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The Nov. 8 passage of Amendment 3, for which supporters asked Missouri voters to approve recreational weed, is likely to open the floodgates for both increased sales and workforces within the burgeoning marijuana industry, officials say.
The new amendment, which goes into effect Dec. 8 after being approved by 53% of voters, changes the state constitution, legalizing the purchase, possession, consumption, delivery, sale and manufacturing of marijuana for adults 21 and older for personal use. The earliest that Missourians will be able to buy marijuana products recreationally is Feb. 6, 2023, according to state officials.
Recreational marijuana products will have a 6% retail sales tax and allow local governments to assess an additional local sales tax of up to 3%. The retail sales tax is estimated to generate annual revenue of at least $40.8 million, according to state officials. The optional local sales tax could bring in at least $13.8 million for local governments across the state.
John Lopez, who co-owns Old Route 66 Wellness dispensaries in Springfield and Ozark, said he expects all businesses in the state’s medical marijuana market will eventually see sales at least double, if not triple. He said the increases should start as soon as recreational use sales begin in February.
“From that day forward, we plan on opening more registers,” he said, noting plans to add roughly 35% more staff early next year.
Lopez also co-owns security company Ozarks Protective Services LLC and is an investor owner of Infused Industries LLC, dba Bison Infused, which manufactures marijuana-infused products such as pre-rolled joints, vape cartridges and cannabis oil. Along with Old Route 66 Wellness, he said the three companies have a combined workforce of 65. He anticipates hiring 25 more employees at each dispensary, 20 additional workers for Bison Infused and four more at Ozarks Protective Services.
At the cultivation facility of Flora Farms LLC in Humansville, company president Mark Hendren said hiring is already in progress to capitalize on the expected jump in customer demand soon to arrive.
“We need to add about 40 workers to our logistics, packaging and trimming departments almost immediately,” he said, adding the company hopes to grow its cultivation facility employee count to 200. “We have a fair backstop of inventory at our cultivation facility in anticipation of this. So, we now have the product that we can trim, package and get tested for what we’re expecting will be that growth in business sometime around the first of the year.”
Flora Farms, which is a vertically integrated company in the marijuana industry, operates cultivation and manufacturing facilities along with three dispensaries in Springfield, Humansville and Neosho. Each dispensary employs between eight and 12 people, Hendren said, adding employee counts will likely expand next year in each to 15-20 workers.
As more suppliers of cannabis products came to market this year, Hendren said there was an excess of supply in the state – a good situation for medical marijuana patients, as prices lowered. However, that also gave his company pause on initiating its plan to add an 80,000-square-foot structure to its cultivation facility. The project, for which he previously estimated costs could exceed $14 million, is still going to happen, he said. However, work probably won’t begin until the spring or summer of 2023 instead of late this year.
“We’ll be making that decision in the next 60-120 days, depending on what we see in supply and demand in adult use,” he said. “As long as there are no supply chain problems, as we still need to order everything that goes inside the building, we can probably get that erected and operational in 120 days.”
As local players in the marijuana industry look to scale up their workforce, so too does the Missouri Department of Health and Senior Services, which has overseen the medical weed program since 2018. Lyndall Fraker has served since then as the state director of the Section for Medical Marijuana Regulation under DHSS. He said the division, which employs 57, plans to hire up to 100 more people to deal with the increased workload.
It’ll be a challenge for a new leader to handle, as Fraker said he’s not going to stay on as division director. As of Dec. 8, he will become the director of public outreach for the Division of Cannabis Regulation, the agency’s new name. DHSS is currently seeking a new division director, and its job posting notes the position’s salary is $120,000 and projects the medical and adult use program annual budgets will collectively be $25 million-$30 million.
“Hopefully, that position will be announced somewhere by the middle of December,” Fraker said, adding he will report to the division director. “I made the decision I didn’t want to lead the whole new division. Our area will probably close to triple in size, as far as employees and responsibility. At this stage in my career, it was my decision to not pursue that position.”
Fraker said his new role will look to continue building relationships among the industry, DHSS and the state legislature, noting he likely will spend more time at the capitol as a liaison.
Medical marijuana cumulative sales reached a milestone in October, surpassing $529 million – a mark reached in two years. Nearly $370 million of the total has accrued since October 2021, according to DHSS data.
Regarding how much recreational marijuana use will impact sales, and how quickly, is hard to know, Fraker said. Still, he said its relatively low tax rate of no more than 9% might be hard to resist for those residing in Illinois to make purchases in Missouri. Its recreational cannabis excise tax ranges 10%-25%, depending on the product’s potency, according to the Illinois Department of Revenue. That’s in addition to a 7% rate for the cannabis cultivation privilege tax.
Still, Illinois, which began recreational weed sales in 2020, has accumulated over $3 billion in marijuana sales since the recreational market launched, according to data from the Illinois Department of Financial and Professional Regulation.
Lopez said he expects Missouri will annually be a $1 billion marijuana market within five years.
Hendren isn’t sure on the timeline for reaching that mark but expects the increased sales will boost his company’s revenue, which should finish up slightly this year from its $32 million reached in 2021.
“We’re trying to budget and make our plans based on doubling around the billion-dollar mark,” he said. “Obviously, we’d be thrilled if it’s more.”
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