So far, the priciest product on the shelves might be the $700 bag of vanilla beans.
But in a matter of days, hundreds of thousands of dollars worth of marijuana will be delivered to Clovr, the first company in Missouri approved to manufacture marijuana-infused products.
For weeks, the Kansas City company has had 800 pounds of marijuana sitting at a Carrolltown grower as it awaited final regulatory approval to start production.
“Currently, I have more weed sitting in storage than the rest of the state has to sell,” said Clovr CEO Josh Mitchem. “I mean, we’re sitting on 800 pounds in storage with 200 pounds coming every 10 days.”
In an industrial park full of rail cars, metal shops and tractor trailers near the Missouri River, Clovr inhabits what Mitchem expects will become the largest marijuana manufacturing facility in the state, if not the nation. So far, the company has repurposed about 48,000 square feet of the 171,000-square-foot building into labs, kitchens and production spaces, spending some $16 million on the building, renovations and equipment.
Workers there will make a range of products, including marijuana-infused sodas, gummies, concentrates, vape pens, pre-rolled joints and extracts. In the chocolate kitchen, marijuana will fill delicate chocolate bars and bonbons crafted with the help of Kansas City’s renowned chocolatier Christopher Elbow.
With state approval in hand, Clovr plans to start production in a matter of days. Its products, beginning with pre-rolled joints, could begin to hit Missouri shelves sometime in mid-December.
“Because we’ll be the first to open, obviously it gives us a really good stronghold on shelf space,” Mitchem said. “And once you get shelf space, you’ve got to mess up pretty bad in order to lose it to competitors.”
Clovr isn’t only going to be the first in the state to begin making such products, but it’s primed to be among the most competitive in the market. By law, all medical marijuana products have to be grown and manufactured in the state.
Aside from creating its own brands of products, Clovr has inked contracts to become the exclusive provider of candy and soda brands that are well known in other states with legalized marijuana. That includes a deal with Wana, which calls itself the nation’s top-selling maker of marijuana edibles.
More than two years after Missouri voters approved a constitutional amendment sanctioning a medical marijuana program, the market remains in its infancy with growers and dispensaries still working to get open.
In October, hundreds of patients lined up to be among the first to buy legal pot at the Kansas City area’s first dispensary. As of late November, only 25 of the state’s 192 licensed dispensaries had been approved to open.
But as dispensaries open, they have so far only offered smokable flower, not the edibles and oils that many patients desire.
That’s because many people don’t want to smoke or are advised against smoking because of health conditions. The body’s reaction to consuming marijuana is also considered distinct with a different and longer-lasting high than with smoking.
Without any sales of edibles to date, it’s unclear how much that market might grow in Missouri, though some operators think it could account for as much as half of all sales once the industry has matured.
In Colorado, flower has accounted for less than half of all sales of recreational marijuana, year to date, according to data from Headset, which tracks marijuana sales across the country. Edibles, concentrates, topicals and beverages make up nearly 30% of sales. Vapor pens and pre-rolled joints account for most of the rest.
“The trends nationally are certainly in the direction of cannabis consumers purchasing more and more infused products,” said Jack Cardetti, spokesman for the Missouri Medical Cannabis Trade Association. “That’s especially true in a medical market.”
Fresh Green dispensary in Lee’s Summit has drawn perpetual lines of patients waiting outdoors to buy marijuana since it opened Oct. 19. With limited supplies from growers, the store is only allowing patients to buy a half-ounce at a time.
“There are people that come to us every other day to get more,” said Bianca Sullivan, who owns the dispensary with her husband.
Even with such high demand, Sullivan knows the store has only scratched the surface of its potential market. Every day, patients call, text or ask employees about infused products, particularly edibles like gummies, which seem to have a strong cachet.
“Edibles are kind of like in style. It’s just the thing,” she said. “I think it’s going to be a large part of our sales once we get it going.”
Fresh Green’s Lee’s Summit store and its yet-to-open Waldo shop will stock a variety of Clovr products. But like many dispensaries, Sullivan said she plans to offer products from a variety of manufacturers across the state.
Still, she said Clovr is poised to be a big player in Missouri, getting to the marketplace first and providing exclusive access to existing, popular brands.
“You get those national brands in there and as long as that stays consistent, it will be hard to compete with that,” she said.
BUILDING OUT MISSOURI’S EDIBLE MARKET
While Josh Mitchem is the CEO of Clovr, his father owns the majority stake among a dozen or so investors backing the firm.
Steve Mitchem’s career has spanned from evangelical minister to president of the luxury jeweler Tivol to the controversial world of online lending.
Members of the Mitchem family were big proponents of Missouri’s medical marijuana program, donating heavily to the campaign to approve Amendment 2 in 2018. In 2015, Steve Mitchem provided his private plane to a bipartisan group of Missouri senators to view Colorado’s pot industry in person as he worked to convince lawmakers of the benefits of a local marijuana program.
Josh Mitchem said he began to eye the marijuana industry as the political winds were shifting. His family operated call centers and payday and online lending companies — an industry that has come under increasing scrutiny in recent years.
Mitchem’s firms settled with the states of New York and Arkansas after being accused of predatory lending. But he said it was the Obama administration’s “Operation Choke Point,” which targeted payday and other alternative lenders, that drove him out of the industry. After laying off 250 employees in a single day, he said he was determined to find a new, “Democrat-proof” line of business.
