Market compression has independent manufacturers taking stock

Rising costs, retailer markups, and brand consolidation are pushing standalone operators to adapt in Missouri’s evolving cannabis industry.

Greenway recently spoke to the leadership team at EmmaLeaf as the company pivots to wholesale amid increased market compression.

Missouri voters approved the state’s medical cannabis program in 2018, with licenses awarded beginning in late 2019 and the first dispensary sales launching in October 2020. Voters later approved adult use marijuana in November 2022, and sales began in February 2023.

Since then, access to tested and regulated cannabis products for both patients and adult consumers has grown rapidly. While this expansion has benefited Missouri’s cannabis consumers, the business side of the industry has become increasingly difficult to navigate. Consolidation, reciprocity agreements between operators, and rising operational costs have created new pressures on independent manufacturers and smaller brands across the state.

In the years since legalization, Missouri’s cannabis market has quickly evolved from opportunity-driven to competition-heavy. Multi-state operators and large vertically integrated companies have strengthened their positions, while smaller licensees have had to adapt to maintain shelf presence and profitability. For many smaller producers, survival has required creative pivots and operational flexibility.

EmmaLeaf, a Missouri-licensed marijuana-infused product manufacturer, represents one of those companies making strategic changes to stay viable. The company launched in December 2024 with a lineup of products that immediately resonated with consumers and patients. Within months, EmmaLeaf had distribution in more than 60 dispensaries statewide and strong sales momentum with its retail products.

Pocket Js and Jumbo Js, the company’s infused prerolls, became early favorites among customers. However, shifts in retail pricing, consolidation, and competitive positioning quickly changed the environment. One well-known dispensary group, after seeing EmmaLeaf’s infused prerolls outsell its house brand, raised retail prices on those products. “We don’t want to not sell to any retails, but when an item is priced $8 more than the MSRP, we don’t have a choice, consumers have no idea that this is a store decision and not a brand decision and it negatively impacted us in our sales forecasting,” said Tammy Puyear, Director of Sales and Marketing for EmmaLeaf.

Additionally, changes among retail operators created additional challenges as established dispensary partners were pushed to reorganize store shelves to prioritize in-house products, Greenway was told. In more than one case, that decision displaced several independent manufacturers, including EmmaLeaf, from more than a dozen dispensaries, Puyear said.

These changes were not unique to one brand. Across Missouri’s market, small and mid-sized manufacturers have reported similar issues with access and pricing. As consolidation increased, stores that once ordered heavily from third-party manufacturers reduced those orders or stopped altogether, focusing instead on their vertically integrated products.

Some operators also told Greenway about difficulties with the pricing of wholesale plant material and how that affects retail pricing. In some cases, higher wholesale costs have pushed product prices upward, making them less competitive. Employees at EmmaLeaf said the company had intentionally kept its pricing lower, but some dispensary operators and retailers substantially marked up the MSRP to make their in-house brands appear more affordable by comparison.

   

Other businesses described situations where popular products were removed from shelves or ordered in smaller quantities than before. In several cases, retailers later told operators their products were not selling as well and requested lower wholesale prices. However, multiple manufacturers reported that in those instances, dispensaries were steering customers toward in-house brands or alternatives, which reduced sell-through and created the appearance of lower demand.

With a full-service facility and steady production capacity, EmmaLeaf began to feel the strain of those market forces. As retail orders slowed and the statewide price of distillate dropped, inventory started to accumulate. “It’s so unfortunate that we had to temporarily shut down retail production, but we were sitting on inventory and didn’t have the stores purchasing enough to keep going at that rate. We had to decrease our headcount and reconfigure what our facility should and could be doing to sustain ourselves,” said Paul Schenck, Chief Operating Officer for EmmaLeaf.

Instead of reducing operations entirely, the company shifted direction. For the remainder of 2025, EmmaLeaf has focused on expanding its wholesale business and pursuing tolling opportunities for other operators. These changes allow the company to keep production active and maintain relationships with partners throughout the supply chain.

EmmaLeaf has also increased its production of bulk specialty ingredients such as isolate, diamonds, and sauce, products used by other manufacturers as components for finished goods. By supplying these materials to other manufacturers, EmmaLeaf has been able to remain engaged in the marketplace even as retail sales slowed.

“We have the facility and the capacity to essentially become a factory for bulk products, and we’ll do what’s necessary to survive current market conditions, but we’d love to get our retail products back into production and back on store shelves,” said Puyear. “We’ve built a great reputation for ourselves with biomass providers, our wholesale customers, and the retail stores. But with this pivot, we have to make sure we’re sourcing biomass with a critical eye to provide what we need in terms of yield and price to make the specialty products go smoothly in production. We can’t produce liters and liters of distillate and expect to sell them as quickly as we might have a year ago, there’s too much of it in the market at the moment and sitting on finished products without the ability to pay for the biomass that went into them. It’s a delicate balance not only for us, but for other operators who are facing these same challenges.”

This kind of flexibility has become essential for many Missouri operators. The rapid expansion of the market has been followed by a period of recalibration, as retailers and manufacturers adjust to consumer patterns, competitive pricing, and new ownership structures.

Even national companies have been forced to reconsider their position. Earlier this year, MariMed announced its decision to exit Missouri’s market to focus resources elsewhere, citing their partnership with a non-vertically integrated licensee as a sticking point.

For regional and local manufacturers like EmmaLeaf, those moves reinforce both the volatility and opportunity within Missouri’s maturing cannabis sector.

Missouri’s cannabis industry continues to evolve, and the long-term balance between large operators and independent producers remains uncertain.

While the early years of legalization offered room for nearly every business model to thrive, today’s market reflects a more competitive environment where adaptability, efficiency, and partnership may determine survival.