In February, the state of Missouri launched its recreational cannabis market. This was after voters in the state approved amendment 3 in November 2022, making Missouri the 21st state in the country to legalize adult-use marijuana. Almost two months later and the market is set to hit $1 billion in sales in its first year.
However, increasing demand from local and out-of-state customers as well as medical cannabis patients has greatly surpassed operators’ expectations, resulting in higher wholesale prices and product shortages.
In some areas, such as near the Kansas border, retailers have observed significant increases in foot traffic since recreational sales were launched. In the southwestern region of the state, consumers from Illinois have been crossing the Mississippi River for St. Louis marijuana, which is said to be more affordable. Of the eight states bordered by Missouri, only Illinois has legalized adult-use marijuana.
Even illicit cannabis in the neighboring state of Oklahoma hasn’t affected demand in the state, causing inventory shortage throughout the supply chain and huge spikes in wholesale prices of flowers.
This is a sharp contrast from other markets such as Oregon, Michigan and Massachusetts, where a supply glut and declining prices are affecting businesses’ ability to grow. A strategy analyst at Leaflink, Ben Burstein states that there isn’t enough flower in Missouri to meet the demand in the market, noting that the demand in the state’s recreational market is exceeding supply. Data from Leaflink shows that since the launch of the recreational market, the price of bulk flower has doubled to $3,000 per pound.
Availability of bulk flower has also declined by almost 79% while the number of product stock-keeping units has also dropped by two-thirds during the same period.
Despite these issues though, medical and adult-use marijuana in the state of Missouri brought in more than $126 million in sales last month, a more than 20% increase in sales from February. Projections expect total cannabis sales in the state to reach $1.3 billion in the first year of recreational retail.
The heart of Missouri’s problem lies in underproduction, despite the abundance of cultivation capacity in the state. Manufacturing issues are also affecting major players, with Clovr experiencing a distillate shortage caused by a flower shortage. Clovr is the biggest producer in the state, with almost 100% coverage across more than 190 stores in the market.
Growers expanding their cultivation capacity and manufacturers scaling up their extraction capabilities will go a long way in helping meet consumer needs in the state.
Meanwhile, a number of entities such as IGC Pharma Inc. (NYSE American: IGC) are investing in coming up with pharmaceutical-grade medicines from THC and other marijuana constituents. These formulations will go a long way in addressing the symptom-relief needs of patients once the FDA gives those medicines the nod.
NOTE TO INVESTORS: The latest news and updates relating to IGC Pharma Inc. (NYSE American: IGC) are available in the company’s newsroom at https://cnw.fm/IGC
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