Tuesday, December 18News That Matters

Missouri's medical marijuana industry will be highly regulated, and highly lucrative – Columbia Missourian


As a newly minted medical marijuana state, Missouri is a fresh field of opportunity in a highly lucrative and competitive industry that is bound to alter the state’s business landscape.

Within six months, entrepreneurs hoping to acquire one of three licenses to grow, process and/or distribute medical marijuana will be able to apply. In the meantime, they will have to navigate a brand-new regulatory environment as they build the foundations of their future businesses.

These individuals, such as growers and dispensary owners, will likely seek the counsel of attorneys and consultants versed in medical marijuana law to help them wade through the red tape.

Medical marijuana, by its nature, is more regulated than recreational marijuana, given the fact that patients must first be certified by a doctor that they have one or more of the requisite conditions outlined in Amendment 2 and only then can acquire a license from the Missouri Department of Health and Senior Services.

Experts say higher regulation is advantageous, given that it keeps markets stable in the early stages of the industry’s development.

Peter Andreone, a marijuana business lawyer based in Kansas City, said it is difficult to say how regulated Missouri’s medical marijuana industry will be in comparison with other states because “those regulations haven’t been created yet.”

“In the broad spectrum of things, I think (Missouri will) be in the middle of the road” compared with other states, said Andreone, owner and founder of Andreone Law and counsel with Hoban Law Group in Colorado.

Small business owners in Missouri who hope to acquire a license and start growing/dispensing medical marijuana will most likely be in fierce competition with people who are well-funded and who have backing from individuals with experience opening dispensaries and starting grow operations in other states.

All licenses for medical marijuana cultivation, manufacturing and testing facilities, as well as for dispensaries and entities with transportation certifications, must be held by entities that are majority owned by Missouri citizens.

There will be Missouri residents who are 51-percent owners of such operations, making them majority owners, but who have the added advantage of funds coming in from outside the state.

Just getting started on a large scale in the industry will require huge amounts of capital, Andreone said.

Cultivation licenses are going to be the most highly sought after and competitive out of the three types of licenses, he said, given that they are limited in number and allow growing marijuana in mass quantities.

“If you want to have a full seed-to-sale business, where you’re growing it, you’re selling it, you’re distributing it, you’re selling it in a storefront, you’re maybe even making your own edibles, you’re going to need definitely six figures,” he said. “And if you want to do everything, your looking at seven figures in investment just to get started and fully funded,” Andreone said.

Business owners will also have to negotiate with cities, which have the ability to set local zoning laws determining where marijuana grow operations and dispensaries can and cannot be established, but it is expected that cities will also greatly benefit monetarily from the arrangement, Andreone said.

Andreone said every state with either medical or recreational marijuana laws regulates cannabis differently, and in Missouri, every cannabis seed planted will have to be controlled, a system known as a seed-to-sale tracking program.

Given this level of regulation, growers will need expert advice on not only the best methods for growing marijuana, such as what kinds of nutrients to use and how far apart the plants should be spaced, but on how to select the proper real estate, whom to hire to protect the crop, and how many cameras they are required to install to monitor grow operations.

Andreone expects all of this regulation to create opportunities for real estate agents, security companies, CPAs, tax advisers, PR firms, attorneys and consultants, among others, who possess the regulatory knowledge concerning Missouri’s medical marijuana industry that will soon be in high demand.

George Nolen is a cannabis consultant and Missouri native currently working in the marijuana industry in Portland, Oregon.

Nolen was involved with New Approach Missouri’s failed 2016 bid to pass medical marijuana and said that the Department of Health and Senior Services has 180 days to release rules and regulations pertaining to medical marijuana.

“It wouldn’t surprise me if we see the regulations released and the applications released early,” he said.

Nolen plans to return to Missouri and establish himself in the St. Louis area as a cannabis consultant who specializes in the technicalities of large marijuana grow operations.

Given that the cultivation licenses in Missouri require large grow operations, Nolen said that scalability will be the biggest issue for future cultivators.

“I really hope to open some people’s eyes as to the amount of work and dedication that it’s going to take to build a successful business,” he said.

Adam Raleigh plans to set up shop in the state and to start an operation growing cannabis for the medical marijuana industry.

Raleigh is a St. Louis native, a Navy veteran and has been growing cannabis for over 10 years, an experience that gave him extensive knowledge on the cannabis cultivation process from seed to harvest.

Raleigh is currently working in the industry in Colorado. Given how saturated the market is in Colorado, Raleigh said, it makes sense to come to a newly established medical state like Missouri.

Raleigh said that given Missouri’s new medical status, “it behooves the growers to go with less synthetics” and to grow a more natural and ultimately healthier product.

Raleigh said the price of marijuana is relatively low in Colorado, and so it is difficult to get the start-up capital required to do the kind of work he’d like to do.

“So the only way to do an all-natural product is to do it in a new market,” Raleigh said.

Raleigh also said that being a medical marijuana state, and therefore more highly regulated than states with recreational cannabis laws, is a good thing for the development of Missouri’s industry in the long run.

Medical cannabis, Raleigh said, being more regulated allows for more growers focused on organic or natural products to take advantage of the higher prices that such a product would fetch for the first two to three years. As the market develops and prices go down, producers can turn those savings over to patients, he said.

Andreone said that starting a marijuana business in a medical state is completely different than setting one up in a recreational state.

As far as cultivation of marijuana goes, the government is going to start accepting application fees 30 days after the law takes effect on Thursday, Nolen said.

Nolen said he would urge anybody interested in getting a license to set those funds aside and to “pay their application fees up front, so the state has some operational funds to implement this program, because it’s definitely not going to be cheap for them.”

At the moment, Nolen is focused on networking with potential license holders in Missouri and has been trying to establish relationships with cultivators and individuals ahead of time who are interested in opening retail locations and/or extraction facilities, where marijuana would be processed into products.

Nolen added that he expects a lot of people from outside the state to come in and that he expects there to be a push for recreational marijuana use in Missouri by 2020. He hopes his services can help businesses establish a niche in the industry so as to be prepared for what is to come.

A former drug addict who recovered using cannabis and a single father who lost his wife to what he calls the “overprescription of opioid drugs in the state of Missouri,” Nolen is looking forward to coming home to Missouri to work in an industry he is passionate about.

Raleigh said that the way Missouri’s medical marijuana law is written “is extremely conducive to allowing open competition and allowing for different types” of marijuana to be grown.

It also might take until 2020 for Missouri’s medical marijuana system to actually kick in, Andreone said.

“By January of 2020 is when a Missourian will be able to walk into a dispensary and buy medical marijuana. It’s going to take a year for all of this to play out.”

Andreone said he expects good things to come in the future given that Missouri’s medical marijuana industry is wide open.

“I think it’s going to have a tremendous impact on Missouri’s economy,” he said.

“Based on what we have now in the Missouri constitution, I think it sets up for a really robust, broad medical marijuana economy,” Andreone added.

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