Despite appropriate measures by the state, challenges from overruled medical marijuana applicants have overwhelmed Missouri regulators.
The state did hire an autonomous third-party scorer to take care of the matters. However, the efforts have gone into vain.
Rejected applicants allege that the arbitrary scoring process has cut them off from a market that has been intended to remain locally owned. A huge chunk of licenses was awarded to multistate cannabis operators (MSOs) and this hasn’t gone well with rejected local applicants.
Rejected applicants have to bear the expense of thousands of dollars. Most of the startups cannot even afford the expense to appeal their cases. In the meantime, some rejected MSOs are alleging that they were targets of inconsistent, capricious and flawed scoring.
The number of complaints filed is strikingly high in Missouri when compared to other states. As per a staff attorney at the Administrative Hearing Commission, the number of appeals made has skyrocketed past 500.
Various other issues have been highlighted by the St. Louis Post-Dispatch report. This includes multiple licenses being won by entities with troubled histories and by those that have a connection with board members of the Missouri Medical Cannabis Trade Association.
Common concerns bothering Missouri Medical Marijuana Industry
The case of Missouri’s Medical Marijuana Program highlights an obstinate issue that is troubling state-controlled licensing of cannabis programs.
Despite having objective rules for the evaluation of applications, almost every state is facing administrative hearings and litigations by cannabis business applicants.
A Denver-based cannabis attorney, Rachel Gillette is of the opinion that Missouri’s case simply shows that the process of handing over medical marijuana license still has inherent flaws.
A lot of things still need to be considered when it comes to licensing. She always stated that the scoring system can become arbitrary even if an independent third party had been involved in the process.
Gillette is in favor of local jurisdiction determining what the best is for their communities when it comes to licensing.
Cannabis businesses in Missouri were highly anticipating the launch of its medical cannabis program. As per projections made, the industry has the potential to touch $300 million as far as retail sales are concerned in a couple of years.
The state accepted over 2,200 applications for 86 processing, 60 cultivation, and 192 dispensary licenses. However, the next move from the government in this regard is highly being anticipated.
Only time will tell if the government will issue further licenses for satisfying disgruntled applicants. This has already happened in many states.
It is still uncertain if legal trials could postpone the launch of the medical marijuana program in Missouri. The lawsuits against the program allege that the cap on cultivation by the government violates one’s basic right to farm.
The Communications Director for the Department of Health and Senior Services, Lisa Cox recently shared her opinions on the matter. She said that currently, the department is not anticipating any interruptions to the program owing to litigations.
Gregory Wu who is co-chair of cannabis practice in Kansas City at Shook Hardy & Bacon is helping a few clients to place an appeal on the matter. His client includes a female-owned applicant with a minority partner.
He is of the opinion that the state is establishing hurdles to entry in the marijuana business in an unfair manner. He said the move is severely impacting small business owners.
Contentious Bonus Points & Arbitrary Scoring are the major Complaints
Appeals and interviews have criticized the scoring disparities. For instance, the Missouri Medical Marijuana Collective has alleged that its processor and cultivation applications had identical answers on 16 questions, yet the scores given were lower on the cultivation application thereby resulting in rejection.
The controversial bonus point system has also been criticized by many. This was based solely on the unemployment rate prevalent in the ZIP code of an applicant. This was circulated way before the applications were due.
Wu said that many clients had invested in their proposed facilities way before the bonus criterion was revealed by the state. He commented that had the applicants known about this factor, they would have certainly considered it while making any move.
Cresco Missouri had secured enough points for winning multiple dispensary, processing and cultivation licenses. However, its application was rejected by the state. Cresco pointed out in several appeals that Verano Holdings and Harvest Health & Recreation, which is an Arizona-based company, had won several licenses by the state.
Cox refrained from commenting on specific applicants. However, she did clarify the reasons for denials. She said that the reasons were many including the inability to adhere to the minimum prescribed standards, scoring results, and analysis of how the entity is controlled.
The criteria also required the applicants to prove that the majority is owned by individuals who have at least a resident in the state for a year.
Wise Health Solutions which is a joint venture between the Oaksterdam University of Oakland and Veracious Investigative and Compliance Solutions was hired by the state to be the independent scorer.
Chad Westom, the founder of Veracious is of the opinion that the state has developed a well though-out process with several layers of objectivity and blind scoring. He maintained his stance that there is a defensible and reasonable explanation for every question.
An applicant who got rejected alleged that the scores vary radically different for the same answers. It is still not clear how long it would take for the appeals to be resolved and heard.
The state has nearly thirty days for responding to a complaint. However, it is still difficult to predict a timeline considering there are too many appeals to consider. Wu mentioned that both the state and rejected applicants have a lot of costs to bear in order to proceed.