Despite supply hurdles, Missouri posts second strong month of recreational cannabis sales
Missouri dispensaries sold a little more than $126 million in recreational and medical marijuana in March, eclipsing the $103 million figure the state posted in February.
March’s numbers break down to $93.5 million in adult-use cannabis sales and $32.7 million in medical sales and put Missouri on track to sell more than $1.4 billion in the first 12 months of recreational sales, according to a release from the Missouri Cannabis Trade Association.
This strong demand has led to a tighter cannabis supply as growers in the state adjust to meet consumers' needs, said Mitch Meyers, one of the founding partners of BeLeaf Medical Group, which operates three cultivation facilities in the state.
“We have enough product,” she said. “Yes the price is going up a little bit, but you’re going to see that level out and come back down over time.”
Higher prices haven’t been noted that broadly, said Madeline Scanlon, a cannabis insight manager at Brightfield Group, which tracks the cannabis industry.
“There has not been a significant shift in our upper or median quartile or lower quartile from February to March,” she said. “It’s likely happening on a micro level where it is noticeable, possibly as a consumer is shopping.”
Scanlon mostly looks at data on the market as a whole and on a month-to-month basis, which has some lag built in. When looking more granularly, she did note the highest-priced cannabis flower has seen some increase in price.
Supply challenges for a state transitioning from medical marijuana markets to recreational markets are par for the course, said Scanlon.
“No state has truly figured out how much cannabis is needed to keep the legal cannabis consumer pool happy,” she said. “Either it’s too much, too little, the prices are shifting around in ways that are just not of a normal market.”
The squeeze on Missouri’s recreational cannabis supply comes partially as a result of the state’s more than 60 cultivators not fully developing the facilities when there were only medical sales, said Jack Cardetti, spokesman for the Missouri Cannabis Trade Association. He explained Growers knew the demand would increase sharply after Missourians passed Amendment 3, which legalized recreational marijuana sales.
“What you had was a lot of the cultivators who were not growing at their full capacity, because of the severe oversupply in 2022, that started to build those rooms out or rooms that had been dormant they started growing in,” he said.
In 2022, growers oversupplied the medical market by 92,000 pounds, Cardetti said. The current cultivators in the state are only producing about 40% of the licensed cultivation capacity, he added.
While cultivators knew demand for cannabis would spike if the state moved to recreational sales, it wasn’t guaranteed voters in Missouri would pass the measure to allow them, Meyers said.
“It was not a slam dunk on that vote, it was rather close, we all think,” she said. “So had we have all built out all that capacity, we would be sitting here with way too much product or you’d be mothballing facilities and laying people off.”
Adding growing capacity requires more capital, possibly new approvals from the state, and time for new plants to grow, Meyers said.
“Between the time you pop a seed and you harvest a plant, you’re looking at four months,” she said. “So even if we had all the capital we needed today to expand, we still have supply chain issues with HVAC equipment and LED lights and racks. You can’t get that in a matter of weeks.”
Meyers expects the current supply challenges will begin to ease in the next few months and be completely alleviated in the fourth quarter of the year. “And in between that period of time I don’t really think you’re going to see that big of a problem,” she said. “You’re not going to see prices double overnight because there are 200 dispensaries and we all have to be competitive.”
And this, to Meyers and Cardetti, is a positive of the Missouri market compared to neighboring Illinois, which has about a third of the cultivators of the Show-Me state.
“It’s cheaper to begin with, but our tax rate is about a third of what Illinois' is,” Meyers said. “It adds up at the end of the day.”