Missouri's recreational marijuana market is estimated at $2 billion dollars annually. This is four times what the medical marijuana market is estimated at ($500 million).
The medical marijuana market is currently exclusively operated by holders of 378 marijuana cultivation, processing, and retail licenses, which were allocated by the Constitutional ballot initiative passed in 2018 by the New Approach Missouri campaign. The New Approach Missouri campaign has now rebranded under the name Legal Missouri 2022 to promote a recently filed recreational marijuana ballot initiative.
The Legal Missouri 2022 proposal keeps license caps in place:
Some Legal Missouri 2022 campaign advocates will no doubt say that language allows for more licenses than the "minimum" but this language is designed for the Department of Health & Senior Services to create and enforce a license cap by making the determination of "lifting" the numerical cap on licenses contingent on an arbitrary determination of "demand". If the Legal Missouri 2022 campaign really wanted to remove the license caps, they would have said "the department shall not limit the number of comprehensive...facility licenses issued." They did not.
The Legal Missouri 2022 proposal then goes on to give every existing medical marijuana license the "right to convert" the license to recreational market.
Because the license caps are not lifted, if every existing medical marijuana licensee chooses to convert their license to the recreational market, no one who does not currently have a medical marijuana facility license would be able to enter the market, with one exception: 144 "microbusiness" licenses would be awarded!
Let's break this down. At a minimum, 4 out of every 6 "microbusiness" licenses would be mandated to be "wholesale" licenses, which could grow and process marijuana.
In total, that means 96 of these 144 "microbusiness" licenses would be able to grow marijuana. The Legal Missouri 2022 proposal caps each of these licensees to 250 flowering plants:
96 "microbusiness wholesale" facilities X 250 flowering plants = 24,000 plants that can be grown by "microbusiness" operators entering the market. By comparison, each "comprehensive" cultivation licensee would be authorized to grow up to 2,800 flowering plants:
As we noted, because the Legal Missouri 2022 proposal does not lift existing license caps, there would be at a maximum ~60 "comprehensive marijuana cultivation" facilities X 2,800 flowering plants = 168,000 flowering plants. In total, the legal recreational marijuana market in Missouri would be limited to 168,000 + 24,000 =192,000 flowering plants. In percentage terms, that means "microbusiness" cultivators would have at most 12.5% of the market and "comprehensive" cultivation licensees would control the other 87.5%.
Of course, the fact that existing medical marijuana licensees would be able to convert their licenses to the recreational market immediately on passage of this proposal would give them a jump on "microbusiness" licensees which would be granted in three waves: 48 "microbusiness" licenses 300 days after passage, then another 48 "microbusiness" licenses 270 days after that, then the final 48 "microbusiness" licenses 548 days after that.
In the marijuana news publication GrownIn, reporter Mike Fourcher notes (emphasis ours):
The Legal Missouri 2022 petition also creates 144 new microbusiness licenses, which would be targeted at lower-income Missouri residents, military veterans, or family of or individuals arrested for cannabis-related crimes. But these new licenses would not be awarded until at least nine months after enactment of the initiative, a provision that has become a major issue in Illinois, as existing cannabis companies were given a wide head-start over social equity licensees, allowing them time to dominate the market.
Bottom line: the Legal Missouri 2022 recreational marijuana initiative petition creates a framework where existing medical marijuana licenses have unrivaled sole access to a $2 billion market space by preventing new entrants from even competing for more than 12.5% of the market.
This is an unabashed, shameless effort to rob Missouri entrepreneurs of an enormous amount of opportunity to innovate and compete in a new market. Missourians should reject this proposal in favor of proposals to allow entrepreneurs to enter the market without restriction.
In our next post, we will delve deeper into the "microbusiness" license and lottery allocation components in the Legal Marijuana 2022 proposal, with a focus particularly on how this second-class license structure will allow the existing marijuana cartel to use predatory means to control even the operators who attempt to get "microbusiness" licenses. We have seen this system deployed in Illinois, where significant public controversy and allegations of political corruption should be a warning to us.