How to Open and Run a Cannabis Dispensary in Missouri in 2023

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Medical marijuana has been legal in Missouri since 2018, and the state just legalized recreational cannabis use in the 2022 mid-term elections to become the 21st state to do so. There’s an immense growth potential for cannabis dispensary owners and potential entrepreneurs, but regulations are quite stringent as well in this highly regulated industry, and proper preparation is essential for entrepreneurs interested in joining Missouri’s thriving cannabis industry.

Many complexities are involved in any new business launch, but this is especially true regarding opening a dispensary. Typically, you can expect to spend between 6 and 12 months preparing for your dispensary launch, applying for a MO dispensary license, purchasing dispensary management tech tools, syncing with the required tracking and reporting software, and developing an effective marketing strategy. You’ll also need to understand and plan for the cost of opening a dispensary in Missouri to maximize profitability once you’re ready to begin sales.

Missouri Cannabis Laws for Dispensaries

Medical marijuana in Missouri is regulated by the state’s Department of Health and Senior Services (DHSS). All MO medical marijuana dispensaries must operate in full compliance with DHSS regulations. Below, a summary of key medical marijuana and Missouri dispensary rules has been provided as an informational resource.

● All MO medical cannabis dispensaries must utilize a certified cannabis POS and inventory management system to track inventory and submit reports to the state. Cova Software is one of the few systems to receive full state approval. 

Physical inventory audits must be conducted quarterly and reconciled to perpetual inventory records. 

● Dispensaries must use a system connected to Metrc, Missouri’s statewide track and trace system, and report the mandatory data according to state requirements. Cova POS is seamlessly integrated with Metrc, minimizing the potential for user error and streamlining compliance. 

Please note that it’s a dispensary owner’s responsibility to review the DHSS cannabis laws and regulations in full to ensure complete compliance. The DHHS has already released draft regulations for the adult-use cannabis market in Missouri and opened a public comment period.

How to Open and Run a Dispensary in Missouri

Each stage in the process of opening a dispensary must be completed with care, both for the sake of compliance and future success. Continue reading for a high-level discussion of tips for starting and operating a successful dispensary in MO.

Understand MO Compliance

Although the basics of MO cannabis laws have already been covered, the importance of compliance bears repeating. Failure to adhere to any state dispensary regulations can result in the revocation of your dispensary license. A compliance misstep can easily lead to application denial even during the license application process. Ensure that your application for a legal license is complete and fulfills all requirements stated by the authorities, including a complete business and compliance plan for your cannabis dispensary.

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Prioritize Inventory management

Your dispensary must appoint a facility agent- establishing (in writing) an individual responsible for inventory control procedures and systems. A DHSS-certified seed-to-sale tracking system is required for inventory management.

In addition to being a state regulation, effective inventory management is a foundational practice of any successful business. Select a  cannabis POSsystem that integrates with the state’s Metrc seed-to-sale tracking system. Ideally, reporting is automated for operational convenience. 

Use a Reliable Cannabis POS System

A high-quality cannabis POS system goes hand in hand with an inventory management system in terms of compliance and efficiency. As Per Missouri law, medical marijuana dispensaries must use one of the cannabis POS systems approved by Missouri DHSS (Cova Software is certified and state-approved). Missouri cannabis POS systems must equip a dispensary with the necessary software to record the daily:

  • Beginning inventory
  • Sales, including the:
  • Dried/unprocessed cannabis (ounces or grams)
  • Concentrates (grams)
  • Infused products (milligrams of THC)
  • Acquisitions
  • Disbursements
  • Disposals
  • Remediations
  • Transfers
  • Ending inventory

A robust enterprise POS system can offer a multitude of benefits, enhancing business capabilities and serving as a powerful asset for a dispensary, if you have a growth vision to expand your cannabis business.

Choose Dispensary Hardware

Dispensary hardware necessities include scales, drawers, displays, tablets, and scanners. Invest in hardware solutions that seamlessly perform alongside your preferred cannabis POS and inventory management system.

Design Your MO Dispensary Store Layout

In devising the layout of a Missouri dispensary, considering state regulations means assessing factors such as the visibility of marketing materials, site security, and others. For example, a dispensary layout must be such that products and signage are not visible to the general public. Also, a dispensary security plan is scored as a part of the application criteria. Security is included in the scoring, so a dispensary’s layout should account for proper security measures.

Set Up Online Ordering and Delivery Services

Online ordering and cannabis delivery in MO can set a dispensary apart and expand equitable access to medical marijuana. The DHSS carefully regulates these options, and a compliant POS system establishes the necessary structure for mandated data collection, reporting, and patient documentation.

