Mark Toigo, CEO of Pennsylvania-based and vertically-integrated cannabis company Organic Remedies, is suing to overturn Missouri’s residency requirements. Organic Remedies MO Inc., where Toigo is a minority owner, has the license to operate one cultivation site, one manufacturer, and three dispensaries.
Last month, Missouri’s medical marijuana program director Lyndall Fraker was hoping for “25 to 30” cultivators to be operational by 2021. As of January 21, only 15 Missouri cultivators passed the state’s commencement inspections. Fraker told Grown In in early December that Missouri licensees that did not commence operations by the January 2021 deadline would be reviewed on an individual basis. Currently, there are only four cultivators able to sell grass in the state, leading to inventory shortages at stores.
“This is a unique situation where an early start may go further than in other states we have looked at,” says Alex Gastevich, whose Chicago-based family office was an early investor in Green Thumb Industries and Cresco Labs. “Due to the delays in raising capital, residency requirements, and lawsuits over the issuance of licenses, we are looking for operators that are vertically-integrated and can get out ahead early to build customer loyalty.”
“One of the challenges we have had is managing expectations of the timeline set by the regulator relative to how these supply chains are developed,” said Vishal Rungta, co-founder of Ann Arbor-based multi-state operator C3 Industries, which through its connection with Missouri-based QPS Missouri Holdings LLC plans to open five dispensaries and one manufacturing facility in the state.
Neighboring Illinois, for better and worse, did not have residency requirements for initial license holders. Today, a small handful of multi-state operators with valuations well into the billions dominate marijuana market share in Illinois.
Effective January 1 of this year, license holders who become operational are able to sell their businesses. Consolidation of cannabis companies that cultivate, manufacture and sell the product are of particular interest to both in and out of state investors.
Dussold added that many prospective Missouri-based investors are content with waiting to put money in at a later stage, when there is revenue and perhaps a shorter timeline to potential adult-use expansion of the program in 2022.
“In any of these buildouts, you need a lot of capital that needs to come in with quick terms and on scheduled timelines,” said John Payne, a founding partner of Amendment 2 Consultants, and who advocated for the passage of the 2018 law. “Otherwise, you are delaying construction as the crews will stop working if they are not getting paid.”
The Missouri Department of Health and Senior Services released a list of 29 deactivated marijuana licenses Friday, after Grown In inquired about a chart posted on the agency’s website in late January, and then taken down. The list includes nine revoked licenses, ten merged licenses, and ten surrendered licenses. DHSS did not explain why licenses were revoked.
The agency charged with overseeing the state’s medical marijuana program posted a chart on their website on January 21, 2021, titled, “Medical Marijuana Facility Licenses/Certifications Surrendered vs. Deactivated” that showed 9 surrendered licenses and 14 deactivated. The chart was taken down a few days later.
Below is a list of the deactivated licenses.
“We have issued licenses when there is an opening,” said Cox, but she did not provide examples of newly awarded licenses. Updated lists of license winners can be found on the DHSS website, but the list lacks award dates.
The chart, “was a draft document mistakenly posted in a batch of other documents a few weeks ago. We haven’t finalized a chart for this information to repost,” said DHSS spokesperson Lisa Cox on Friday.
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