Last week Missouri’s cannabis regulators issued a stark warning to licensees who, after holding their license for more than a year, are not yet up and running.
“We have emphasized with licensees for a while now that extensions beyond September 30 are very unlikely to be approved,” said the April 22 Guidance Letter from the Department of Health and Senior Services. It continued: “We are mindful of the fact that granting an additional year to a licensee will always be problematic since we could have revoked that licensee at the one-year mark and replaced them with someone who could meet that obligation.”
As of April 28, 21 of 60 licensed cultivators, 12 of 85 licensed manufacturers, and 91 of 191 licensed dispensaries were certified to operate by Missouri regulators. While the state has over 122,000 registered medical marijuana patients, cannabis supply remains tight and wholesale flower prices hover around $4,500 a pound as cultivator license holders have struggled to put together capital investment with a 51% local ownership, numerous cultivators have told Grown In off the record.
The 51% local ownership rule, which was inscribed in the Missouri constitution through medical marijuana’s legalization, has become a major point of contention for cannabis operators. As a result, many operators are heavily lobbying to strike the ownership rule through a proposed recreational use referendum currently being drafted by state cannabis advocates and operators.
A DHSS spokesperson also provided Grown In with notice of three new license revocations.
|TC AppliCo LLC
|Blue Arrow Holdings LLC
Meanwhile, Missouri operators are trading stories of convertible debt offers from large out of state operators. Convertible debt is a private loan made so that if the terms are not met by the borrower, or if the note is still held after a certain date, the lender receives an agreed upon equity stake in the company. Missouri license holders unable to raise enough in-state capital, could offer such convertible debt, with the conversion pending an expected change of ownership rules in a new referendum.
The new DHSS guidance would put a major kink in that kind of plan, potentially revoking hundreds of licenses this fall.