DHSS released the first draft of rules on how to obtain a medical marijuana ID card to possess and/or grow weed. Megan Bridgeman, USA TODAY Network
Last week, Missouri officials released an early version of the application that companies wanting a medical marijuana business license must complete in order to legally sell, grow, process or transport cannabis in the Show-Me State.
Those who remember filling out a ’90s-era two-page flyer to get an after-school job at Taco Bell might find this application a tad more complex. The proposal, not yet finalized by the Department of Health and Senior Services, runs to 144 questions.
In a newsletter sent early Friday, a trade association for the Missouri marijuana industry said, “while these questions could change, they provide the most detailed look yet of what the department wants to see from the applicants.”
The questions are divvied up into 10 topics, each topic matching one of the criteria for medical marijuana businesses outlined in the text of the Missouri Constitution. Each topic, and questions within each topic, will be assigned a scoring weight.
Some questions will be more important than others, but weights have yet to be assigned, said DHSS spokeswoman Lisa Cox on Friday. Even the state’s “Evaluation Criteria Scoring Table” — a scoring key with stair-step numerical values for “unsatisfactory,” “satisfactory,” “superior” and “distinctive” answers, among other items — is still a proposal.
The state just named 20 members of the public to a series of advisory committees that will help finish writing the applications and decide how important each question is. Their work runs from April 17 to May 1.
Early last week, one committee member, Greene County Sheriff Jim Arnott, reminded the public that medical marijuana rules and the licensing process are still in flux. The state still has about seven weeks to finish up the rules.
“Whatever anyone reads about it at this point, doesn’t make it so,” Arnott said.
After businesses start filing their applications beginning Aug. 3, a third party will score them — something members of the public asked for during open forums DHSS held earlier this year. The state is still working on a request for proposals from organizations who could potentially score the applications, Cox said, but it is expected to be published soon.
So what’s on that application? Here is a News-Leader FAQ covering some — not all — aspects of the proposed application. Read the whole thing at medicalmarijuana.mo.gov.
Does an applicant need a certain amount of cash on hand to get a cannabis business license?
Question 19 asks applicants if they have access to certain amounts of liquid capital. The amounts proposed so far are at least:
- $500,000 for cultivation applicants
- $300,000 for dispensary and manufacturing applicants
- $200,000 for testing facility applicants
- $150,000 for transportation applicants
That’s on top of the nonrefundable licensing application fees, which are not proposals but actually fixed in the Missouri Constitution.
- $10,000 for cultivation facilities
- $6,000 for dispensaries and manufacturing facilities
How does the state plan to measure the character and background of would-be marijuana business owners?
The current proposal would have every key “principal officer” or “manager” file one letter of recommendation related to that person’s “character” and a separate letter of recommendation vouching for that person’s “veracity,” or truthfulness.
The state also wants a resume or CV and other career documentation, including information as to whether applicants have run a business for five years or longer. Applicants will be questioned in detail about whether they owe any taxes, whether they were subject to any government actions related to their professional life, or marijuana regulations in other states, whether any owner or manager is a convicted felon, and whether there’s been any trouble with the DEA or a state-level drug regulator.
Does any of that stuff give consideration for businesses owned by women, minorities or veterans?
A pair of Democratic bills that would mandate a 10-percent scoring bonus for women and minorities isn’t moving forward in the GOP-controlled legislature. But the state could ask applicants to outline whether they have “a plan to address diversity” among principal officers of their marijuana business. The state could also ask applicants to describe how their key people “reflect the community” where their business could be located. Draft questions also include how the business plans to recruit its own employees and whether it will train employees on “diversity awareness.”
Will these businesses have to answer detailed questions about their business plans?
The current form of the application asks myriad questions about business affairs. One question simply asks whether owners and managers have experience with business operations. Another asks if the business will be operational with in a year of winning one of the coveted licenses.
Other potential questions pertain to whether businesses have secured five types of insurance policies. There are also questions about whether business owners have experience with highly-regulated retail sales for items such as pharmaceuticals. Questions about inventory management — from a macro level down to individual plants — along with record-keeping, security and ways to prevent diversion are also among the proposals.
Businesses could be asked if they have prepared their own market analysis; how they intend to become profitable; and to account for strengths, weaknesses, opportunities and threats to their business models.
