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Multistate operators plan local marijuana facilities

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Four companies with medical marijuana operations outside of Missouri are slated to open local facilities by summer’s end.

Conversations have been ongoing among state leaders and industry operators since the lineup for the state’s medical marijuana industry was finalized in January. A main point of the discussion has been whether out-of-state operators truly comply with Amendment 2 and if they take opportunities away from local entrepreneurs.

The law requires licenses to be awarded to businesses with at least 51% Missouri ownership. That’s been the ultimate question for the seven multistate companies that were awarded medical marijuana facility licenses in Missouri.

“With a multistate operator, it’s whether or not a Missouri resident truly owns the majority of the company or … it’s a strawman situation where a Missouri resident has been paid,” said Cynthia Northcutt, a local cannabis attorney, who’s handling appeals on behalf of denied applicants.

Lyndall Fraker, director of the medical marijuana program under the Missouri Department of Health and Senior Services, said the license announcements made earlier this year were conditional and pending further investigation of compliance.

“The scoring was all done in a blind fashion, so there was no way of knowing if they were multistate operators or local businesses,” Fraker said. “We’re still going through a vetting process to make sure people are who they say they are. We’re making sure they’re 51% Missouri owned.

“We still have a process to fulfill to make sure everyone is compliant.”

Part of the process is the commencement inspections conducted by the state before facilities become operational. Businesses have one year from the day the license was received to become operational.

Of the 348 licenses awarded, 50 licenses were given to multistate operators, according to Springfield Business Journal research, or about 15% of the total licenses.

Those corporations and their headquarters, in parentheses, are:

• Grassroots Cannabis (Chicago, Illinois), eight licenses;

• Holistic Industries Inc. (Washington, D.C.), six licenses;

• Bloom Medicinals of Florida (Boca Raton, Florida), eight licenses;

• Harvest Health & Recreation of Arizona (Tempe, Arizona), seven licenses;

• Justice Grown (Chicago), 11 licenses;

• Standard Wellness (Ohio), six licenses; and

• Verano Holdings (Chicago), four licenses.

Local facilities
Multistate operators that will be participating in the southwest Missouri medical marijuana market are Bloom Medicinals of MO LLC, Grassroots OpCo MO LLC, Holistic Missouri LLC and Harvest of Missouri LLC. They represent a combined eight planned facilities.

Boca Raton, Florida-based Bloom Medicinals will operate as a dispensary at 751 S. Glenstone Ave. near East Cherry Street. The storefront is owned by NZ Properties LLC, according to a permit application provided by the city’s Planning and Development department. Bloom Medicinals already operates dispensary, infused-product manufacturing and cultivation facilities in Arkansas, Utah, Maryland and Ohio, according to its website.

Grassroots OpCo Mo LLC, tied with Chicago-based Grassroots Cannabis, is planning dispensaries in Springfield, Branson and Joplin. The Springfield storefront is slated for 1306 N. Stewart Ave., next to the Solo Cup complex on Glenstone Avenue. Representatives did not return requests for comment.

Outside of Springfield, Holistic Missouri LLC was given the green light for a cultivation facility in Cassville, and Harvest of Missouri LLC was granted two cultivation facilities near Joplin.

Representatives with each company did not return requests for comment regarding its 51% share owned by a Missouri resident. DHSS denied SBJ’s Sunshine Law request seeking more information on the ownership structures. State officials cited confidentiality of the application process, per the Missouri Constitution. Additionally, permits filed by the city did not provide additional information related to a Missouri business partner.

Raising the minimum
DHSS received over 2,100 applications last year for just 348 available licenses. By press time, around 820 appeals were submitted to the state’s Administrative Hearing Committee, according to DHSS spokeswoman Lisa Cox.

Denied applicants are pointing to inconsistencies in the scoring, which was contracted to a third-party company, Wise Health Solutions LLC, to avoid conflicts of interest and favoritism, as well as concern that their business opportunities were taken by unqualified operations.

By March 16, nearly 40,000 patients were approved to use medical marijuana in Missouri, according to data provided by Cox. This far exceeds the projection of 22,500 qualified patients by the end of 2021 from a University of Missouri study conducted per state request.

“The number of licenses the state felt was acceptable to provide medicine for patients was based on what has turned out to be faulty data, which is a concern,” attorney Northcutt said. “To create a strong industry, there needs to be a healthy mix of all types of licensees, like larger entities. They’re going to do things and produce products that patients need and won’t have access to otherwise because some of your smaller producers can’t meet the scales.”

Northcutt said the small presence of cultivation facilities in southwest Missouri poses a problem for the region’s medical marijuana operations.

“That is going to ultimately affect patients,” Northcutt said. “The dispensaries have to secure products from producers that are geographically farther away, which will drive up the costs to patients. That’s a huge concern.”

Rep. Crystal Quade, D-Springfield, previously suggested during a committee hearing that the minimum number of facilities outlined in the medical marijuana amendment wasn’t enough. She thought the program wasn’t creating a free market. Such a move also would allow more local entrepreneurs to participate.

When asked if the inquiries into the medical marijuana program would continue, state House of Representatives Speaker Elijah Haahr said coronavirus matters had taken top priority. Fraker was unaware of any additional actions planned by the committee.

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