State licenses for medical marijuana dispensaries: neighborhood-level determinants of applicant quality in Missouri

When state governments impose quotas on commercial marijuana licenses, regulatory commissions use an application process to assess the feasibility of prospective businesses. Decisions on license applications are often met with formal appeals and legal challenges from rejected applicants. Although prior research has examined substate disparities in the availability of marijuana dispensaries, less attention has been given to the quality of license applications. The present study analyzed the relationship between neighborhood-level characteristics and the quality of prospective dispensary businesses.

During Missouri’s first applicant pool for medical marijuana dispensaries in 2019, a total of 606 census tracts contained the location site of at least one dispensary applicant. Using data from the Missouri Department of Health and Senior Services and the American Community Survey, fractional and binary logistic regression models were used to estimate the relationship between census-tract characteristics and application outcomes.

License applications received higher evaluation scores when proposed dispensary sites were in census tracts with greater population densities and no majority in racial/ethnic composition. Census tracts with poorer socioeconomic conditions attracted a disproportionate share of low-scoring applicants from the bottom quartile of scores. These effects were stronger for certain application subsections, particularly those assessing the quality of an applicant’s business plan and on-site security.

Some communities tend to attract prospective license holders who possess better quality resources, business practices, and industry experience. State disparities in commercial licensing requirements and application processes may lead to the inequities in legal product access found in some prior studies.