Lawmakers refocus on medical marijuana

Elijah Haahr: The DHSS testimonies left unanswered questions.

Peter Merideth: The House supports removing the license cap.

Lyndall Fraker: The DHSS license cap allows the department to carefully regulate the industry.

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The coronavirus pandemic brought nearly all political efforts to a halt midsession for the Missouri General Assembly, including proposed legislation and an investigation into the state’s developing medical marijuana program.

But as May 15 neared, the last day of the legislative session, many lawmakers turned their focus back to medical marijuana.

The Missouri House Special Committee on Government Oversight in the first week of May resumed its investigation into the rollout of the new state program, which has been widely criticized by industry hopefuls for irregularities in application scoring and alleged conflicts of interest within the Missouri Department of Health and Senior Services. Many denied applicants also have said the process favored multistate operators and that the state department has limited the industry by putting a cap on the number of licenses issued.

“The first thing [DHSS] did was limit access when they said they wanted to create a free market,” said Rep. Peter Merideth, D-St. Louis, the ranking minoring member of the oversight committee. “What we have right now looks to be a closed market with key players getting special treatment.”

DHSS received over 2,100 applications last year for just 348 available licenses. Of those licenses, 50% were awarded to multistate operators, according to past Springfield Business Journal reporting, and 18 licenses were dished out in Springfield.

The license cap that DHSS implemented, which many in the industry are calling unconstitutional, is the minimum facility requirement outlined in the medical marijuana amendment. It calls for at least 24 dispensaries in each congressional district and 60 cultivators, 86 manufacturers and 10 testing facilities statewide.

House members this session voted with bipartisan support to repeal the license cap, but last-minute efforts to fully repeal it failed after representatives stripped the bill of all House amendments during the final hours of session on May 15. Other changes to the industry were approved.

“The House sent a pretty clear message that we don’t believe the cap should be there,” said Merideth. “I tried really hard to get that amendment through, … and my No. 1 priority in the committee is the cap. It’s at the heart of all of this.”

Legislative investigation
Oversight committee Chairman Rep. Robert Ross, R-Yukon sent a letter May 7 signed by committee members to the DHSS, requesting a host of records to address the “too many unanswered questions” from committee proceedings that have taken place over the last few months, according to the letter.

Speaker of the House Elijah Haahr, R-Springfield, said the reason for the records request was because the committee felt there was too much uncertainty among the executives of the medical marijuana program in past testimonies.

“We’re trying to ascertain the exact processes that were followed to make sure everything was done correctly, that everyone who applied were treated equally and that there was no opportunity for conflicts of interest,” he said.

The committee is requesting emails and documents concerning the hiring of the medical marijuana program director, Lyndall Fraker, and its deputy director, Amy Moore, as well as department meetings, a market minimums study, application questions and the third-party scoring contract.

Also in the request is information concerning key players in Gov. Mike Parson’s inner circle – Missouri Chief Operating Officer Drew Erdmann, Deputy Chief of Staff Robert Knodell and lobbyist Steve Tilley – and their involvement in the program. According to the request, the committee is interested in Erdmann’s involvement in the department hiring Deloitte, a British consulting firm, to conduct a study in the early stages of the program. Knodell is also believed to have a role in hiring Fraker, according to the documents, and committee members have questioned Fraker’s ability to lead the medical marijuana program in previous testimonies. Steve Tilley is a lobbyist and longtime friend of Parson, dating back to when the two served together a decade ago in the Missouri House. Tilley has reportedly become a major fundraiser for Parson in recent years and also serves as lobbyist for several medical marijuana clients, as well as the Missouri Medical Cannabis Trade Association, of which dozens of members were approved for facility licenses.

Merideth said the committee is concerned with potential conflicts of interest that have popped up in committee hearings over the last few months, including Moore’s position as deputy director. Moore’s husband, Blake Markus, is a Jefferson City attorney with medical marijuana clients, according to past Springfield Business Journal reporting.

Fraker, of Marshfield, said his team is working to respond to the request by the June 1 deadline, noting the department anticipates the request requiring over 300,000 documents to be found.

“There’s a lot of unhappy people that didn’t get licenses, so we knew they’d be doing what they could to try to prove a point or get a license,” Fraker said, adding the committee investigation is spurred by denied licensee complaints.

By press time, there were 828 appeals filed with the state’s Administrative Hearing Committee, said DHSS spokesperson Lisa Cox, which represents nearly half of the applications that were denied. Two appeals were settled in April for a St. Louis-based dispensary and a testing facility in Kansas City, according to a DHSS news release.

“The (amendment) that was passed by the voters was very clear that they wanted a well-regulated, safe, patient-focused industry,” said Fraker. “We decided to limit the licensing to a manageable amount and these numbers were ... put together by the drafters who thought that these numbers would supply the state for the time being.

“We feel we can regulate it and we can make sure the state is safe.”

Fraker said two businesses with cultivation licenses have requested a commencement inspection, which is likely to take place over the coming weeks. He said he anticipates the program is still on track to see product hit the shelves in late summer, despite concerns that COVID-19 would greatly delay the industry.

Last minute legislation
A proposal by Rep. Lane Roberts, R-Joplin, that passed during the final days of session requires DHSS conduct criminal background checks and fingerprint all employees, officers, managers, staff and owners of licensed medical marijuana facilities. The fingerprints are to be sent to the State Highway Patrol and forwarded to the FBI, according to the bill.

Last year, the FBI informed the state Health Department that it did not have access to the national fingerprint background check database, and Cox said Roberts’ bill provides that authority.

The House proposal flew through the Senate in the beginning of May and was passed May 14, as many lawmakers saw this bill as a way to keep the industry clean. The bill is now awaiting the governor’s signature.

Lawmakers also considered legislation proposed by Rep. Ben Baker, R-Neosho, that would require DHSS to uncap the limit of facilities, though the amendment failed during the final minutes of the legislative session in the House.

And a budding association has also joined this movement.

The Missouri Patients Alliance, which formed in March, is currently made up of over 600 denied medical marijuana companies statewide, said co-founder Paul Murano. The group is considering legal action against the state to uncap the license limit. Local entrepreneur Desmond Morris of The Wholesome Bud Co. said he’s joined the alliance.

Murano said allowing the 1,700 denied companies in the state to open for business could create roughly 50,000 jobs.

“Now, more than two months ago, this is desperately needed for our economy, and it doesn’t cost anything from the state government,” he said. “Allowing 1,700 companies to join this industry would impact the real estate industry … construction industry – especially with the massive hit taken to the economy because of COVID-19.”