‘Adult use’ marijuana vote could have huge impact on Chaffee

Rarely, if ever, has there been a statewide election in Missouri that has the potential to profoundly impact a specific business sector, especially one that would have been unthinkable just a few years ago. But it will happen in November when voters are asked to decide whether recreational marijuana use should be legalized in the Show Me State.

And nowhere will the results of the referendum be watched more closely than at Organic Remedies-Missouri (ORMO), a state-licensed marijuana cultivation and production facility in Chaffee.

ORMO principal and spokesperson Ray Boyer told B Magazine that approval of recreational cannabis — or adult use marijuana as he prefers to call it — will be good for consumers, good for the state and good for his company.

“We’re thinking sales in Missouri will increase anywhere from three to seven times, depending on location,” Boyer said. “That’s what I’m hoping.”

Ray Boyer, principal of Organic Remedies-Missouri, looks over some of the flowering cannabis plants at the company's medical marijuana growing facility in Chaffee on Friday, June 10, 2022. Photo by Aaron Eisenhauer

Supporters of the recreational marijuana referendum, officially known as the Missouri Marijuana Legalization Initiative, say its passage would add thousands of jobs to the state’s legal cannabis industry and boost profits for companies such as ORMO and scores of others throughout the state. In addition, advocates say it could add millions in tax revenue for state and local governments.

Petition certification

Approximately 170,000 signatures were necessary to place the issue on the Nov. 8 ballot, which the secretary of state confirmed had been done with enough signatures in each congressional district, as required.

“We turned in about 390,000 signatures,” John Payne, Legal Missouri 2022 campaign manager, told B Magazine.

The ballot initiative would require a simple majority for passage. If approved, the initiative would permit anyone 21 and older to legally buy, possess, grow and consume marijuana. It would also allow those convicted of nonviolent marijuana-related crimes to petition to be released from incarceration and/or have their records expunged and would impose a 6% excise tax on marijuana sales through state-licensed dispensaries. In addition, it would allow municipal governments to assess a local sales tax of up to 3%.

Workers carefully trim some of the cannabis flowers by hand at Organic Remedies-Missouri's medical marijuana growing facility in Chaffee on Friday, June 10, 2022. Photo by Aaron Eisenhauer

“The single biggest argument in favor of it is that adults should be able to do what they want with their own lives as long as they’re not hurting anybody else,” Payne said.

Investment in Chaffee

ORMO is a partnership between a Missouri investor group and a sister company in Missouri and was formed shortly after Missouri voters approved Amendment 2 in 2018, legalizing the medical use of marijuana for qualifying Missouri patients.

The company sought and received licenses from the Missouri Department of Health and Senior Services to cultivate and manufacture cannabis products inside what was once the Columbia Sportswear plant near Chaffee’s northern city limits.

Chaffee, according to Boyer, has been an ideal location for ORMO’s operations.

“When we came here we wanted to build a business in a community that needed economic development and good jobs,” he said. “Chaffee has been great to work with and the people in this area are some of the finest I’ve ever met.”

Roughly 30,000 of ORMO’s 75,000 square-foot facility has been earmarked for plant cultivation. However, only about a third of that is currently being used as “canopy square feet” for growing and harvesting the company’s crops.

“That’s because there’s an oversupply of marijuana right now,” Boyer said. He explained there’s currently more than enough raw material to meet the demands of Missouri residents who have qualified to purchase medical marijuana products by virtue of various qualifying medical conditions.

As of May, the State of Missouri had approved about 195,000 “patient use” applications — including 2,743 in Cape Girardeau County, 1,296 in Scott County, 534 in Perry County and 302 in Bollinger County — allowing cardholders to purchase and use physician-prescribed marijuana products from state-licensed dispensaries.

The number of approved applications is gradually growing, but Boyer says recreational use approval will mean companies like ORMO will have to boost production to keep up with demand.

“When adult use comes we’ll use our full 30,000 square feet (of cultivation space),” he said. “We’ve also been successful in getting another license to add on to the Chaffee plant so we’ll double our canopy with another 30,000 square feet.”

ORMO currently has just over 60 employees making it one of Chaffee’s largest employers behind the Chaffee R-2 School District, which has a payroll of close to 100 staff. As of the end of May, ORMO had 23 employees from Chaffee, 19 from Cape Girardeau, nine from Jackson and three from Scott City. The balance of the company’s employees commute from Sikeston, Benton, Perryville, Marble Hill, Commerce and Whitewater.

The company’s products are distributed to ORMO’s dispensaries in Cape Girardeau, south St. Louis and Sedalia, Missouri. Organic Remedies has a fourth dispensary planned for Missouri in the Kansas City area.

