A California-based company that was denied an application to grow medical marijuana in Missouri by its Department of Health and Senior Services (DHSS) was victorious in court this week, according to media reports.
DHSS appealed the Cole County Circuit’s Court’s judgment quashing its preliminary writ of prohibition arguing that the Missouri Constitution requires it to keep data submitted by medical marijuana license applicants confidential, but the Western District Court of Appeals sided with the lower circuit court, according to a May 18 order.
"Because the plain language of [Article XIV of the Missouri Constitution] Section 1.3(5) allows the confidential information to be used for purposes of an appeal of the Department’s decision to deny a license, Commissioner Slusher did not err in granting Kings Garden’s motion to compel and ordering the production of certain confidential information pursuant to a protective order," the order states. "Consequently, the circuit court did not err in denying the Department’s petition for a writ of prohibition. Point denied."
Kings Garden Midwest, known in Los Angeles as the King of Weed, alleged the state's process for granting marijuana licensing is "arbitrary and capricious in that other applicants were awarded more points for the same and/or similar answers provided by Kings Garden.”
“The process that’s in place probably did not provide a lot of confidence in the decision-making of the administrators and when you don't have transparency, people who feel aggrieved go to the court system, which is what happened here,” said Steve Stewart, a Government Accountability Institute (GAI) researcher who previously evaluated the state of Missouri for favoritism in the legal cannabis industry.
Some 800 appeals by various companies seeking a license were filed with an administrative hearing commission requesting review when they were denied.
“It's difficult to do, manage this type of regulation in a market where there are so many people who want to be in it,” Stewart told the St. Louis Record.
According to DHSS, the appellate court’s decision is based on the fact that the Missouri House last week approved an amendment 82-59, requiring DHSS to provide legislative oversight committees with records regarding who owns the businesses that have been licensed to cultivate and distribute medical marijuana.
“Today, the court of appeals determined that (the amendment) permits the disclosure of facility applications, in limited circumstances, at the Administrative Hearing Commission subject to a protective order,” DHSS department spokeswoman Lisa Cox told the eMissourian in a statement. “The Department is reviewing this order and next steps in fulfilling the mandates in (the amendment), including seeking final review by the Missouri Supreme Court.
It was widely reported In November 2019 that the United States District Court for the Western District issued a grand jury subpoena to DHSS, requiring it to disclose documents regarding four license applications.
“It indicates the amount of money that's involved with the cannabis industry and you're dealing with people trying to get to the front of the line and the way you do that is through influence and relationships,” Stewart said. According to DHSS data, dispensaries have reported $44.5 million in medical marijuana transactions statewide since sales began.
Rep. Peter Merideth (D-St. Louis), who sponsored the amendment requiring transparency told the Missouri Independent, that DHSS privatizing ownership records creates transparency obstacles for the legislative oversight committees.
“The fact that marijuana businesses want to hide their identities doesn't surprise me and the fact that there are some legislators wanting to know for regulatory purposes doesn't surprise me either because this is a story that's going to play out in all the States that start with medical marijuana and move to marijuana legalization,” Stewart said. “A lot of these owners want to remain behind the scenes.”
Missouri is among four states under investigation by the Federal Bureau of Investigation, including California, Florida, and New York, according to GAI’s report.