How Missouri Became a Cannabis Mecca
March 16, 2025
The hottest market for weed is a Republican stronghold in the middle of the country.
Missouri has become the seventh-largest state for weed sales since it legalized recreational marijuana in 2022, putting it ahead of such places as Arizona and Washington, which have bigger populations and older markets. The industry credits its success in the conservative state to low taxes, its role in helping shape regulations and proximity to states where recreational pot isn’t legal.
“My friends and I joked that we’d be the 50th state to legalize it because it’s such a red state,” said Doug Jeffries, a 56-year-old IT contractor who regularly visits a dispensary near his home in St. Peters, about 30 miles west of St. Louis.
Around half of U.S. states have legalized recreational marijuana, with pot shops outnumbering Starbucks stores in some cities, including Denver and San Francisco. Those markets offer others case studies in how legalization might one day play out in their own communities.
In Colorado, one of the first states to legalize cannabis, in 2014, Pueblo County serves as a warning for all that can go wrong. A once-promising industry has flopped, weighed down in part by heavy taxes and onerous regulations. That has fueled the illicit market, along with drug use and crime.
Missouri’s weed industry says it can avoid a similar fate. Cannabis businesses say they worked with lawmakers from the get-go to craft regulations to ensure the industry is a success. In campaigning for legalization, proponents touted the tax revenue that weed could bring to the public defender’s office, veterans services and other programs.
“I disagreed with them, but the backers behind the amendments did a phenomenal job driving their messages,” said Jay Ashcroft, Missouri’s secretary of state when weed was legalized and the son of John Ashcroft, attorney general under President George W. Bush.
A 42-page blueprint
Voters approved a constitutional amendment legalizing recreational weed in 2022. Soon after, the cannabis industry swooped in to work with lawmakers on adjusting the existing regulations for medical marijuana, which it had also helped write.
The amendment designated the state health department as the sole regulator for cannabis businesses. The industry said that would help avoid the multiagency red tape that hampered operators in other states.
The health department was given 90 days to adjust regulations, a quick turnaround that pushed the agency to tap industry groups for help.
“They couldn’t miss that date, so they looked at us and said, ‘Can you help us?’” said Mitch Meyers, co-founder of BeLeaf, which has a chain of dispensaries and was the state’s first licensed producer of medical marijuana.
Eventually, the health department issued a 42-page framework the industry said wouldn’t bog it down in bureaucracy. That compares with California’s regulatory framework, which was 239 pages as of last March.
Missouri also limited the number of licenses it issued to around 350, to avoid an oversaturated market.
“We look at different states and we see that Missouri isn’t too tightly controlled, which allows for competitiveness, but there aren’t so many businesses that there’s too much margin pressure,” said Ankur Rungta, CEO of C3 Industries, which sells cannabis in six states.
The state’s marijuana sales tax is 6%, compared with Colorado’s 15%. Additionally, Missouri has one of the country’s lowest overall corporate income-tax rates, at 4%. That is especially helpful for cannabis companies that can’t deduct operating expenses from their federal taxes, because weed is still illegal federally.
Another big factor working in Missouri’s favor, at least for now: simple geography. Of the eight states Missouri borders, only Illinois allows recreational weed. At a dispensary near the Kansas border, many of the cars waiting in the drive-through recently had out-of-state license plates.
The spread of legalization in nearby states could seriously dent Missouri’s cannabis industry, in much the same way that Arizona and New Mexico’s legalization affected Colorado’s industry.
Free delivery with a $50 purchase
So far, the weed industry is living up to its promise of helping to boost Missouri’s economy and coffers. Cannabis sales generated $244.9 million in tax revenue for Missouri for 2024, more than four times the annual amount the state had forecast.
Warehouses around the state that have sat empty for decades are also filling back up. Factories that used to house operations for Maytag and Pepsi now have cannabis firms as tenants.
Tyler Hannegan is among the cannabis producers taking advantage of local tax breaks for manufacturing businesses. His company, Robust, built a 74,000-square-foot facility in the town of Cuba, about 80 miles from St. Louis, that includes an indoor growing facility and manufacturing site.
“It kind of seemed like a wild, grandiose idea in a little rural part of Missouri, but they took it in stride,” Hannegan said.
Dex West, a 32-year-old St. Louis resident, recalled his graduate school days when he would drive 12 hours to Colorado to buy weed legally. Now the video rental shop in the rural Missouri town where he grew up is a dispensary.
“I’m now seeing things I never thought would be possible—like free delivery with a $50 purchase,” West said.
Write to Angel Au-Yeung at angel.au-yeung@wsj.com
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