Missouri adult-use cannabis measure would exclude minorities, critics say

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(This story is part of a series examining state ballot initiatives as well as key issues and races that voters will consider on Nov. 8.)

 In a departure from activist-led and -funded legalization campaigns, the Missouri cannabis industry is the chief bankroller of the adult-use legalization measure state voters will weigh on Nov. 8

Critics charge that the ballot initiative, as written, would exclude minorities and give dozens of existing medical marijuana operators in the state a head start over smaller businesses and new entrants – essentially creating a monopoly situation.

Like the legalization laws that have passed in 19 other states, Missouri’s Amendment 3 would legalize the possession, consumption, purchase and – with some restrictions – cultivation of cannabis for anyone 21 and older.

The initiative would also automatically expunge most nonviolent marijuana offenses, and it would do so via an amendment to the state constitution rather than a non-constitutional statute that could be amended by the state Legislature.

Polls suggest no slam dunk

Though the pro-Amendment 3 campaign, called Legal MO 2022, has spent more than $6.2 million to date – versus zero in opposition spending, according to the campaign finance records released Monday – recent polling suggests Election Day might be a crapshoot.

Despite 66% of voters approving a medical cannabis measure in 2018, two of three recent polls predict a relatively close race.

Part of the reason might be shaky support from otherwise-reliable quarters.

Predictable opposition has come from Republican Gov. Mike Parsons and the state prosecuting attorneys’ association.

Both blasted the measure as detrimental to public safety.

But, in another  departure from how legalization efforts have played out in other states, the Missouri Democratic Party has declined to endorse Amendment 3 on much different grounds, saying it “may negatively impact minorities, people of color, and low-income earning Missourians.”

The group argues that Amendment 3 would make “it difficult for those who do not currently have a license to enter the industry.”

In a scathing op-ed urging Black people to vote no, the historically Black St. Louis American newspaper went further, denouncing Amendment 3 as “sinister” and calling many of the existing MMJ operators “monopolistic.”

In a statement to MJBizDaily, John Payne, Amendment 3’s campaign manager, pushed back, pointing to the higher number of existing MMJ licenses in Missouri than both Illinois and New Jersey when legalization came to those states.

Both markets, he noted, are dominated by the country’s biggest multistate operators, which do not have the same footprint in Missouri.

“New Jersey had only ten medical marijuana cultivators, compared to more than 60 here in Missouri, despite the fact that New Jersey has a nearly 50% larger population,” Payne said via text message.

In previous comments to the Springfield News-Leader, Payne said the measure would ensure “one of the most competitive markets” in the country – a claim based on the “minimum of 144 new business licenses” that state regulators will be on notice to issue, he pointed out to MJBizDaily.

Whether that’s true, some of those new competitors – including the social equity applicants – could have to wait to enter the market for as long as two years, critics noted.

Rejected applicants up in arms

The state received thousands of applications for the total of 338 licenses issued under the MMJ program, a process that rejected applicants have denounced as opaque and suspicious, if not rigged.

Nevertheless, If Amendment 3 passes, existing vertically integrated MMJ businesses – called “comprehensive facilities” in Missouri – would be able to apply for new “comprehensive permits” that would allow them to operate in both the medical and adult-use markets as early as Dec. 8.

However, the measure also restricts the number of licenses granted to a single business entity “under substantially common control, ownership, or management” to no more than 10% of the statewide total.

As St. Louis magazine reported, it is “widely assumed all” existing medical licenses will attempt to convert to recreational.

The state health department is required to process those permits within 60 days.

Currently absent from the Missouri market, however, are most of the biggest names in U.S. marijuana.

Major multistate operator Columbia Care – which agreed to be acquired by rival MSO Cresco Labs earlier this year for $2 billion – does have a presence in Missouri.

Other large companies, such as Proper and Greenlight, founded by Missouri residents, are more local, though other out-of-state operators have openly acknowledged interest in the Missouri market.

As for smaller businesses and new entrants to the market, applications for “microbusiness” licenses – reserved for those who fulfill one of several qualifications, including an income and net-worth cap and certain marijuana-related offenses – would be unavailable until six months after Dec. 8.

And the health department would not have to accept applications until another three months after that.

The state would also need to grant a total of only six microbusiness licenses in each of the state’s eight congressional districts.

Those microbusinesses would not be able to cultivate more than 250 cannabis plants.

They would also be barred from selling their products in existing dispensaries.

And they could wait up to 548 days to receive their permits. Those restrictions, and the head start promised to existing big cannabis companies, add up to a “nefarious” ballot measure, said Democratic state Rep. Wiley Price IV.

As for the equity provisions, he dismissed them as “nil, all phoned in at the last minute.”

“It’s just white people white people-ing,” he told MJBizDaily.

“It’s, ‘Hey, you, do you want some scraps? Want some scraps to take home to your family?’ It’s very blatant.”

Low taxes

Taxes under Amendment 3, meanwhile, are low compared to other states: Adult-use marijuana would be subject to a 6% state tax and an optional 3% local tax.

A 4% state tax on medical cannabis would remain unchanged.

But the significant head start Amendment 3 gives the existing industry – along with the industry’s generous support – and the harsh criticism of the microbusiness proposal is what’s giving state Democrats pause and fueling much stronger critiques from opponents such as Price.

The state chapter of the NAACP, for example, is urging voters to reject the measure, claiming that it would enshrine “the permanent exclusion of minorities from the cannabis industry in the state of Missouri” in the state constitution.

“Virtually the only support for the Amendment 3 campaign comes from a small group of medical marijuana licensees and their associates,” former Republican Lt. Gov. Peter Kinder, who opposes the measure, told the Missouri Independent.

That’s an exaggeration, as Amendment 3 has received endorsements from labor as well as most national legalization advocacy groups, including the national chapter of NORML.

Key financial backers

At the same time, holders of comprehensive permits in Missouri’s existing limited-license market are also Amendment 3’s chief financial backers, campaign finance records show, with a leading donation of $447,000 from New Growth Horizon, the advocacy arm of Proper Brands, products of which are available statewide.

Other major funders currently in Missouri’s cannabis market include Organic Remedies, which has donated $305,000; Green Four Ventures, doing business as Clovr Cannabis, which has donated $250,000; and $216,750 from Midwest Roots, which claims to operate the state’s biggest cultivation and extraction operation in the state.

There are only about 200,000 registered medical cannabis patients in Missouri, out of a population of 6.1 million, according to state health department data.

These patients can shop at 193 licensed dispensaries, which are supplied by 49 licensed cultivation and 75 licensed manufacturing facilities, according to state data.

Medical cannabis sales are projected to reach as high as $450 million by the end of the year, according to the 2022 MJBiz Factbook, and $500 million-$600 million by the end of 2023.

Controversially, when licenses were first awarded in early 2020, at least 50 went to entities connected to or controlled by MSOs.

Despite clear instruction in the state Constitution that no entity can hold more than five dispensary licenses, critics point out that some companies claim to own more than a dozen.

Ownership records, meanwhile, are withheld by the state, leaving citizens to trust state regulators at their word, as NPR has reported.

There’s also a racial disparity: Of the 338 licenses that initially went out, only three went to Black people – this in a state that’s 12% Black, Price said.

“Amendment 3 literally locks up the industry and locks out the competition,” he said.

“I think (Amendment 3’s backers) thought if people had nothing, they would accept anything.

“It’s like seeing a group of people starving and then offering them crap sandwiches.”

Chris Roberts can be reached at chris.roberts@mjbizdaily.com.