Notable Players

A Deeper Look At This State

Regulatory Framework

In November 2018, Missouri voters approved Amendment 2, a constitutional amendment legalizing the sale and use of medical cannabis, by an overwhelming 66% to 34% margin. 

Amendment 2 called for the state to issue 24 dispensary licenses in each of Missouri’s 8 congressional districts, for a total of 192 retail licenses statewide. Given its population of nearly 7 million people, this makes Missouri a “limited license state”, with one retailer for every 35,000 residents.

In addition, Amendment 2 required Missouri to issue 60 cultivation licenses, and 86 manufacturing licenses, for a total of 338 licenses in the state.

In December 2019, Missouri began issuing its 60 cultivation licenses. In January 2020, Missouri began issuing its 86 manufacturing licenses and its 192 dispensary licenses. The first legal sale of medical cannabis in Missouri took place in October 2020, and the vast majority of licensees in each category are now operational.

Missouri’s state tax code is consistent with IRS Code Section 280E, meaning that cannabis businesses in the state cannot claim ordinary state tax deductions. This makes operating a cannabis business in Missouri particularly onerous. However, Missouri’s retail cannabis tax rate of 4% is relatively low compared to other states, such as neighboring Oklahoma, which has a 7% retail tax rate.

Regulatory and industry insights provided by Ananda Strategy

Notable Market Activity

July 2022 | Legal Missouri 2022 officially qualifies for the November 2022 ballot

May 2022 | Missouri generates $37 million in medical cannabis sales, a monthly record

May 2022 | Legal Missouri 2022 submits 385,000 signatures to the Secretary of State

January 2022 | Missouri records more than $200 million in medical cannabis sales in 2021

October 2020 | Medical cannabis sales begin

January 2020 | Missouri begins issuing its 192 dispensary licenses

January 2020 | Missouri begins issuing its 86 manufacturing licenses

December 2019 | Missouri begins issuing its 60 cultivation licenses

What's the Play?

Missouri is one of the fastest growing cannabis markets in the United States, and operates at a fraction of its long-term potential. In 2021, medical cannabis sales in Missouri exceeded $200 million. In 2022, cannabis sales in the state are likely to exceed $400 million. 

If Missouri were to legalize adult use cannabis, statewide sales would likely approach $1.5 billion. Much of this revenue would be captured from Illinois, where residents in neighboring St. Louis can travel just a few miles to purchase adult-use cannabis. In addition, Missouri borders 5 states (Kansas, Nebraska, Iowa, Kentucky, Tennessee) that are unlikely to see adult use cannabis sales until 2025 or perhaps even later, giving Missouri an unprecedented opportunity to capture revenue from residents in neighboring states.

There are multiple ballot initiatives that aim to legalize adult use cannabis in Missouri in November 2022. However, the initiative most likely to qualify and pass is Legal Missouri 2022. This initiative would impose a 6% tax on adult use sales, allow existing medical operators to be grandfathered into the adult use market and call for an additional 150 licenses to be issued to low income and social equity applicants.

Given its market potential, Missouri is likely to be a key M&A target for many of the largest multi state operators (MSOs) in the country over the next 12-24 months. This M&A activity will likely resemble the flurry of M&A activity that took place in maturing medical markets like Arizona, Florida and Pennsylvania in 2020 / 2021.

Alternately, new licensing opportunities created by the likely passage of Legal Missouri 2022 in November represent another way to gain a foothold in the Missouri market. As these new licenses are likely to be “micro businesses”, allowing businesses to operate across the entire cannabis supply chain, they offer operators a unique opportunity to obtain higher margins within the Missouri market.

Regulatory and industry insights provided by Ananda Strategy

Market Snapshot

This Data Point

58,380

This Data Point

58,380

This Data Point

58,380

This Data Point

58,380

This Data Point

58,380

This Data Point

58,380

This Data Point

58,380

This Data Point

594/273

By The Numbers

Population

~6.2MM

21+ Population

~3.92MM

Annual Tourists

~
43
MM

Medicinal Legalization

2018

Adult-Use Legalization

N/A

First Adult-Use Sales

N/A

MMJ Patients

~174K

Monthly Revenue

~$25MM

Cultivation Cap

30K Sq.Ft.

Cultivation Licenses

39/60 (Operational/Limit)

Retail Licenses

192/192 (Operational/Limit)

Retail License Cap per Operator

5

Vertical Integration

Allowed

Delivery

Not Allowed

MMJ Qualifications

Less Restrictive

Adult Population/ # Retail Licenses

Accepts Out of State MMJ

No

MMJ Patients / # Retail Licenses

~900

Top Cultivators

Notable Market Activity

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Proprietary Sharp Capital Advisors data - compiled using various sources including state and local government data

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