“We should have that one up and running before adult use comes,” Boyer said.

ORMO products are also available at scores of other medical marijuana dispensaries throughout the state. “We’re in about 75 stores right now and that’s growing every day,” Boyer said. “We also sell (raw materials) to processors that don’t have cultivation operations. We have about 10 of those clients right now.”

Approval of recreational marijuana sales, Boyer said, will have “a great impact” on ORMO’s production volumes and employment levels.

“Adding another 30,000 (square feet of cultivation space) will probably mean adding about 100 employees, and I would expect at some point in time we will have over 200 jobs here.”

Those jobs, Boyer said, will offer competitive wages and good benefits including health, vision, dental plans as well as 401(k) paid time off (PTO) benefits. “We share the wealth,” he said. “That’s kinda what we do around here.”

And there will be more “wealth” to go around once the company recoups its initial investment in the Chaffee plant, which was approximately $20 million.

“We’re getting there, we’re getting close,” Boyer said. “We had our first harvest five or six months ago and we only sold our first products out of that harvest a couple months after that, so although I’d love to be in the black right now, it might take another month or two before we get there and that’s when we’ll be able to do a lot for the community.”

Although the ORMO plant has only been up and running for less than a year, it’s already had a significant impact on the area, according to Chaffee Mayor Steve Loucks, who says passage of the recreational use referendum will mean added benefits for his community.

“We have already seen an improved job market for our citizens with Organic Remedies and medical marijuana,” he said. “The advent of recreational marijuana would mean more jobs and possibly more revenue for the city.”

That revenue increase, the major said, “would mean more funding for police and public services like streets, sidewalks and parks.”

Usage and revenue projections

Approximately 20 other states, including neighboring Illinois, allow the legal sale, possession, and consumption of marijuana. Proponents of recreational use in Missouri say legalization in Missouri would help keep marijuana sales in Missouri instead of losing revenue to dispensaries east of the Mississippi River.

In fact, they say it’s likely cannabis users from Illinois will choose to buy product in Missouri because it will be taxed at a lower rate than Illinois’ recreational marijuana taxes.

A recent Gallup poll indicated 12% of the U.S. population age 21 and older smoke marijuana regularly. “I think that’s low,” said ORMO’s Ray Boyer when told of the Gallup study. “Way low.”

But assuming it’s accurate, that percentage would equal about 29 million people, based on a nationwide adult population of 239 million. Assuming 12% of Missouri’s adult population also use marijuana on a regular basis, that would be just over 500,000 of Missouri’s 4.2 million adults.

A report issued last fall by the Missouri State Auditor’s office estimates the average marijuana consumer spends somewhere between $650 and $1,000 annually on marijuana and cannabis-related products. Based on those estimates, the state estimates annual legal marijuana sales in Missouri of roughly between $325 million and a half-billion dollars.

Those sales would generate tax revenue for the state of between $33 million and $51 million (the proposed 6% marijuana excise tax on top of the current state sales tax rate of 4.225% for a combined state tax of 10.225%).

Under the proposal, all recreational marijuana tax revenues are to be deposited into the Missouri Veterans, Health and Community Reinvestment Fund.

According to the nonpartisan website Ballotpedia, the Missouri Marijuana Legalization Initiative is supported by a number of statewide organizations including the Missouri Association of Criminal Defense Lawyers, the American Civil Liberties Union of Missouri, Empower Missouri, and MoCannTrade, the Missouri medical cannabis trade association.

Ballotpedia does not list any opposition to the initiative. However, the Missouri Veterans Commission has gone on record saying it “could have a disastrous fiscal impact” on the commission. The commission was projected to receive more than $2.9 million in Fiscal Year 2023 from tax revenues generated from retail sales of medical marijuana.

“It is only common sense that those wishing to use marijuana products will forgo the inconvenience of establishing medical need and obtaining a physician’s certification and avail themselves of the non-medical program,” commission general counsel Scotty Allen wrote in a letter to the Missouri State Auditor’s office in September. “We anticipate a significant reduction in the tax revenues generated by the medical marijuana program, perhaps as high as a 90% reduction, should the petition become law.”

John Payne with the Legal Missouri 2022 campaign says its unclear whether the adult use initiative would have a significant impact on the state’s medical marijuana program. “I think for a lot of people it’s still going to make sense to be part of the medical program,” he said and noted medical marijuana products would be taxed at a lower rate than adult use products, making them more affordable.

“We’ll just have to wait and see,” Payne continued. “It’s gone both directions in states after adult use legalization passed.”