Stand Out From the Crowd

Determine how your dispensary will differentiate itself from your competition: will it be an exclusive selection of products, unparalleled customer service quality, or a unique dispensary shopping experience that sets your business apart? Set a goal to craft a well-rounded brand identity that encompasses both the aesthetic of your brand and aspects such as the customer experience, merchandising strategy, and even staff training. 

Know your MO Cannabis Customer

Learning as much as possible about your customers and medical marijuana patients empowers a dispensary to utilize more effectively-targeted marketing strategies, increasing the potential to connect with new individuals. Tracking data and analytics such as store traffic, itemized product sales, and other specifics make it possible to make highly educated refinements to operational practices. For example, a dispensary owner may opt to increase the store’s supply of a specific cannabis product after tracking its consistently high demand, thus resulting in a rise in overall profit.

How to Apply For and Win a Dispensary License in Missouri

Before you even think about applying for a cannabis license in Missouri, make sure you are eligible. To apply for a Missouri cannabis license, you must be a resident of the state for at least one year. Cannabis business entities must be majority-owned by a citizen of Missouri for at least a year and do not claim residency in any other state. Additionally, no licensee, owner, partial owner, or employee can have a disqualifying felony on their record.

Here are the basic steps for applying for a cannabis license in Missouri:

  1. In preparation, look over these sample applications.
  2. Submit your application and unpaid licensing fees in full using the DHSS web-based application.
  3. You will be notified if you are awarded a license within 150 days of applying.

Missouri Cannabis Licensing Fees:

  • Cultivation License: $10,000 non-refundable, $25,000 annual
  • Dispensary License: $6,000 non-refundable, $10,000 fee
  • Medical Cannabis-Infused Processor: $6,000 non-refundable, $10,000 annual

If you miss this first round of licensing, you will have to wait for the next round. The next application window will be at least six months after the one before and will be publicly announced.

How Will Missouri Score Cannabis License Applications?

According to the state, a transparent scoring system run by an independent, blind scorer will promote fairness in the licensing process. This scoring system is based on a variety of criteria, from experience in legal cannabis to site security. The criteria will differ based on the license type. Some aspects will be scored on a scale of 0-10, while others will be scored on a more simplified “satisfactory/unsatisfactory” or “yes/no.”

For more scoring details, use the state’s proposed scoring rubric as you prepare your cannabis license application.

Tips for Increasing Your Chances of Winning a Cannabis Retail License

To increase your chances of winning, look over all the provided sample documents linked above and focus on the important scoring criteria. Here are five aspects the state will expect every cannabis license applicant to address:

1. Previous experience in the legal cannabis industry

When bringing together your leadership team, be sure to recruit partners with cannabis industry experience. In your application, from the resumé to recommendation letters, consider how you can amplify that cannabis experience.

2. Dispensary site security

Include a detailed security plan for keeping your dispensary and the surrounding community safe and secure. Beyond just cameras and security guards, explain how you will use a seed-to-sale Point of Sale system to ensure no product is diverted to the illicit market or underage sales are made.

3. Good character and qualifications of your leadership team

Each application must include information on the top three managers of the potential business. Each manager will need to include a resumé, proof of legal cannabis industry experience, and two recommendation letters. Each manager can fill up to three pages.

4. Business plan specifics

Beyond safety and security, you will be expected to show a robust business plan, including a plan for staying competitive, illicit market diversion protection, vendor information, and supply chain management solutions. This should also include social responsibility by providing a plan for low-income patients and providing a positive economic impact on the community.

5. Experience or capacity for providing health care

While it isn’t required for all licenses, having healthcare experience in the leadership team is a big plus. If you don’t have healthcare experience, explain how you will provide safe care to patients. For dispensary applicants, this should include information on location accessibility for disabled patients.

Seed to Sale System Guide for Your Missouri Application

Missouri’s DHSS started accepting medical marijuana dispensary license applications on August 3rd, 2019. As part of your application, you’ll need to demonstrate how the seed-to-sale system you choose helps you maintain compliance and run a responsible business.

Instead of taking a casual approach to the application process, download this supplement to demonstrate your ability to record and track at your store today. 

7 Things to Look For in a Seed-To-Sale Compliant POS in Missouri

Cova Cannabis POS

You put a lot of hard work into earning a dispensary license, and now that you’ve got the green light, you’ll need to find the right POS partner. You must pick a point-of-sale that meets all DHSS seed-to-sale regulations, one that helps you prevent the diversion of product into the black market, and offers robust inventory management and fiscal controls.

Find out how Cova’s cannabis dispensary technology in Missouri meets all compliance needs.

What A Seed-To-Sale Compliant POS in Missouri Needs to Have

1. METRC Integration & Reporting

Missouri’s cannabis rules state, “If a facility or a facility employee fails to comply with seed-to-sale tracking requirements or intentionally misuses or falsifies seed-to-sale tracking data, the facility’s license may be revoked.” Such a strict penalty is enforced because seed-to-sale tracking is essential to a regulated cannabis market. It allows the state to keep a close eye on all cannabis grown, processed, and sold, lowering the risk of diversion into the black market.

