Breaking down the numbers: How are Missouri’s marijuana businesses faring?
The Missouri marijuana industry is rapidly expanding, with the majority of operators projecting to reach profitability by the end of 2023, roughly three years after the state’s first legal marijuana sale.
Recently, Greenway issued its first Missouri Cannabis Industry Operator Survey. The survey posed questions to operators of licensed marijuana businesses in the state regarding the growth and success of their businesses from the inception of Missouri’s medical marijuana program through the first month of adult use sales in February.
Greenway asked operators of cultivation, manufacturing, and dispensary businesses to answer 20 questions about their companies. The respondents represent a vast cross-section of the industry, from independent licensees to verticals representing some of the state’s largest brands and companies.
Profitability
63% of operators responding to the survey reported their company had achieved profitability, while 32% projected reaching profitability by the end of 2023. Only 4% of respondents reported not achieving profitability, with no projection to achieve profitable margins by year’s end.
Budgetary Insight
In terms of operational budgets for Missouri businesses in 2023, 11% of those surveyed reported a budget between $1.1 and $3 million. 18% of respondents reported a budget between $3.1 and $10 million, while the majority of operators, 43%, reported a budget between $10.1 and $20 million. Additionally, 20% of operators responding will have an allocated budget between $20.1 and $50 million, and 8% of respondents stated that their operating budget will exceed $50 million for the year.
Projections
Before adult use legalization, 22% of operators reported that their companies did not meet projections overall, while 38% reported that they did not meet projections initially but have since recovered. Another 18% reported meeting projections on pace to date, and 22% of the businesses responding reported exceeding projections.
Since adult-use legalization, the industry has performed very well, with 61% of operators reporting exceeding projections, and 34% reporting meeting projections on pace. Only of those surveyed 5% reported not meeting projections overall.
How Operators View Missouri
Regarding the industry’s perception of the state, for those with operations or interests in other states, 43% of operators surveyed rated Missouri’s industry as highly favorable, while 57% rated it as favorable compared to other states where they operate. This indicates that Missouri’s marijuana industry is perceived positively by industry insiders and speaks well to significant growth and economic opportunities, as well as the level of appeal to potential investors. While more established markets are growing stagnant, Missouri has become one of the most explosive growth states.
Overall, the data indicates that the Missouri marijuana industry is experiencing growth and success, with most operators reporting profitability and exceeding projections since adult-use legalization. This is a positive sign for the state’s economy, as the marijuana industry has been one of the state’s largest job creators since the onset of the pandemic and with adult use sales tax approvals across the state, the generated tax revenue will prove to be a huge boon for many localities.
Obstacles Ahead
There are still challenges to be addressed. Despite the industry’s success, some operators have not achieved profitability, and some have not met projections since legalization. The pandemic caused a majority of the state’s licensees to fall behind original timelines. For those that were able to meet initial deadlines and become some of the first operators in the state to meet the market, other problems emerged. The increased cost of construction, materials, shipping, hardware, and a bevy of other issues made the cost of success exponentially higher than most projected. In the time since, nearly every operator has felt the same sting of increased costs compared to original projections.
From the cost of labor to general inflation, nearly every aspect of producing or selling marijuana and marijuana products has become more expensive.
Additionally, regulation and compliance are critical factors in the industry’s success. Businesses face steep tax burdens in addition to other operational costs. While Missouri businesses will be able to take deductions on state taxes for costs associated with their licensed marijuana business this year, the disparity in traditional businesses and marijuana businesses on a federal level is still a substantial burden for legal marijuana businesses.
