ST. LOUIS (AP) — Missouri has awarded licenses for the state’s burgeoning medical marijuana industry, but it’s a safe bet that some of those licenses will be sold before dispensaries open later this year.
Over the past several weeks, the Missouri Department of Health and Senior Services has awarded licenses for various aspects of the industry, such as testing, transporting and growing. Last week, the department announced 192 dispensary licenses.
The health department permits licenses to be sold so long as the sale is approved by the department. At least one license may already be on the market, according to a report in the St. Louis Post-Dispatch. The newspaper obtained an email from a broker who asked an unsuccessful applicant if the company was open to purchasing from one of the winners who was “open to selling” a license.
The broker, Shya Mousavipour, did not return an email message from The Associated Press.
Missouri voters made medical marijuana legal in a November 2018 vote, but because the drug must first be grown at approved sites and tested, sales aren’t expected to begun until this summer.
Selling state-issued marijuana licenses may be new to Missouri, where the industry is just getting off the ground, but it’s been common for years in other places, said Hadley Ford, CEO of New York-based iAnthus Capital Holdings Inc. The firm owns cultivation, processing and dispensary facilities, including 30 dispensaries, in 11 state.
Ford said some licensees were willing to sell because they lacked the capital to build a successful business. Selling the license offers a chance to make a profit from their investment.
“It’s tough to raise money in cannabis,” Ford said. “Banks don’t lend to it. The typical providers of equity capital in our industries aren’t available. A lot of those license owners then turn to existing operators who have better access to capital. You’ll see sales of licenses, partnerships, partial sales, things like that.”
Ford’s firm has won some of its licenses and purchased others. He said the obvious preference was to win a license because “if you’re acquiring it you have to pay the owner of the license some type of premium for their time, effort and treasure.”
The advantage of buying from an awardee is that a company doesn’t risk investing tens of thousands or even hundreds of thousands of dollars pursuing a license, only to be denied.
Competition for licenses has been intense in Missouri. The health department received nearly 1,200 application for the 192 dispensaries. Projections are that Missouri’s marijuana industry will exceed $100 million in sales by 2025.
Health department spokeswoman Lisa Cox said in an email that requirements must be met for the sale or transfer of licenses. Sales of licenses won’t be considered until January 2021.
The licensing process has drawn criticism by some who were turned down. Several applicants have cited what they called inconsistencies and irregularities in the scoring process used to award Missouri licenses.
The health department is concerned enough about the potential for lawsuits that it solicited bids for attorneys who could help defend the state in legal action, the Kansas City Star reported recently.