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What's next for cannabis in Missouri?

Rebecca Hawkinson
February 24, 2022

With legislative actions and ballot initiatives regarding adult-use cannabis sales gaining momentum in Missouri, the clock is ticking for existing medicinal license holders to solidify their market positions and prepare for a massive increase in demand. If Missouri approves adult-use as expected, the market could quickly triple to roughly $750 million. For existing market participants, the future is now.

At present, the state's anemic and fundamentally flawed medical program is replete with too many licensed operators and a restrictive list of qualifying conditions limiting patient counts.

There are precious few operators within the state generating acceptable returns. That said, the potential uplift from an anemic medical program to a full-throated adult-use program is best illustrated by the experience of Missouri's neighboring state, Illinois, which is now a $1.8B market, up from less than $400 million before adult-use.

Although Missouri has just half the population of Illinois, it will benefit from "cannabis tourism" thanks to only one of its eight bordering states having an adult-use cannabis program. Moreover, with a proposed state sales tax of just 6%, industry pundits believe it will be a massive market.

Existing market participants need to actively pursue expansion of their operations to position themselves to meet adult-use demand. Those with the financial capabilities to do so are expanding across the supply chain via cultivation, processing, and retail. Those who lack the financial resources to expand their existing operations should seek partnership opportunities. With the residency requirement being lifted, both in and out-of-state operators are viable strategic partners/acquirors.

First mover advantage matters. If you have a license and an operation, you should be expanding to the total license cap. If you lack sufficient capital, you need to find a partner. Let us help you unlock the value of your assets before the market is played out. You do not want to be the last to market and leave your valuable licenses undeveloped.

Regardless of whether you want to raise capital to develop your licenses or find a strategic partner with whom to joint venture the development, and even an outright sale of existing licenses/operations, Sharp is here to help. We are in active dialogue with the top 20 MSOs regularly and continue to hear that Missouri is a key target market for many of them.

Sharp Capital Advisors has over 25 years of experience advising privately-held companies with mergers, acquisitions and private sale processes. We have provided advisory services to multiple cannabis companies, helping them determine the most practical and efficient next steps to achieve their goals. Our services are invaluable when considering a sale or merger and/or responding to unsolicited in-bound buyer interest.

Let's schedule time to begin the discussion regarding a path to monetization for your business.

Authors:
Rebecca Hawkinson
Stephen Miles