Questions about several types of staff training, recruiting and staff positions are included in the application draft. For example, dispensaries would be asked if a pharmacist or physician is available for clients. The draft application also asks how many full- and part-time employees the businesses might employ, and whether they’ll get health insurance through the company.
They could also be asked very specific questions about the number of customers they might have over their first two years of operation — an issue that’s sparked some controversy in recent days in the wake of a University of Missouri-Columbia study that calls into question how many growers and dispensaries Missouri will need to service the new medical cannabis system.
Mizzou’s study projects 26,000 qualifying patients will need to be served. New Approach Missouri, which backed Amendment 2, along with MoCannTrade, a medical marijuana business association formed since the amendment passed, project a figure of 120,000 to 200,000 or more patients.
Monthly sales estimates might be part of the final application, along with estimated expenses. Separately, two years of monthly revenue forecasts could be among the requirements, along with a financial plan that would account for the difficulty in getting an FDIC-regulated bank to work with a marijuana-related business.
I’ve heard banking is a big issue for medical marijuana businesses. What’s up with that?
Remember, Amendment 2 openly defies the federal government’s prohibition of marijuana as a Schedule I controlled substance. Same goes for other cannabis laws in 33 states and the District of Columbia, whether they allow for medical or full adult-use marijuana.
That prohibition extends from users to providers, both legal and illegal, and to the money exchanged. Even CBD businesses, which claim their products don’t contain enough THC to get somebody high, have been dropped by banks — including in Springfield.
Thus, Missouri’s marijuana license applications appear likely to deal with that issue, which has led to marijuana businesses stockpiling cash in other states.
It’s not something Jefferson City can take care of on its own, say bankers.
“It will take a fix at the federal level to allow banks to do business with cannabis-related businesses,” Max Cook, president and CEO of the Missouri Bankers Association, told the News-Leader in a recent email.
Uncle Sam’s hand touches every part of banking. Even when a bank is chartered by its home state, as opposed to federally, the Federal Deposit Insurance Corporation has power over the bank, Cook explained. National banks are subject to the federal Office of the Comptroller of the Currency.
“The federal regulators can impose cease-and-desist orders, civil money penalties (and other consequences), Cook said. “These penalties can be in the millions of dollars. Bankers most often aren’t willing to take those risks.”
Late last month, Missouri bankers met to start learning about how they fit into the system, according to the association.
Do people who want to operate a marijuana dispensary have to tell the state how much they’ll charge?
Question 69 on the draft application asks how the business will set pricing.
The size of the future Missouri medical marijuana market is a variable likely to determine where supply, meeting demand, sets pricing. So far, we have educated guesses like the MU study referenced earlier in this story or comments made by industry types.
Springfield-based business owner Kevin Ellison, whose CST Solutions company expects to provide security services for marijuana businesses, told the News-Leader this week that he has several objections to the data underlying MU’s study. Last month, he said Missouri’s marijuana market could clock in at $100 million during its first year — a smaller estimate than some others.
Meanwhile, factors like weather, outdoor growing season harvest and the national patchwork of regulations affect the overall price of cannabis.
In a recent weekly report, data collector Cannabis Benchmarks outlined wholesale pricing averages that may come as a surprise to folks acquainted with street weed deals.
The all-United States average wholesale price for cannabis stands at $1,068 per pound, Benchmarks reported. In medical marijuana states with active programs, Benchmarks reported a wholesale rate of about $1,364 — or about $85 per ounce, before retail markup. Recreational states have a wholesale rate around $903 per pound.
Remember, state licenses for Missouri dispensaries have yet to be awarded, and Missouri’s law requires all cannabis sold in the state to be grown in the state. There’s no legal way to import or export the plant.
But Amendment 2 — and potential questions on the business license application — gives weight to owners or managers with experience in legal marijuana states where data has been generated so far.
In a news report written about three weeks before Missouri voters adopted medical marijuana, the major marijuana information website Leafly predicted that nationally, “prices will likely continue to fall as industrialization and consolidation drive production costs down in maturing markets.”
But Missouri’s market is just getting started.
The latest on Missouri medical marijuana:
MU study: State doesn’t need as many pot dispensaries as Amendment 2 requires
Amid rapid shifts, Springfield employers respond to medical marijuana
Missouri posts draft rules for medical marijuana dispensaries, grow facilities and more
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