What’s going on with Missouri cannabis? A Show-Me-State pot primer

Missouri DHSS Director Randall Williams speaks at the state capitol. Second from left is Gov. Mike Parsons. (DHSS photo)

While Missouri dispensaries are only a few weeks away from selling medical marijuana to patients, the state’s legal cannabis rollout is already plagued with lawsuits, delays, and plenty of industry grumbling. State-collected data indicates that once legal sales begin, cannabis adoption will be like a shot out of a gun, but exactly how the industry grows and who benefits has been the core of complaints. For those catching up on the Show Me State’s cannabis industry, here’s twelve things to consider.

1. Although Missouri is a deep red state, there is broad support for cannabis legalization.

Passed by referendum in November 2018, medical marijuana laws are now embedded in the state constitution, giving it preeminence over any existing laws criminalizing cannabis use. Taking a cue from the electorate, Missouri Gov. Mike Parsons’ appointed chief cannabis regulator, Health and Senior Services (DHSS) Director Randall Williams, who has held dozens of town halls across the state where he calls out his personal cell phone number to the audience, inviting them to call him directly if they have any problems.

2. Medical patients are signing up at a rapid clip.

As of August 31, over 69,000 Missourians have been approved as medical marijuana patients. While you can’t yet legally buy cannabis in Missouri, the state opened sign ups in June 2019, and since then, patients have been signing up at the rate of about 5,000 a month. The state has one of the broadest set of cannabis medical patient permissions in the country, which has caused some concern among dispensary owners. 

For instance, while Illinois was racking up $22.2 million of cannabis sales among 55 dispensaries by July 2019, when it had signed up 71,000 medical patients, Illinois had a much more stringent patient definition, encouraging more consistent customers that purchased larger amounts in each visit. Because of Missouri’s more lax patient definition, there are concerns cannabis customers will have more casual buying habits.

3. The state vastly underestimated the number of patients that would sign up.

A University of Missouri market study commissioned by the governor’s office in early 2019 suggested that only 19,000 patients would be signed up by 2020. That study was then used by the governor’s office (see #7, below) to set a policy of limiting number licenses through a scoring process, like in Illinois, rather than simply allowing all comers to apply for and obtain a license, like in Oklahoma or Michigan. In Republican-dominated Missouri, the policy decision has divided free-market conservatives versus social conservatives who are still uncomfortable with any kind of legalization.

4. The state awarded licenses on December 31, 2019, but there’s been plenty of hold ups.

DHSS scored 1,207 dispensary license applicants, 576 cultivation license applicants and many more infused manufacturer and transport applicants. Following 2019 regulations, the state awarded licenses to 192 dispensaries, 60 cultivators, 86 infused manufacturers, 22 transporters, and 11 testing facilities. Despite that, the state took a long time to provide required employee ID cards and has been slow to inspect cannabis licensees that are ready to open. 

5. License distribution has been somewhat uneven.

Missouri law eliminated municipalities’ ability to opt out of cannabis facilities, and license applications are tied to specific addresses. While there were extra points awarded to applicants in ZIP codes with low employment, and each congressional district got a limited number of licenses, location otherwise played no role in scoring and approval. As a result, there are towns with many licenses, and others that could support a license have none. There is no regulatory provision for moving a license, and none have yet tried. Only 62 of the 371 approved facilities have begun their inspection process, suggesting many license winners are in a wait-and-see mode for the time being.

6. Failed applicants filed 853 appeals complaining of scoring issues.

So far Missouri has spent $1.3 million to defend against lawsuits in the Missouri Administrative Hearing Commission, which charge the scoring process was unfair due to limited answer space and conflicts of interest with Wise Health Solutions, a partnership between Oaksterdam University and cannabis consulting company Veracious Compliance Solutions. Many of the applications’ complex questions only allowed 300-word answers, and by design, scorers each looked at a limited group of questions, rather than entire applications. And, in a charge familiar to Illinois cannabis applicants, some applicants tell Grown In that identical applications for different applications received different scores, suggesting that different scorers were using different scoring rubrics.

7. A blistering report from a Missouri House of Representatives investigation has raised even more questions about the application process.

The minority Missouri House Democrats released a report earlier this month [download here] that charges Gov. Parsons interfered with the 2019 market study, the company hired to manage applications had conflicts of interest with applicants and DHSS Director Randall Williams had an undisclosed personal relationship with the chosen scoring company, Wise Health Solutions. While the report was written by Democrats, the research was conducted by a Republican-led legislative committee, suggesting that the findings are bi-partisan, but Republicans sat on them since elections are mere weeks away.

8. A Right to Farm lawsuit threatens cultivator limits.

A Southwest Missouri nursery owner is due to begin a jury trial on October 29 with a case that charges the state’s limits on cultivation facility licenses violates a 2014 state constitutional amendment that asserts Missourians’ “Right to Farm”. The state has fought the case tooth and nail for over a year, but a judge has allowed the case to go forward and is currently in the discovery phase. The case also asserts the state’s geographic-based scoring system is illegal, and if successful could threaten all of Missouri’s cannabis scoring systems, not just cultivation.

9. Cannabis facility certifications have been moving forward anyway.

As mentioned above, despite all the lawsuits, Missouri has continued to license and certify cannabis facilities – in stark contrast to Illinois’ dispensary and craft grow licenses. At least one dispensary is ready to open, and at least one cultivator has a crop ready to sell, but none of the testing facilities have been certified by the state, so sales are likely still weeks away.

10. The state could just decide to eliminate dispensary license limits anyway.

The easiest solution to many of the state’s cannabis application problems is to simply give a license to every applicant who passes a background check, Missouri cannabis advocates tell Grown In. That’s a process similar to Oklahoma, which legalized medical cannabis in August 2018 and has already approved 9,458 cannabis dispensaries, growers, testers, and other related facilities. Once the election is over, advocates say, the winning Missouri governor could lift the limits, or the state legislature could as well, which comes back to session in the first week of January. 

11. Where’s the social equity provisions?

Really, Missouri doesn’t have any. The license scoring system encourages applicants to site in ZIP Codes with high unemployment rates, but there are no programs to encourage minority ownership or applications.

12. Cannabis proponents are preparing to push for adult use in a 2022 referendum.

Missouri cannabis advocates, which are well organized and have createdmultipleassociations, are already preparing to push for an adult-use legalization referendum on the November 2022 ballot. The proposed law is still being crafted, but it does seem likely that existing medical facilities would get first crack at a recreational use license somehow.