What to expect with the passing of Amendment Two.
With November’s passage of Amendment Two, growing, manufacturing, selling, and consuming marijuana and marijuana products for medicinal use has been legalized at the state level, paving the way for Missouri to experience the same economic boost seen by 30 other states around the country that have legalized and implemented medical marijuana programs.
“According to the state auditor, this program is expected to generate $6 million annually for local governments and $18 million annually for the state of Missouri,” says Jack Cardetti, a spokesman for Amendment Two.
The application process for infused-product, cultivation, and dispensary permits officially opens on August 3, 2019. With a non-refundable fee of $6,000, entities can apply for a medical marijuana-infused manufacturing or dispensary license. The application for a cultivation license is $10,000.
To date, more than 450 prospective license holders have pre-applied for permits, raising more than $3 million for the Missouri Department of Health and Senior Services. According to Cardetti, that money will allow Missouri’s medical marijuana program to be implemented without delay.
“To be involved in this industry, you have to be licensed by the Missouri Department of Health and Senior Services, and all activity can only happen amongst licensed businesses,” Cardetti says. “All the marijuana that is grown will be by those that hold cultivation licenses, and infused products will be made by those with infused product licenses. It will be sold by at least 192 licensed dispensaries, as Amendment Two requires the state to issue at least 24 dispensary licenses for each of our eight congressional districts.”
Once licenses are awarded, licensees will be required to pay an annual fee to the state — $10,000 per year for infused product and dispensary licenses and $25,000 for cultivation licenses. Cardetti also notes that Amendment Two specifies that those seeking licenses must be majority-owned by Missouri residents, ensuring that the economic benefits are largely kept in-state.
“This is a competitive bidding situation,” Cardetti says. “The Department of Health will analyze and score the applications, and the ones that are best will be awarded licenses. Even then, there will be competition within the market, which we think is good for patients. It will ensure patients get a good product at a great price.”
“It’s going to help local economies all over the state.”—Jack Cardetti, spokesman for Amendment Two
Lake of the Ozarks resident Paul Bocci represents Missouri Essentials, a 100 percent Missouri-owned group of investors with backgrounds in the medical industry and related fields. Missouri Essentials is hopeful that their applications will be approved and they’ll be awarded a cultivation license, a medical marijuana-infused manufacturing license, and five dispensary licenses. Although site selection is not yet complete, the dispensaries would be based around Central Missouri, and Bocci says they expect to eventually hire 40 employees for a growing facility in Waynesville.
“These are nice paying jobs,” Bocci says. “A chemical engineer to work on the manufacturing process, an operations director who has been involved with manufacturing, people from out of state with growing experience, and a number of other individuals. There are a lot of good paying jobs.”
Bocci also expects each dispensary to have a staff of five or six, many of them medical professionals who will counsel patients on the specific type of marijuana most helpful to their medical need. Amendment Two allows patients with nine medical conditions to qualify for medical marijuana. Other conditions may also qualify with a doctor’s approval.
Though there is not yet an official estimate of the number of jobs Amendment Two will create, an estimated $100 million worth of medical marijuana will be sold annually in Missouri. Those marijuana sales will be taxed, as would any other product in the state. For most local governments, sales tax is the leading revenue generator, Cardetti says. Funds go towards the most basic of municipal services, including police, fire, and other public safety measures. Other governments direct tax dollars to parks or other municipal services.
In an effort to both increase tax revenue and create new jobs in their communities, Cardetti says some cities are “rolling out the red carpet” to attract dispensaries.
“Under Amendment Two, no local government can ban medical marijuana facilities, but they do have the ability to regulate the time, place and manner of sales with planning and zoning oversight,” Cardetti says. “No facility can be located within 1,000 feet of a church, school, or daycare, but local governments can waive that requirement or reduce the setback. Every municipality will take a look and decide what works best for their community.”
Bocci says that Waynesville has been welcoming to the idea of a cultivation facility, which would be located in an industrial park. In addition to the warm welcome from city government, Waynesville is also an inviting location because it is home to many veterans with PTSD and many current or former factory workers who are using opiates for pain.
“These populations don’t have a lot of good options, but cannabis is one of them,” Bocci says. “That is what we are all about — it is all about the patient.”
In addition to a standard sales tax, revenue from an additional 4 percent tax on marijuana sales will be used by the Missouri Veterans Commission for health care and personal care services for military veterans and by the Department of Health and Senior Services to continue to administer the program to certify and regulate marijuana and marijuana facilities.
“It’s going to help local economies all over the state,” Cardetti says. “With more than 330 marijuana facility licenses, that is going to produce millions of dollars of economic benefit and opportunity.”
Though he hesitates to forecast how profitable the medical marijuana business will be for Missouri Essentials, Bocci says his research has shown that businesses can earn a 30 percent profit after taxes. But that profit comes as the result of years of effort, a heavy up-front investment, and some complications due to federal law, which still considers marijuana, including medical marijuana, illegal.
“It will take quite a while to become profitable,” Bocci says. “You’re laying out a ton of money. Because you can’t borrow from banks, it’s investor money, and the biggest risk is running out of money before you become profitable. You can be making money, but that doesn’t mean you’ve recouped your investment.”
Although there is possible legislation at the state and federal levels that could ease some complications for cannabis companies, Bocci says that those suddenly considering jumping into the industry with the passage of Amendment Two could be surprised by the nuances of the industry, the regulations, and the relationship with federal law.
“Because marijuana is still federally illegal, buildings that will be used for marijuana can’t have federally-insured bank loans,” Bocci says. “If you’re going to get involved in cultivation, you better be ready to put millions of dollars into it, from the cost of the property to licensing to operating capital. It could be $500,000 to $1 million. There is also a tax penalty called 280E that deals with drug trafficking, so you can’t deduct things like marketing costs and administrator fees. Taxes can become a big issue for you. If you’re just jumping into it now, it’s a little dangerous. This is a very complicated business, so you better have researched it.”
If you’re just jumping into it now, it’s a little dangerous. This is a very complicated business, so you better have researched it.—Paul Bocci, Missouri Essentials
Missouri Essentials has been discussing and planning for the legalization of medical marijuana since 2015. Bocci says when he first heard, many years ago, that medical marijuana was part of the solution to opioid addiction, the idea of substituting one substance for another didn’t make sense to him. When he started hearing from more doctors that states with legalized medical marijuana had fewer overdose deaths than states without, it hit close to home and inspired him to learn more.
“One of the major reasons I’m involved in this industry is because my sister died because of the opioid epidemic,” Bocci says*. “I want to get this medicine to the people who need it. I knew that if we sat down and designed it right, we could develop a good initiative, and this state can do it as well as anybody.”
While cultivation and manufacturing facilities and dispensaries may become very profitable to those who perfect the business, and increased tax dollars will improve communities, Cardetti echoes Bocci’s sentiments that Missourians ultimately gain the most benefit from Amendment Two.
“First and foremost, Missouri patients are benefitting because for the first time they can work with their doctor to determine what the best medical treatment is,” Cardetti says. “In some cases, medical marijuana will be the best treatment, and in some cases, it may not. This puts the doctor and patient back in charge of their health care.”
*Editor’s note: After publication it was brought to Jefferson City Magazine‘s attention that the source’s sister may not have died from the opioid epidemic.