much to spend on advertising.

“We’re building a base budget right now, but we know that if this gets close and the numbers tighten at all, we are going to have to go out and persuade Missourians,” Cardetti said. “If you don’t see us out there in the press a lot over the next, you know, 30 to 60 days, that is intentional.”

“They don’t want it in their face every single day,” Cardetti said of voters.

“That’s really the game plan over the summer here,” he added. “We’re going to get prepared, we’re going to get ready, we’re going to raise money and we’re going to get organized and then we’ll be prepared to run a big sort of media campaign in the fall, with hopes that we don’t actually have to do that.”


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