Federal judge removes residency requirement for Missouri cannabis business owners
Late last week, a federal judge made an order that could dramatically change the development of Missouri's young medical marijuana industry.
Missouri voters authorized a highly regulated medical cannabis system almost three years ago. Voters backed a state constitutional amendment that made it mandatory for marijuana companies operating businesses like dispensaries, grow operations and manufacturing centers to be at least 51% owned by residents. Residents were defined as those living in the Show-Me State for a minimum of one year before applying for a marijuana facility permit.
But in a Thursday virtual hearing that only lasted from 10 a.m. to 10:07 a.m., according to federal court records and cannabis news site GrownIn, Judge Nanette Laughrey of the Missouri Western District ordered a permanent injunction against the residency requirement. (In late June, Laughrey blocked the state from enforcing the requirement with a preliminary injunction, federal court records show.)
When Laughrey's written order is issued — federal court records did not display the order at press time — Missouri marijuana companies will no longer need to comply with the 51% residency rule.
That opens the way for big cannabis corporations, often called "multi-state operators" by people in the industry, to directly enter Missouri's market. The plaintiff in the lawsuit that resulted in Laughrey's order, Pennsylvania investor Mark Toigo, argued in court filings that Missouri marijuana retail sales could be worth $175 to $275 million per year.
Multistate operators expected to move in to Missouri
Missouri represents a small chunk of change in a $12 billion national legal market, but multistate operators have already teamed up with Missouri owners to do business here. They're chasing revenues from some 150,000 state-approved marijuana patients who often pay $40 or more for a 3.5-gram portion of dispensary marijuana buds that would likely be priced more cheaply on the underground market. Meanwhile, the marijuana industry has also developed a wide range of other products like marijuana-infused edibles and tinctures.
Consider the example of Columbia Care. The company touts marijuana business permits in 18 jurisdictions in the U.S. and the European Union, including big states like New York and Virginia that are expected to transition to legal recreational marijuana systems in the near future. In its most recent quarter, the company reported $109.7 million in revenues and gross profit margins over 40 percent.