The state requires reporting on

  • Beginning inventory
  • Acquisitions
  • Sales
  • Disbursements
  • Remediations
  • Disposals
  • Transfers
  • Ending inventory
  • Weight of dried, unprocessed marijuana sold in ounces or grams
  • Concentrates in grams
  • THC-Infused cannabis products 

Cova’s Point of Sale system is fully integrated with METRC (the state’s appointed seed-to-sale software for Missouri). It generates compliant reports with all the information the state requires and integrates directly with METRC so you can submit reports automatically.

2. Accurately Track Inventory and Record Inventory Adjustment

Missouri’s law requires “the use of security measures and controls…for the prevention of diversion, inversion, theft, or loss of marijuana.” Cova’s POS simplifies dispensary inventory reconciliation. The state requires any significant inventory changes to be documented, investigated by management, and reported to DHHS through METRC within 24 hours of discovery.

When inventory levels change, whether that’s because a product sold, it was stolen, or it was damaged, once it is reported in Cova, it is automatically reported to METRC. Cova tracks all the sales and inventory in real time and provides visibility to the dispensary’s owner through detailed reports. This allows managers and owners to detect fraud/ inventory theft and help prevent diversion.

3. Reliability

Missouri’s law is strict when it comes to seed-to-sale tracking, inventory management, and reporting. If your dispensary POS is unreliable and plagued with spotty or weak wifi, with the potential to leave gaps in tracking, your license and business performance could be on the line. The state’s law states that if the network is down, a medical marijuana dispensary cannot process sales, which leads to both losses in revenue and unhappy customers.

Cova POS is known for its reliability, even on the busiest days. And even if there is a network interruption, your staff can continue to use the system in offline mode. Once the POS is reconnected to the network, it will automatically update its database.

4. Security

Missouri requires dispensaries to maintain “the confidentiality of information related to the medical use of marijuana, including but not limited to compliance with the Health Insurance Portability and Accountability Act (HIPA). By requiring HIPAA compliance, the state is protecting private patient information from being shared without permission.

Cova’s POS maintains the confidentiality of all patient data and records by restricting access to only the department and other entities authorized by law.

5. Record Keeping

In Missouri, dispensary law requires that a medical cannabis dispensary maintains records for up to five years. With Cova, record-keeping couldn’t be easier. Cova backs up your data at least once per day to Microsoft Azure and keeps that data safe and secure indefinitely or until the client requests it be deleted. If and when the state comes looking for old records, all Cova customers have to do is export their stored data.

6. ID Scanner

Only licensed medical marijuana patients will be able to purchase cannabis from a dispensary in Missouri. Missouri’s cannabis license application requires a plan for verifying each medical marijuana patient’s identity before purchase. Cova POS allows budtenders to scan IDs to Verify a customer’s age and confirm the ID is not expired. Underage customers or those with an invalid ID will not be added to the queue or cart for purchase.

Cova POS also confirms the customer ID in the medical cannabis patient registry and will verify the amount that remains in the patient’s purchase limit.

7. Purchase Limit Alerts

A doctor can certify a medical cannabis patient for up to four ounces of cannabis per month in Missouri. During the licensing process, DHHS requires each applicant to explain how they plan to enforce purchase limits accordingly. Luckily, Cova makes this part of the application easy.

Cova’s POS purchase limit monitoring communicates with METRC to verify and update the purchase limit that remains for each customer. It ensures no customer will be able to purchase more than 4 ounces of dried, unprocessed cannabis within a 30-day period. The system will also calculate product equivalencies automatically and not allow sales that exceed the regulatory limits.

6 Things to Consider Before Starting Cannabis Delivery in Missouri

When entrepreneurs are faced with a new opportunity, let alone a new industry entirely, they tend to fixate on the best-case scenario. If there’s even the possibility of adding $25K a month to the business, most will obsess about turning that possibility into a reality without ever seriously considering the cost in time and dollar figures. Delivering cannabis as a dispensary in Missouri is no different. After all, the state has patiently been watching other states like California structure their delivery services and become established as lucrative avenues for cannabis retailers, and with the increased likelihood of people staying at home and isolating into the new year, the option for cannabis e-commerce and delivery in a state like Missouri has become intoxicating. 

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Should I Start a Cannabis Delivery Business in Missouri?

Delivering cannabis in Missouri isn’t just a little more complicated than in those aforementioned states; it’s entirely different. There are incredibly rigid safety and insurance regulations for drivers, and there’s also an inexperienced, fresh-faced market in Missouri to consider, one which doesn’t have the benefit of established cannabis cultures predating legalization like California and Colorado. Too many dispensaries are considering cannabis delivery as a no-brainer and a goldmine rather than making a business case for it and seeing if it makes sense for their business specifically. 