He said he’s been involved in Colorado’s industry for the last seven years, which included an investment in the Buddy Boy Brands marijuana franchise there.
At first, he was lured by the financial opportunity. He smoked marijuana in high school and figured the industry existed for people who just wanted to get high. But then he began to meet cancer patients who used marijuana to gain back their appetites and sufferers of chronic pain who finally found relief in pot.
“It almost started as a safety net against my other businesses,” he said, “but then it really turned into a huge passion when I actually started meeting patients.”
Mitchem, a founding member of the state trade association who now sits on its board, is now poised to build a Missouri marijuana empire.
He said Clovr’s manufacturing plant is the biggest in the state. The company has agreements to sell products in more than half of all Missouri dispensaries. And with its national brands, it’s likely to help stock shelves of nearly every dispensary. Additionally, Clovr plans to build out its own grow operation in Kansas City.
That market penetration will only grow if the state approves a recreational marijuana program. Industry advocates hope to put that issue on the 2022 ballot and Clovr has plenty of room in its plant to expand if such a measure is approved.
“Sales quintuple when rec comes to a state. That’s just the standard,” Mitchem said. “We’ve built this to be diverse and to be flexible for whatever it is we need to do.”
Across the state in the St. Louis area, BeLeaf Medical has been selling marijuana flower at its Swade brand of dispensaries for weeks now. But partner Kevin Riggs said not a day goes by without patients asking about edibles and oils.
“It’s just some people’s preference. Some people enjoy kind of the art of smoking it or the quicker response you get out of smoking,” he said. “Some people, particularly people with illnesses and respiratory illnesses, are reticent of putting anything in their lungs so they’re going to lean toward more manufactured products.”
BeLeaf, which is waiting on its final manufacturing approval from the state, plans to make pre-rolled joints, vape pens, cartridges, candies and even marijuana-infused, nonalcoholic beer.
For now, it’s not planning on offering any baked goods, a more complicated product with a shorter shelf-life. But that hasn’t stopped patients from making their own: Its dispensaries are selling a lot of butter machines that allow patients to turn the marijuana they buy at the store into oil they can bake into brownies or cookies at home.
BeLeaf is what’s known as a vertically-integrated firm: it won licenses to grow, manufacture products and sell them in its own dispensaries. By contrast, some businesses operate in only one segment of the market, like the owner of a single dispensary or a business that only grows marijuana. But to some degree, all of the state’s marijuana facilities will be intertwined.
BeLeaf’s dispensaries, for instance, will sell its own manufactured products and flower. But it will also stock its competitors’ lines, including Clovr.
“From the dispensary side, we want to carry the best products we can find in Missouri,” Riggs said. “Those are probably going to come from all over.”
MAKING CHOCOLATES AND GUMMIES
The metal facade looks like it could contain any old factory or warehouse. But inside, the plain hallways of Clovr connect a maze of disparate spaces.
One room contains oversized beakers and pricey gadgets to test and extract marijuana from raw plants.
Other areas look more like catering kitchens, with stainless steel aesthetics, hot plates and shelves packed with seasonings like cinnamon, ginger and vanilla bean.
Another room contains a bottling machine, where Clovr employees will make and package the Colorado brand of Keef soda.
Because of the nature of the business and state regulations, all parts of the building are covered in security cameras. Guards roam the hallways and the company’s 40 employees must navigate a series of locked doors to move about the facility.
Mitchem wants Clovr to make a variety of products that appeal to a wide variety of people. As he puts it, he wants to serve the cannacurious and cannasseurs alike.
One line of chocolates will feature playful names like Toasted Nuts and Smorgasm. On the other end of the spectrum, the bonbons and chocolate bars created with the help of Chrisopher Elbow will feature his trademark delicate design and bold flavors.
“We’re essentially doing the same thing we do at Christopher Elbow Chocolates,” Elbow said. “Obviously, the difference will be the infusion.”
Elbow has previously consulted on edible marijuana products in Colorado. He said the biggest challenge is identifying flavor combinations that can mask the taste of cannabis. He plans to start off with three flavors: salted vanilla caramel, citrus caramel and espresso caramel.
“I don’t necessarily enjoy the flavor of cannabis,” he said. “One of the hallmarks of Christopher Elbow chocolates are the really robust, intense flavors. So it naturally kind of masks what we’re doing.”
Kansas City native Zach Romey has been back in town training Clovr staff how to create his Robhots Edibles brand of gummies. He started that company in Colorado in 2014 and his products are now sold in 500 stores in Colorado and Oklahoma.
Because everything must be produced locally, people like Romey essentially license their recipes to companies like Clovr to bring those brands to market in Missouri.
That can be helpful for newer operators as products like gummies can be tricky to execute. Aside from crafting the right texture, every single unit must be consistent in its dosage.
“We know our process in and out. We’ve made millions of gummies at this point,” Romey said.
In Colorado, gummies account for a quarter of marijuana sales, he said. And he expects to see similar demand in Missouri’s medical market.
“People really like the convenience of having an edible,” he said. “You can just eat a gummy as opposed to having to step outside to smoke a joint…We’ve gotten a lot of people off opiates and other hard-core prescription drugs.”
Once fully operational, Romey said the Clovr facility will stand out not only in Missouri, but in the wider national cannabis market.
“I’ve toured the country looking at kitchens and grow facilities in just about every state where it’s legal,” he said. “This is far and away the biggest and most impressive manufacturing facility I’ve ever seen.”