YOUR BUSINESS AUTHORITY
Springfield, MO
YOUR BUSINESS AUTHORITY
Springfield, MO
The application period has started for small and minority-owned ventures to apply for entry into Missouri’s marijuana microbusiness program.
As of Aug. 2, the Missouri Department of Health and Senior Services had received 106 microbusiness applications, officials say. The window for applications is open through Aug. 10. DHSS posted application forms on its website in June.
Amy Moore, director of the state’s cannabis regulation division, which operates under DHSS, said it’s difficult to estimate the number of applications the state will receive by the deadline.
“I learned the last time we went through applications to not try to guess,” she said, in reference to 2019, when the state rolled out the medical marijuana program and received over 2,100 applications for dispensary, cultivation, testing, transportation and infused-product manufacturing licenses. “All of those guesses turned out to be very wrong, and we got many more than anybody expected.”
The microbusiness licenses are designed to allow applicants, including minority groups and lower-income individuals, to participate in the marijuana market. DHSS is expected to issue 48 microbusiness licenses in early October, comprising six from each of the state’s eight congressional districts after eligible participants are selected by lottery. Among the recipients in each district, two will be awarded microbusiness dispensary licenses, while four will receive microbusiness wholesale facility licenses.
Moore said the Missouri Lottery will conduct the drawing for all three waves of licenses. Another 48 licenses will be issued in both 2024 and 2025.
Applicants must meet specific criteria, such as having a net worth of less than $250,000 and an income below 250% of the federal poverty line or a disability card from the U.S. Department of Veterans Affairs. They also are eligible if they reside in a ZIP code with a historic incarceration rate for marijuana-related offenses that is 50% higher than the state average, or where 30% of the population live below the federal poverty level or the unemployment rate is 50% higher than the state average.
“We would be doing the analysis of whether an applicant is eligible,” Moore said. “Once we receive the applications, those will be assigned an anonymous number. That list of numbers of all the applications will be sent over to the Missouri Lottery, and they are the ones that will shuffle the numbers with the system that they use, and they’ll give it back to us ranked, and then we can see which of the applications came out on top.”
License options
According to DHSS, a microbusiness dispensary is licensed to dispense marijuana products for medical or adult use. A microbusiness wholesale facility is licensed to cultivate and manufacture marijuana products, and also for medical or adult use. If cultivating, a microbusiness wholesale licensee may cultivate up to 250 flowering plants at any given time.
As part of the language in Amendment 3, microbusinesses will be able to do business only with other microbusinesses. John Payne, a cannabis consultant who helped write the constitutional amendment, said the main goal was to ensure microbusiness wholesalers have an outlet for their products.
Noting most dispensaries in the marijuana industry are owned by vertically integrated groups, Payne said they tend to prioritize their own products and can make it challenging for new cultivators and manufacturers to get products into stores.
“The new wholesalers here will be able to build their businesses knowing that there is shelf space out there for their products,” he said via email.
John Lopez, co-owner of Old Route 66 Wellness dispensary, was among the early entrants into the state marijuana industry. It was the first dispensary to open in Springfield in November 2020, according to past Springfield Business Journal reporting.
“They are a welcome addition, for sure,” he said of microbusinesses. “I don’t think it’s going to be that impactful for competition, just because as a microbusiness, you can’t buy from a macro. They couldn’t buy from the big grows, so really they will be specialty on whatever they do. It would be too hard to compete pricewise.”
Lopez said he’s had a few potential applicants reach out for business advice. While glad to provide guidance, he said he’s waiting to do so until the winning applicants are determined.
“I hope to have good business relationships with anyone in the industry, including the micros,” he said. “We’d love to see what that part of the industry becomes. They for sure will be on our radar.”
Retail sales for medical marijuana started in October 2020. That was followed by adult-use sales in February of this year after passage last November of Amendment 3, which legalized recreational marijuana in the state. The constitutional amendment also created the microbusiness category of cannabis licenses.
The state’s legal marijuana market has exceeded $100 million in monthly sales since products for both medical and recreational use became available in February. June sales combined for $121.3 million, according to the latest DHSS data.
Moore, who was promoted to the state leadership role in February after serving since late 2018 as deputy director and counsel, said she wouldn’t be surprised if many of the microbusiness applications come in right near the deadline.
“That’s definitely what we saw last time, that the biggest influx of applications were in those last few days of the application period,” she said.
There is a $1,500 application fee charged by the state, which is refundable to any applicant not chosen in the lottery, provided they meet the microbusiness license criteria and have no pending or future legal actions related to the application denial.
Once licenses are issued in October, Moore said any winning applicants will need to be approved by the state to operate, much like the industry’s current businesses. She doesn’t expect any will start operations before 2024.
“They probably won’t be ready for a commencement inspection for at least several months, and I wouldn’t be surprised if it takes quite a bit longer,” she said. “Financing is hard for all these businesses, but I imagine it will be particularly difficult for a small business.”
Moseley’s Discount Office Products was purchased; Side Chick opened in Branson; and the Springfield franchise store of NoBaked Cookie Dough changed ownership.
