Missouri Marijuana Shortage Drives Up Prices

The sale surge has been impacting Illinois' sales.

Less than two months since recreational marijuana sales launched in Missouri, a shortage has emerged, and could cause prices to skyrocket.

Cultivators have struggled to meet the overwhelming demand, resulting in higher production costs for manufacturers and steeper prices for consumers at dispensaries, KCTV 5 reported.

A significant factor contributing to the demand surge is the influx of customers from Missouri’s eight bordering states, only one of which has legalized recreational use. In the Kansas City area alone, around 40% of all cannabis dollars spent come from neighboring Kansas counties.

As a result, prices for marijuana products are expected to increase by 50%-60%.

It may take until July for the market to see any relief from the price hikes, as cannabis plants typically require four months to flower and bud, meaning additional supply won’t be available until current plantings mature.

Despite the expected price hikes, Missouri still sports some advantages over its nearest competitor, Illinois. Illinois’ products tend to be more expensive, and its tax structure can reach up to 35%, whereas Missouri taxes retail marijuana sales at a flat 6%.

The pricing difference attracts customers from Illinois to hop the border for marijuana products. Increasing competition in St. Louis and along the two states’ borders has been expected among retailers and analysts.

Missouri dispensaries sold almost $71.7 million worth of recreational marijuana in their first month, a milestone that took Illinois nearly a year to achieve.

Illinois recreational cannabis product sales by legal retailers fell to $120.5 million in February, according to the state’s Department of Financial and Professional Regulation, the lowest since the same month in 2022.

The data shows a sales plateau occurring in the state, though future figures will paint a clearer picture.

That represents a 15% decrease in sales to customers from out-of-state during that period, according to Cantor Fitzgerald. In Illinois cannabis stores located near the Missouri border, the decline was even more significant, with a drop of up to 30%.

Missouri expects to generate substantial tax revenue from marijuana sales to help fund various programs. The overwhelming success of the launch has led many local governments to consider implementing their own taxes on recreational marijuana sales.

Missouri also benefits from a well-established retail footprint born from its medical cannabis market, as well as a smooth compliance process. And although cities and counties have the option to opt out, the public must vote for the decision rather than leaving it solely to the city or county officials.

Around 3% of Missourians are currently registered in the medical program. The number of consumers has been projected to rise to around 10% of the state population, or 600,000 individuals, with the adult use market – though consumption is notoriously underreported.

To sweeten the pot, revised regulations introduced in Missouri in December permit increased quantities per visit. Medical cannabis patients are now authorized to purchase a maximum of six ounces within a 30-day span, a rise from the prior four-ounce cap.

All other individuals aged 21 and above can buy up to three ounces of recreational-use flower, or the THC equivalent.

Adam Jackson

Adam Jackson writes about the cannabis industry for the Green Market Report. He previously covered the Missouri Statehouse for the Columbia Missourian and has written for the Missouri Independent. He most recently covered retail, restaurants and other consumer companies for Bloomberg Business News. You can find him on Twitter at @adam_sjackson and email him at adam.jackson@crain.com.

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