How Might Missouri’s Amendment 2 Affect My Business?
Missourians have voted to amend the Missouri Constitution to allow for the medicinal use of marijuana. The new constitutional article, which is set to go into effect in early December, has an estimated net gain of $17 million in tax revenue alone for the state annually, so the impact of this amendment may be huge for communities and the state as a whole. With that impact comes a host of implications not only for the government and individuals, but for businesses as well. Here is a rundown of what the new Article of the Missouri Constitution may mean for your business (or your prospects on starting a new one).
New and Existing Businesses
Business types. The New article creates 4 new types of businesses in the state dealing directly with the marijuana industry: Cultivation facilities, Product Manufacturing facilities, Testing facilities, and Dispensaries. The creation of these new businesses may offer the potential for great success, but also come with significant risks.
First, new marijuana-related businesses will be expensive and time consuming to get off the ground. Application and licensing fees alone can range from around $16,000 up to $35,000 depending on the type of facility you may be opening (for more specifics, read our companion article, “What Will Missouri’s Amendment 2 Actually Do?” https://medium.com/seed-law-blawg/what-will-missouris-amendment-2-actually-do-6e7779425ed5). This doesn't take into account the materials, equipment, and personnel you will have to acquire in order to have your best chance at certification, including adequate space, proper security and safety measures, personnel familiar with/experienced in the medical marijuana market, not to mention actual materials and capacity to produce products. All of these factors may be taken into account by the Department of Health and Senior Services in considering and granting licenses to prospective new facilities.
Second, in areas where other structures and people are located (basically anywhere except a secluded farm in the middle of nowhere), dealing with these existing entities can effect not only how you do business, but whether or not you can do business at all. Moving into an existing building, for example, may be difficult, particularly if you as a new marijuana-related business are leasing or renting space. There is nothing in the amendment that prohibits or limits a landlord’s ability to deny space or use of space for marijuana-related activities. This may also affect people or entities with existing leases or rentals who might want to convert such a space to a marijuana-related purpose. Unless the current contractual relationship is amended or renegotiated, there is again, no prohibition on a landlord’s ability to punish or evict tenants for conducting marijuana-related activities on their property, even if such activity is legal under the amendment.
Third, There are zoning restrictions as well as space and proximity limitations built into the amendment. For instance, Medical marijuana facilities cannot be within 1,000 feet of a day-care center, elementary or secondary school, or church.
Finally, it is important to note a fact that some people not familiar with the law may not realize: in many circumstances, terms and conditions that are contracted to between parties may supersede stated law. As stated earlier, even if an activity is legal, you can make or be subject to a contract that prohibits or forbids such an activity. As an example, smoking cigarettes is a completely legal activity, but most residential leases prohibit smoking in the space within lease, meaning you could get evicted for doing something that is perfectly legal because you contracted it that way. The new amendment decriminalizes the use of marijuana for medical purposes. This, however, does not stop people or entities from restricting or prohibiting its use, even medically. This is an important consideration to think about, especially if you are renting/leasing space from another entity. A landlord, residential or commercial, may still prohibit and may be able to evict a tenant for the sale or use of marijuana if such a provision is in the lease or an exception or amendment is not added to an existing contracting document.
Employment and Business Practices
For employers and business owners of non-marijuana related businesses, the main way Amendment 2 may effect your business is how hiring, retaining, disciplining and terminating employees may occur and be managed.
Drug Testing and Discipline — It is not clear as of yet what the future of drug testing and consequences for positive drug tests will be in Missouri, and unfortunately, there is not a consistent application of such rules throughout states that allow marijuana use. Some states allow drug testing and protect employer decisions regarding penalties associated with positive results, some allow drug testing but have exceptions and protections for qualified users in the context of medicinal use of marijuana, and a few states have done away with employment related drug testing for marijuana all together. Based on the language limiting employees’ remedies for being terminated for being under the influence at work, it is likely that one of the first two options, or some sort of hybrid, will be implemented.
Use — As previously stated, the amendment does not allow for the unrestricted use of medical marijuana. Use at work may be prohibited by employers and employers may be protected against wrongful termination or discrimination lawsuits if employees are terminated for being under the influence while at work. Depending on the rules and regulations implemented, it may be up to the employer to decide to allow or prohibit use of medical marijuana during employment.
It is important to remember other provisions, rules and laws may coincide or interfere with the employer’s decision on how to handle medical marijuana. For instance, the amendment does not permit a person to operate vehicles or “dangerous devices” while under the influence, so even if the rules and regulations state the decision is left up to the employer, there are still restrictions on what employees may be able to do.
Banking and Taxes — For marijuana-related businesses, two large issues they may have to confront once the amendment goes into effect are banking and taxes. Many banks will not work with or allow accounts to be opened for marijuana-related businesses because it is still federally illegal. This means in funding efforts as well as in paying employees, vendors, and taxes, it can be extremely onerous. Second, based on federal laws concerning drug trafficking, there are restrictions concerning the ability to make certain business tax deductions if controlled substances are involved in the business. We have seen in states that have legalized marijuana that this can have a significant impact on marijuana-related businesses’ tax liability and effective tax rates.
Many state-legal marijuana businesses, for instance, must function as cash-only enterprises, since many banks are nervous about dealing with businesses that are essentially breaking federal law. Businesses also can’t file for several [business tax] deductions and, as a result, their effective income tax rates can soar to as high as 90 percent. -https://www.vox.com/cards/marijuana-legalization/marijuana-schedule
Felon Employees — Amendment 2 also contains a prohibition for persons with qualifying felony offenses (regardless of the severity, sentence, or actual offense) from taking part in marijuana-related businesses in any way, with a few exceptions. This includes not only ownership or management, but also simply employment.
Federal law
Though the amendment makes medical marijuana legal in the state of Missouri, federally marijuana is still illegal and classified as a Schedule I controlled substance. As such, there are certain inherent limitations for possible new marijuana-related businesses. Marijuana related businesses cannot, for instance, register a marijuana-related trademark with the USPTO,even if recreational use is legal in the state. There is a prohibition on granting federal trademark protection for unlawful activities, and decisions denying registrations for marijuana-related companies have been upheld (for a case highlighting this prohibition in the context of a medical marijuana business, see In re PharmaCann, 2017: LLC https://e-foia.uspto.gov/Foia/
RetrievePdf?system=TTABIS&flNm=86520138–06–16–2017).
Federal law may also have impacts on local businesses and their employees when it comes to disputes over the use of medical marijuana. One such instance would be the tension between the ADA and accommodations. The American’s with Disabilities Act (ADA) requires that accommodations should be allowed by employers when working with employees with certain disabilities or conditions. Most states incorporate or simply mirror the language of the ADA into their state disability laws and guidelines. And while some of the conditions in Amendment 2 are ADA conditions, marijuana is still federally illegal and may not fall under a reasonable accommodation under the ADA. This could mean that even if a doctor prescribes medical marijuana as treatment for, say, Crohn’s disease, an employer would not have to allow such use under the ADA as an accommodation and could still punish the employee for its use during employment.
In large measure, we won’t know much impact the amendment will have until the applicable rules and regulations have been created and implemented by the state government (and it actually goes into effect). So what does that mean for a new/future business owner? The short answer is, unless you are a veteran or a company who may work with or be receiving benefits from the Missouri Veterans Commission (the primary beneficiary of the taxes to be collected from the sale of marijuana in the state), or if you open your own medical marijuana related business, you might not see any direct financial gain from the amendment. But its effects, including possible effects on your employees, how you run your business, and local community impacts, may be large.
