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In the Weed Part V: Master Planning

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Two months into production of its marijuana-infused products, output is reaching new heights at Heartland Labs.

The Buffalo-based company is hitting its manufacturing stride, the Pearcy family says. Its weekly count of honey, cookies, gummies and vape cartridges are all increasing.

“It’s just coming down to manpower on our end at this point,” said Hayden Pearcy, lab director. “We’re all working overtime every single week just to try to get product out the door and meet the basic necessities for everybody.”

Managing Partner Michael Pearcy said daily production of its three flavors of gummies is around 9,000 – a 50% increase from April. Chocolate chip and peanut butter cookies have more than doubled to 3,000 produced per day over the past several weeks.

Lemon, a third cookie flavor, was added this month and 5,000 are made per week. That might not be enough, Michael Pearcy said.

“They are extremely popular. We’re getting lots of reorders on those,” he said, noting the company made a new hire for the kitchen to keep up with demand from the roughly 60 dispensaries it serves statewide. That brings the employee count to 12.

The Pearcys say demand also is high for its cannabis-infused honey, made in partnership with Everton-based Wild Ozarks Honey LLC. Up until late May, 460 jars were produced per week, Michael Pearcy said. Now, it’s around 900.

“It’s flying off the shelves. Every single dispensary we talk to, they want as much honey as we can send them,” he said.

Hayden Pearcy said another goal is to double vape cartridge production – previously at 3,000 per week – in the near future.

“It seems like most of the patients are gearing towards disposable vaporizer cartridges, so we’re putting some more focus towards that,” he said.

The decision to boost vape cartridges availability means another new Heartland Labs product, Show-Me Concentrates, is on a slower rollout plan, said Maddi Pearcy, director of operations. The product line, which is marijuana concentrate made via extraction of cannabis plants, was delivered May 14 for the first time to dispensaries in southwest Missouri, St. Louis and Columbia. Inhaling vaporized concentrates is a common consumption method, the Pearcys say.

More concentrates are coming for June, but the family is no rush to ramp up its production as final packaging is under development. Plus, they say there’s plenty of other products to keep the team busy.

Market supply
Lyndall Fraker, director of medical marijuana for Missouri’s Department of Health and Senior Services, said the state currently has 15 infused-product manufacturing facilities operating, far short of the 86 that were awarded licenses back in 2020.

He said all of the licensees were given variance requests last year to extend their operational deadline. The state must approve the variance if the facility is unable to open within one year of the license issuance date, according to the DHSS website.

“There will probably be some of the manufacturers who won’t fulfill their obligation,” he said, declining to provide an estimate. “The manufacturers we have now are really doing a great job of supplying the market for the patients we currently have.”

He said DHSS is currently in a “heavy period” with commencement inspection requests.

Medical marijuana dispensary sales in the state reached nearly $48 million on May 21, the most recent DHSS data available. Fraker said sales now consistently surpass $3 million per week.

“We didn’t actually have any benchmarks that we set in place,” he said. “We’re monitoring sales as a courtesy for the industry.”

The medical marijuana program surpassed 100,000 patients and caregivers this month; the second year of registrations ends June 30.

“It’s probably just a little bit stronger than what we initially thought,” he said of patient and caregiver interest, noting as many as 180,000 may be registered by June 2022.

Fraker declined comment on the recent ruling by the Western District Court of Appeals that said DHSS can’t keep applications of those seeking medical cannabis licenses in the industry confidential. The ruling involved California-based Kings Garden Midwest LLC, which is among more than 850 appeals that roughly 200 companies have made after being denied licenses, Fraker said. The state denied Kings Garden’s request for a cultivation license but granted it a manufacturing one, he said.

Kings Garden said it needed information on the other applications to challenge its denial, according to media reports.

DHSS plans to appeal the ruling to the Missouri Supreme Court, Fraker said. The department’s appeal will add to its legal costs, which are budgeted at $6.2 million each for fiscal 2021 and 2022, he said.

“In this fiscal year, we’ve spent a little over $4 million,” he said, noting fiscal 2021 ends June 30. “So, we’re well under what we thought the budget would be. For next year, we don’t know but we had to put a figure in the budget and wanted to make sure we had enough. I personally don’t believe we’ll spend the $6.2 million next year.”

Next steps
As DHSS works through legal issues, Heartland Labs is on the verge of introducing its newest product: chocolate bars. The product has been delayed as other items received greater attention.

“We fully intend to get that rolling probably in the next couple of weeks,” Michael Pearcy said.

Much like the product lines, the company’s staff count is expanding. Now with 12 employees, the family is looking to hire two more, he said, noting a second shift also is under discussion.

Maddi Pearcy said Heartland Labs uses a nearby storage unit to handle the overflow of packaging that existed even before production ramped up. Production facility expansion is a future possibility, but no plans are set.

“This is a 6,000-square-foot facility and we thought we had plenty of room. We could use more,” Michael Pearcy said. “We’re using every square inch of it. But our parcel here is 15 acres, so we’ve got plenty of room for expansion.”

Keeping up with daily orders has been a challenge, Michael Pearcy said. The family’s initial target was to produce 40,000 packages per month, he said, declining to disclose sales data. He expects that number to be reached by the end of June.

Where and when the production demand will peak is an unknown, Michael Pearcy said.

“It will slow at some point, without question,” he said, adding the company has been deliberate in building its brand since opening. “The manufacturing facilities that put out the highest quality products for the patients and focus on customer service for them will always be able to survive and thrive.”

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