This article originally appeared at https://missouriindependent.com/2023/05/31/where-does-the-revenue-from-missouri-marijuana-sales-and-license-fees-go/
Since Missouri’s marijuana sales began in 2019, the state has collected nearly $100 million in revenue from taxes and program fees, according to state authorities.
Etched in the state’s constitution is a road map for where the revenue can go.
The first stop is operational costs. By law, any expense it takes to run both medical and recreational marijuana programs — like salaries or professional services — all must be paid for through marijuana revenues.
That means the salaries for cannabis inspectors will never compete with that of school teachers, which come out of the state’s main pot of money, the general revenue fund.
The agency that regulates the program, the Missouri Department of Health and Senior Services, told the Independent last week that their expenses have been $38.4 million to date.
Salaries for the department’s cannabis division make up about a third of that. Another third has gone towards hiring private attorneys to represent the state when companies appealed their application denials.
After expenses, the revenue can go towards supporting veterans, funding drug addiction treatment programs and adding to the Missouri Public Defenders System’s budget.
A big asterisk on all this money is that legislators must pass budget bills that appropriate these funds, and they did that the first week of May.
If the governor signs the bills, then the money will start flowing to these areas when the state’s fiscal year starts on July 1.
As of April 30, there was $22.7 million in the state’s medical marijuana fund and $10.9 million in the recreational marijuana fund, according to the state treasurer’s records and DHSS.
Medical marijuana
Medical marijuana first went on the market in 2019. Since then, the medical marijuana program has brought in $85.2 million in total — $57.7 million has come from fees, including for new license applications and annual license fees, according to DHSS.
And $27.4 million has come from sales tax revenue.
The constitutional amendment that legalized medical marijuana in 2018, which appeared on the ballot as Amendment 2, mandated that revenues after operational expenses go towards the Missouri Veterans Commission.
So far, $27 million has gone to support veterans.
To date, the state has spent $11.7 million to pay private attorneys to defend hundreds of appeals filed by businesses who argue they were wrongly denied a license to grow and sell medical marijuana, according to DHSS.
At the heart of those appeals were decisions made by Wise Health Solutions, a Nevada-based company paid $2.2 million to score applications for marijuana business licenses.
Of the roughly 850 appeals of denied licenses that were originally filed, there are currently 305 still pending.
“The reduction in cases is largely due to litigants dismissing their cases or decisions in the department’s favor,” said Lisa Cox, spokeswoman for DHSS in an email to The Independent last week.
Adult use revenues and costs
The revenue road map is a bit different for the adult-use recreational marijuana program, and it’s defined in Amendment 3 that was approved by voters in November.
By law, direct revenues first go towards operational costs and then to expenses incurred by the court system for expunging certain marijuana offenses from people’s criminal records.
After that, revenues will be split in three ways: Public defenders, drug addiction treatment and veterans.
Since recreational marijuana sales opened in February, the revenue collected is already at $13.8 million, and almost all is from sales taxes, according to DHSS.
Marijuana monthly sales in Missouri have tripled since February, but so has the workload for DHSS.
For the past two years, DHSS has had 50 full-time employees to regulate the medical marijuana program.
The total employees will now be just over 170 employees — 23 for medical marijuana and 148 for recreational, Cox told The Independent.
Between the medical and recreational program, lawmakers appropriated about $32 million for operational expenses. That’s a little more than double what it’s appropriated in past years.
However, DHSS has yet to ever use the full appropriated amount, though there was plenty in the fund to cover it, according to budget documents.
In the fiscal year 2020, lawmakers appropriated $13.5 million for DHSS’ personal services, expenses and equipment. But the department only spent $6.3 million.
In fiscal year 2021, DHSS was appropriated $13.5 million and spent $9.4 million.
In fiscal year 2022, DHSS was appropriated $13.8 million and spent $8.4 million.
The department also spent about $5 million for employee benefits, which are not included in DHSS’ appropriation but in a separate part of the state budget.
Cox said it’s taken some time to understand what the annual cost of running the program will be.
“It is likely to be two to three more years before we reach operational stability in both programs under the new law,” she said, “and can more closely match appropriations with anticipated expenses.”
This year lawmakers signed off on $4.5 million for state courts to pay their employees overtime or to hire temp workers to complete the massive number of expungements required by law. They approved an additional $2.5 million in a supplemental budget on May 5.
After that, $1.3 million was appropriated for each public defenders, treatment programs and veterans.
And out of the medical revenues, $13 million will go towards the Veterans Commission again this year, as it did last year.
