Are the Red States’ anti-pot laws beginning to crack?

Missouri is poised to become the youngest state in the US to introduce recreational cannabis sales. The move is likely to draw the attention of marijuana companies and voters in nearby Oklahoma, who will vote in a special election next month on whether to legalize adult use.

Medical dispensaries are awaiting approval from the Missouri Department of Health and Senior Services (DHSS) to begin selling recreational marijuana as early as Friday.

With the GOP controlling the state’s governorship and legislature, Missouri is expected to generate over half a billion dollars in sales in its first year and attract customers from neighboring states. Almost all of Missouri’s 212 licensed medicinal cannabis dispensaries, 95% of them, have applied for the extended license, and if approved, they can begin selling to people 21 and older.

Recreational marijuana sales in Missouri are estimated at $550 million in the first year and could grow from $800 million to $900 million in four years.

Key Features

Missouri’s recent passage of Amendment 3, approved by 53% of voters in November, has amended the Missouri Constitution and introduced various regulations for the legal cannabis industry. Here are the key takeaways for government operators and consumers:

• A low 6% retail tax on recreational cannabis purchases is one of the lowest in the country. Jurisdictions can add a maximum 3% tax, but only through local voting initiatives.

• Advertising for recreational cannabis is treated the same as advertising for alcohol.

• Local cities and towns can only ban retail operations with a vote of at least 60% approval.

• DHSS had until February 6 to process, deny or approve large retail license applications and established a recreational cannabis program in just three months, one of the shortest transitions of any recreational product launch (Arizona’s January 2021 recreational product launch was even faster ).

Missouri’s tight schedule meant regulators had to start issuing licenses by Friday. Despite the opportunity to launch the adult-use program with nearly 200 retailers, Missouri’s vertically integrated, limited-license market is effectively established for now.

Amendment 3 did not significantly increase the number of licenses, which drew criticism from prominent figures such as the Missouri NAACP and St. Louis Mayor Tishaura Jones. The Missouri Democratic Party declined to support Amendment 3 over concerns that it “could have an adverse impact on minorities, low-income Missourians and people of color.” However, the amendment provides a process for approving an additional 144 “micro-enterprise” licenses.

One third of the licenses must be awarded by lot by October 3, 2024, but the last third cannot be awarded until 548 days after the initial licenses are issued. This means that the micro-enterprise licensing process is expected to be completed in 2026.

According to Cox, while Missouri doesn’t have restrictions on licenses, regulators have decided to keep the number of farmers (50), manufacturers (78), and licensed stores (195) close to the minimums set by the state constitution. Together with Amendment 3, this has created few opportunities for new market entrants and reduced competition for existing operators.

Turn up

Given the unpredictable license approval schedule, the first day of sales in Missouri could be a gradual start rather than a grand celebration of celebrations and industry recognition.

Despite the quiet start, operators are optimistic about the high demand. Some pharmacy owners have informed MJBizDaily that they expect to double their sales by adding recreational offerings.

BeLeaf Medical, with five stores serving about 310 medical marijuana patients daily, can handle two to three times that traffic, according to CEO Jason Nelson. To ensure a smooth transition for medical marijuana patients, the retailer encourages them to place online orders for seamless pickup so their shopping experience remains the same.

To streamline transactions, BeLeaf associates will use laptops and iPads to showcase products and take orders from customers queuing inside and outside of stores. To add a local flavor, BeLeaf’s Sinse Cannabis brand has teamed up with renowned St. Louis chef Bob Brazell to launch a new line of gummies made with THC distillate, CBD and whole extract cannabis oil become.

Good Day Farms hired 200 new employees, expanded their hours, and increased their inventory of popular products like flowers, vapes, and gummies. They offer a range of prices starting at $25 for an eighth to suit all customers.

C3 Industries, a multi-state operator, has hired 75 new employees and upgraded its technology and displays in preparation for launch. They expect a two-fold increase in sales velocity with the switch to adult use.

Colorado-based edibles leader Wana Brands is partnering with Clovr, a Missouri-based manufacturer, to double its manufacturing capacity. The aim is to ensure that they have sufficient stock to meet the diverse needs of new customers.

Overall, retailers are well prepared to launch adult sales and are focused on attracting consumers and offering them accessible, quality products.

Regulatory concerns for cannabis companies

As product categories remain the same between medical and recreational programs, companies expect a seamless transition in production. However, some companies are operating in a legal gray area due to the recent release of proposed rules on January 20th.

With the new 111-page document outlining manufacturing, labeling and packaging requirements set to go into effect on February 3, brands are hoping for a grace period to be fully compliant.

The most important regulations include:

• No human, animal or fruit shaped designs

• A limit of two colors (including logos)

• Disclosure of THC, CBD and Delta-8 concentration

• Submission of all product and packaging designs for approval by the DHSS.

This last requirement can cause delays in bringing products to market and is a concern for Wana Brands as properly staffing the approval process is critical. Grön, an edibles manufacturer, ramped up production in anticipation of peak consumer demand during the first 6-8 weeks of recreational sales.

The CEO, Christine Smith, stated that the brand and design team were able to quickly adapt to the proposed regulations and ensure the successful launch of products.

Diploma

As Missouri opens its doors to recreational marijuana sales, companies are poised to meet the expected spike in demand. With a blend of technology, local flair and strategic inventory management, retailers are confident in offering consumers a seamless shopping experience. From THC-infused gummies to extended hours of operation, companies are leaving no stone unturned to capture a piece of the fast-growing cannabis market. While regulatory hurdles can pose some challenges, brands are confident in navigating the rules and bringing their products to market, setting the stage for a new era of marijuana policy and industry legitimacy.

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