With all the variables and little certainty, we’ve created a list of questions and tips to consider before pursuing delivery for your dispensary in Missouri.

1. Are you prepared for a substantial upfront investment for a fully compliant process? 

This question pertains to both time and money. Let’s start with the vehicle – the vehicle itself needs to meet a slew of criteria for your show to even get on the road. The cargo areas must be lockable and temperature controlled. Vehicles must also contain a lockable box compartment for storing cash and be equipped with video monitoring. A body camera must also be worn to verify identity and record safe transactions. In addition, vehicles must have GPS tracking.

There’s more we could get into, but the important takeaway is that Missouri’s approach to its legalities has been to amalgamate processes from all states into one jumbled and convoluted process that is expensive and hard to forecast.  

2. Are you prepared for an insubstantial delivery base?

Let’s start with product education. If you’ve never had or even seen Chinese cuisine, how difficult would it be to order takeout and have a satisfying experience? Keep this in mind when walking through your customer’s thought process for delivering cannabis. In Missouri, there isn’t precedent for the variety of cannabis products and the different types of SKUs being offered.

People likely have no idea about the products, quantities, and recommended dosages, which means they will likely prefer a physical retail experience in their first several encounters with your products. They want to know what works and what works for them, and without knowing the menu and products extensively, they’ll likely opt to stop in and consult the experts. 

There’s also the added deterrents of only being able to pay cash for deliveries and the extra surcharge for deliveries. You need to be asking yourself: How incremental is the business of delivery? Are you cannibalizing a segment that would just come to your store anyway?

3. Are you prepared to allocate and train your staff specifically for this?

Hypothetically, you’re putting your employee in a vehicle with boosted security measures, ample cameras, lofty amounts of cash and cannabis products, and different lockable cargo components. You can’t just hire someone with Uber or Postmates experience and expect them to hit the ground running. You need to ask yourself whether it’s more economical to hire delivery drivers hourly or hire an extended part of your staff to handle the inventory and logistics and also make the drops in your radius. 

4. Do you have the right technology?

You’re going to need logistics software and different levels of tracking, which requires maintenance and upfront investment. Is your business prepared for this? Do you have the right staff in place to manage this technology and stay up to date with reporting and compliance? Where will people order for delivery? Do you have an online cannabis store with e-commerce capabilities?

5. Are you prepared for all seasons?

Not only does your vehicle need to be primed and prepared for all four seasons, including weather like rain and snow, but you also need to consider that when assessing your staff’s readiness and unavoidable delays during deliveries for road closures, accidents, and stalls.

6. Have you thought through a scalable and sustainable validation process for your customers?

Missouri has stressed this step of the process in terms of verifying the legitimacy of medical conditions and confirming that your customers are who they say they are. How do you plan on doing this over the phone or online for your prospective delivery customers?

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No matter what you choose to do with your delivery operation, here are two tips that we’d recommend every Missouri dispensary follow through with before diving into delivery:

Tip 1: Do a business case.

Before you rush into buying, equipping, and insuring a vehicle and hiring a driver, you should probably get your business up and running first. Your customers need to work their way up to being comfortable placing an order online. At what point can you get enough of an addressable market and enough orders to cost-justify the volume of orders and substantial initial investment? Are you in a high-density area where you can make many deliveries quickly? In Missouri, probably not. There is no cosmopolitan area to take advantage of, so it may not be cost-effective to set your business up for a high volume of deliveries. Your addressable market likely spreads across 20 miles or so. How many deliveries could you do in an hour? 

Tip 2: Give yourself time to establish your brand first.

You’re a brand new market. What percent of your customers do you think have ever been in a dispensary? As we mentioned, many have no idea what’s behind that door and are unfamiliar with the consumption variable types and products. People want to experiment and try things out and visit retail locations to do so. Not only will people be lining up at your door to indulge in the newness of cannabis retail, but it also benefits you to get people coming to your physical location where you can introduce new customers to products, upsells, gift cards, and loyalty programs.

It’s also in your best interest to establish consistency in both product and brand. A harsh reality of the new marketplace in Missouri is that there will likely not be consistent product selection for the first 6-12 months. With that being the reality, why jump straight into delivery and add extra and unnecessary costs? 

Open Your Dispensary in Missouri & Stay Compliant With Cova

Cova has partnered with dispensaries in Missouri and nationwide to launch successful cannabis dispensaries. If you’re considering opening your own MO dispensary, Cova POS can help you balance compliance, customer service quality, and profitability with ease.

Are you interested in applying for a cannabis retail license in Missouri, or transitioning your dispensary from medical to recreational? Connect with Cova today to see how we can help.

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