Published March 18th, 2020 at 6:00 AM
There’s bound to be turbulence when you are building a plane on the fly.
No one knows that better than Missouri’s medical-marijuana entrepreneurs, as they scramble to get off the ground while the state assembles the nuts and bolts of a brand new industry.
“Our schedule is always changing, but we just get right back on task,” said Cheryl Annen, co-founder and director of operations for 3rd Street Dispensary in Lee’s Summit. “We are anxious, we are excited — and people want it.”
In November 2018, Missouri voters overwhelmingly approved a constitutional amendment legalizing medical marijuana. Since then, the state Department of Health and Senior Services (DHSS) has been sprinting to implement the program.
Around the first of the year, the department issued approximately 340 licenses for growers, retail operators (dispensaries) and manufacturers who make things like marijuana-infused chocolates.
Yet failed applicants have flooded the state with contract appeals, which now reportedly top 800 cases, as the department contracts with outside attorneys to help handle the crush. DHSS has also faced withering criticism from state lawmakers about potential conflicts of interest among applicants and the state’s scoring contractor.
The state appeals process is also going to have to sort out questions about how the contractor gave widely varying scores to answers that applicants had essentially cut and pasted between and within applications.
Sorting all that out is expected to take months, which could stretch into more than a year.
But as all those troubles have dominated the headlines, people like Annen and her partners have been quietly laying the groundwork for an industry that could eventually serve 150,000 customers.
“Everyone is figuring it out as they go,” Annen said.
One of the biggest questions is when pot will be available for manufacturers, retailers — and patients.
For months now, industry experts have been estimating that products could be available as early as June. That could still be the case, but it’s a good bet that demand will far outstrip supply.
Said Annen, “Our biggest challenge now is bringing product to market at an affordable price.”
The most likely scenario is that the initial supply available to patients will be the unmanufactured type that is usually smoked or baked into a product at home. The edibles and other products, such as lotions, would come later as manufacturing ramps up.
Kansas City attorney Chris McHugh has a ringside seat to the industry, as president of Vertical Enterprise, which is based in St. Joseph, Missouri.
Like many applicants, Vertical Enterprise sought to build its own supply chain by applying for a cultivation, manufacturing and dispensary license. Unlike other companies, Vertical Enterprise got all three licenses.
The company plans to build a 57,000-square-foot cultivation and manufacturing facility in St. Joseph.
In the best-case scenario, which McHugh thinks is unlikely, the facility would be ready for operation by the first of September. Opening includes getting the final go-ahead inspection through the state.
It takes at least 10 weeks to grow the plants, he said, which means the product would not be coming out of the facility until the first of next year. He thinks it could be two years before patients could walk into a dispensary to find the full range products.
“I wish it was different, but it’s not,” McHugh said. “We don’t want to put out products that are harmful, or unsafe, or that taste bad. That is not what Vertical is all about. We are not serving the meal before it is cooked, I suppose you could say.”
Dan Nelson is in a different boat, as chief operations officer for Kansas City Cannabis Co. The company won four dispensary licenses, but did not get the manufacturing and cultivation licenses it sought.
The company is appealing the denials, he said, but that was mainly to keep their chance alive before the appeal window closed.
He characterized not getting the licenses as a “little setback” that could nonetheless delay by a year the time the company turns a profit. The company is now seeking cultivation and manufacturing vendors.
“We’re still grateful we got the four licenses,” Nelson said. “The hard part is making sure the company is successful.”
The four dispensaries are located in Blue Springs, Kearney, Excelsior Springs and Lake Lotawana.
Given the reluctance of some landlords to have marijuana dispensaries in their buildings, Nelson said company officials probably looked at 50 locations in their search for retail space.
They found their Kearney landlord through a mutual acquaintance, and building owner Brian Kelling is thrilled to have Kansas City Cannabis as a tenant.
He is a chiropractor and has become a believer in medical marijuana after talking with so many clients who swear by it, especially in helping them quit addictive opioids.
“You just hear so many stories,” Kelling said, “I said, ‘OK, this has got to be for real. There is something to this.’”
He’s “horribly disappointed” that the schedule for products to hit the shelves keeps slipping.
Early on, Kansas City Cannabis officials hoped they could be open by this spring, but they ruled that out pretty quickly as the application and licensing process rolled out.
Then, they revised their hopes to open as early as late May. And now that it seems that it’s going to take the state more time than first expected to do final inspections of growers, Kansas City Cannabis is looking toward opening in August or September.
Given all the appeals pending before the state, there’s a strong likelihood that companies like Kansas City Cannabis will have more competitors than they initially thought. For instance, the state limited the number of dispensaries statewide to 192, but there could be more, if companies win their appeals.
Nelson isn’t too worried about that. It’s almost like the early entrants, no matter how many there are, are part of the same team in demonstrating to DHSS, and the public at large, that the system can operate safely and effectively, he said.
And then, it’s up to each team to develop a good marketing plan and capture as much business as they can.
As for Kansas City Cannabis, Nelson said, “We will run lean as long as we have to.”
Back at 3rd Street Dispensary, Annen works at her desk in what will eventually be the retail space. The inside is a shell, with roughed out rooms and exposed metal beams.
(The space was formerly the Shanghai Boy restaurant, and Annen said it’s a natural fit to pay homage to that shuttered business with something like a “High Boy Special.”)
People stop in all the time and ask when she is going to be open. A couple of those folks are Shona Reinkemeyer of Lee’s Summit and Sheri Gibson of Raymore.
Gibson’s preferred time frame for getting access to the medication? “I want to get it yesterday,” she said.
The two friends each got certified for medical marijuana in the second half of last year. They are afraid they will have to pay to renew the card, which is good for a year, even before they have access to any medical marijuana.
Both women want medical marijuana to help manage anxiety and chronic pain. They want to get off the prescription medication they now take.
Gibson knows pot can help her manage the memories of the 2011 car accident that killed her 12-year-old son. He was ejected out the back window when the car she was driving rolled over four times.
Both women also see medical marijuana as a boon to small business people like Annen.
When the product finally does arrive, Reinkemeyer said, “It is going to be a plus for the community and the well-being of our towns.”
Annen already knows a thing or two about operating a small business. She and her husband own a restaurant in Warrensburg.
And, as she has gotten deeper into the medical marijuana industry, the food-service parallels are unmistakable.
In place of servers, for instance, you have a “budtender” who works with customers on finding the right type of product. And, DHSS inspections are like complying with the local health department.
“It’s almost like the restaurant business,” Annen said. “Just a different menu.”
Mike Sherry is senior reporter for Kansas City PBS. He can be reached at email@example.com or 816.398.4205.