Microbusinesses: An entry point to Missouri marijuana
There it is, just over the horizon, adult use marijuana legalization is not only possible, it’s just outside of reach.
Legal Missouri 2022 (Amendment 3) is on the ballot in November and the Greenway Team dove deep into Amendment 3 to identify the truth, and misinformation, amongst all of the hearsay.
While there is much to dissect and debate in the amendment, possibly the most talked about are the 144 microbusiness licenses that will be awarded by lottery, but only to qualifying applicants.
The qualifications to apply for licensing are one of the major components of Amendment 3.
The lottery program being proposed is a social equity program, meant to provide an opportunity for those who have been disproportionately affected by Missouri’s marijuana laws. To qualify an applicant would need to meet one of the following criteria:
- (a) Have a net worth of less than $250,000 and have had an income below two hundred and fifty percent of the federal poverty level, or successor level, as set forth in the applicable calendar year’s federal poverty income guidelines published by the U.S. Department of Health and Human Services or its successor agency, for at least three of the ten calendar years prior to applying for a marijuana microbusiness facility license; or
- (b) Have a valid service-connected disability card issued by the United States Department of Veterans Affairs, or successor agency; or
- (c) Be a person who has been, or a person whose parent, guardian or spouse has been arrested for, prosecuted for, or convicted of a non-violent marijuana offense, except for a conviction involving provision of marijuana to a minor, or a conviction of driving under the influence of marijuana. The arrest, charge, or conviction must have occurred at least one year prior to the effective date of this section; or
- (d) Reside in a ZIP code or census track area where:
- (i) Thirty percent or more of the population lives below the federal poverty level; or
- (ii) The rate of unemployment is fifty percent higher than the state average rate of unemployment; or
- (iii) The historic rate of incarceration for marijuana-related offenses is fifty percent higher than the rate for the entire state; or
- (e) Graduated from a school district that was unaccredited, or had a similar successor designation, at the time of graduation, or has lived in a zip code containing an unaccredited school district, or similar successor designation, for three of the past five years.
Another major change from the way licenses were awarded during the rollout of the medical marijuana program, the license fee for microbusinesses is much lower ($1500) and if the applicant isn’t chosen the license fee is refundable. This change addresses a major complaint among those who applied for a medical marijuana license and were ultimately disappointed to not be selected.
The criteria defined are intended to help bridge the gap for the many people that want an opportunity to exist in the industry but didn’t have the financial resources to participate in the medical marijuana program.
Legal Missouri 2022 Campaign Manager, John Payne, explains, “There is a minimum of 144 micro licenses guaranteed in the amendment, with two-thirds of them as wholesale and one-third retail. Wholesalers will be able to both cultivate up to 250 plants and manufacture infused products. The retail micro-licenses will function in much the same way that current medical marijuana dispensaries operate, but will also have the ability to sell adult use marijuana.”
Perhaps the most debated topic regarding microbusiness licenses lies in interactions will the current market have with the newly licensed micro-businesses and what exact differences are there between these new storefronts and the existing ones. Payne said, “They [micro-businesses] will have lower fees than the comprehensive licenses, and the wholesalers will be able to operate like a combined cultivation and manufacturing license. The micro-licenses will only purchase from each other, which will ensure the wholesalers will have shelf space in the dispensaries.”
Does that mean there will be no interaction between already-established brands and new micro-businesses?
“The micro-dispensary licenses will only purchase from the micro-wholesalers,” Payne explained. “That does mean that the micro-wholesalers cannot sell to the comprehensive dispensaries, but any new cultivator is going to find it extremely difficult to get on shelves of established dispensaries. The existing dispensaries already have a product mix that they like, and although they may tinker around the edges, new cultivators and manufacturers are already finding it very hard to get shelf space.”
Describe the process of writing the amendment Payne stated, “No matter what we did, the new licensees were always going to be late entrants to the market, as we’ve had medical sales for more than two years now. That’s why we guaranteed the micro-wholesalers outlets for their craft products through the new dispensary licenses.”
Critics argue that Amendment 3 subcategorizes these smaller shops and effectively creates a secondary market within the industry, and could disenfranchise potential small business owners, by not allowing them to compete with well-established brands.
Payne disagreed with this idea stating, “As many cultivators coming into the medical market now can attest, battling for shelf space against well-established brands is very difficult. Newer dispensaries can always compete by finding underserved locations, but we want to ensure that these craft cultivators can gain a foothold in the market, and we believe this is the best way to accomplish that. The main advantage of a lottery is that everyone has an equal chance in the process. There are advantages to a merit-based application as well, but those applications are costly to prepare and could price out the very people we hope to include with the micro-license program.”
It is also important to note, that while there is separation between the markets, there is also opportunity for microbusiness licenses to expand. Engrained in Amendment 3 is a requirement that as new comprehensive facility licenses become available, 50% of those licenses must be awarded to operational microbusiness facility operators.
“The department shall award by lottery at least fifty percent of any new licenses available to satisfy the minimum requirement to applicants who are owners of a marijuana microbusiness facility that has been in operation for at least one year and is in good standing with the department and is otherwise qualified for the license.”
Less than a month away from election day, one thing is certain, the vote for Amendment 3 will be of monumental importance to the direction of the cannabis industry in Missouri.