A Goal without a Plan is Just a Wish: A Breakdown of the Medical Marijuana Licensing Process in Missouri

In what feels like eons ago, Missouri became the 32nd state in the country to legalize medical cannabis when voters approved Amendment 2 on the November 6, 2018 ballot. The Missouri Department Health and Senior Services (DHSS) began accepting license application fees for medical cannabis cultivation, infused product manufacturing and dispensaries on Jan. 5, 2018. There is a $10,000 fee for a cultivation application, a $6,000 fee for a medical cannabis-infused products manufacturing application and a $6,000 fee for a dispensary application. Each application must be filed separately, however, applicants are allowed to apply for multiple permits. Per the language of Amendment 2, the Missouri DHSS plans to issue 60 cultivation, 86 manufacturing and 192 dispensary licenses.

The licensing process is expected to be competitive and the stakes are high. New Frontier Data projects Missouri’s annual sales of medical cannabis to reach $111 million, with an estimated 2,800 cannabis-related jobs created in the state by 2025 . While according to a Marijuana Business Daily projection, Missouri’s medical cannabis program could generate $175 million-$275 million in annual cannabis sales within several years of the state’s first dispensary opening . The measure allows patients with cancer, HIV, epilepsy and other conditions access to marijuana. It also permits use by veterans suffering from post-traumatic stress disorder. The measure will tax the sale of medical cannabis at 4 percent and allocate revenue from the tax toward providing healthcare services for military veterans.

Permit applications were released on the DHSS website on June 4, 2019. Submissions will occur via an online portal from August 3, 2019 to August 17, 2019. Each application consists of roughly 89 questions, 32 of which pertain to the applicant’s “proposed business plan.” All applications will be graded by an independent, third party scorer. Some questions are as simple as answering “yes” or “no.” Other questions are open-ended, such as: “Provide an analysis of the strengths, weaknesses, opportunities, and threats associated with the proposed business and explain how you intend for the business to become successful.”

All applicants will have to provide details of their general business plan: a market analysis, if they have insurance, expense and revenue projections through two years and a timeline for hiring and training employees. They’ll also be asked for details about how they will set their prices for marijuana, store it, dispose of their waste and keep records of it all. Applicants will be required to describe the financial plan for the business, while specifically addressing the long-standing industry reality that FDIC banks and NCUA insured credit unions currently do not provide loans or financing to the legal cannabis industry and details regarding how financial transactions will be completed.

The state also wants to know how the business will impact the community, how many full-time jobs their businesses will create and what their hourly wages will average. They’ll also have to describe how their top managers “reflect the community” in which their business would be located and describe their plan to “address diversity” in their top management. Cultivation and dispensary applicants will also have to plan for making medical marijuana available to low-income patients.

See below for a listing of sample questions included in the business plan section.

 

1. Describe your plan to address diversity, such as individuals belonging to a racial minority group as defined in section 37.013(5) RSMo, women, and/or veterans in ownership and/or staffing.
2. Describe your plan to maintain an adequate supply of marijuana?
3. Describe your plan for making medical marijuana available to low income Qualifying Patients (only answer if applying for a Dispensary or Cultivation License).
4. Will anyone in ownership or management have, or are you retaining a contractor or consultant with, work experience in regulatory compliance? If yes, list all and describe.
5. How will the business recruit qualified employees?
6. How will the business become operational within 1 year of the license being awarded?
7. What is the plan for inventory management and tracking orders?
8. What is the plan for storage of marijuana?
9. What is the plan for accounting, including but not limited to, fiscal controls?
10. Provide an analysis of the strengths, weaknesses, opportunities, and threats associated with the proposed business and explain how you intend for the business to become successful.
11. Has a market analysis been completed for the business? If yes, provide.
12. Describe your estimated monthly revenues and expenses for the business in the first 2 years of operation. What are the estimates based on?
13. Including a timeline, what is your staffing plan for the business in the first 2 years of operation?
14. How will the business source non-marijuana products and equipment necessary for the business?
15. How will the business fulfill orders?
16. What is your marketing plan, including to whom, method of delivery, and costs?
17. How will the business set pricing, initially and thereafter, based on supply and demand?
18. What are the necessary steps that will need to occur for the business to succeed?
19. Describe the financial plan for the business. Specifically address financing if FDIC banks and NCUA insured credit unions currently do not provide loans or financing to the legal cannabis industry and how you will complete financial transactions.
20. Will the business offer health insurance for your employees?

 

Please contact Peter Prevot at pprevot@bridgewestcpas.com if you have any questions or would like to learn more about the business plan section of Missouri’s medical marijuana application.

 

Sources and Further Reading:

https://www.globenewswire.com/news-release/2018/11/07/1647258/0/en/Missouri-Passes-State-wide-Medical-Cannabis-Ballot-Measure.html
https://mjbizdaily.com/if-they-pass-state-cannabis-initiatives-could-lead-to-2b-plus-in-new-mj-sales-forecast-shows/