A lawsuit that is airing out almost all the dirty laundry of Missouri’s nascent medical cannabis program goes to court today for a two day trial in Cole County Circuit Court. The case is almost guaranteed to end up in the Missouri Supreme Court and could have a significant impact on the state’s industry by eliminating cultivation license caps if the plaintiff’s complaints are upheld.

Brought by the Sarcoxie Nursery, a medical cannabis applicant, against Dr. Randall Williams, the Director of Missouri’s Department of Health and Senior Services (DHSS), and Lyndall Fraker, the state’s chief cannabis regulator, the suit makes four major claims: 

1) that regulations created by the law were rushed into effect without proper review by the legislature’s Joint Committee on Administrative Rules (JCAR); 

2) that geographic bonuses granted in the licence scoring system created an illegal special law violating the state constitution’s equal protection clause; 

3) that DHSS’s ability to grant license variances without oversight is unlawful; and

4) that the limit on cultivation licenses is counter to the Missouri constitution’s “Right to Farm” provision added by referendum in 2014.

The issues at stake are mostly questions of law, rather than of fact, so it’s likely the presiding judge, Patricia Joyce, will focus on taking lengthy briefs during the trial and then issue a ruling in 30 days or so, says Jay Preston, shareholder and medical marijuana practice leader at Springfield, Missouri-based law firm Carnahan Evans Cantwell & Brown.

“I would not expect a final answer on this anytime soon,” said Preston. “I would expect this matter to get appealed to the next level depending on who wins. I think that if it is appealed it may end up going directly to the Missouri Supreme Court because the court has exclusive jurisdiction on constitutional issues.”

Aggressive court tactics

The plaintiff, Sarcoxie Nursery, is led by Dr. Paul Callicoat, his wife Wendy, and botanist son, Jonathon. Dr. Callicoat, a successful cardiologist who operated a large practice group with his wife, operates the flower nursery and hemp farm in Sarcoxie, a small town near Joplin, in Southwest Missouri. An applicant for one of the state’s 60 cultivation licenses, the nursery ranked 236 in the December 2019 scoring process. Soon after receiving its score, Sarcoxie Nursery filed a temporary restraining order asking courts to restrain the state from awarding licenses until review by JCAR, the Missouri legislature’s rules review board, was completed. That motion was denied.

Neither the Callicoats, the plaintiff’s attorney Joseph Bednar, nor representatives from the Missouri Attorney General’s office responded to inquiries from Grown In by publication.

Since that first motion, the plaintiff has filed a second motion for a restraining order, conducted an in depth discovery demanding tens of thousands of documents from the state, and then last week, just before trial, Sarcoxie Nursery filed a motion demanding sanctions against the state after alleging the DHSS and Attorney General Eric Schmitt’s office illegally concealed documents and violated open records laws in order to undercut the lawsuit.

Attorney General Eric Schmitt denied the allegations to the St. Louis Post-Dispatch, “That motion is baseless; it’s frivolous,” he said.

Perhaps not coincidentally, plaintiff’s attorney Bednar, is the former chief counsel to the late Democratic Gov. Mel Carnahan.

Judge Joyce did not rule on the motion, but the Jefferson City News Tribune reported the judge, “found it troubling when the Attorney General’s Office told her she could not see documents she normally would be able to see in such proceedings, she had to order the office to turn over the documents.”

The suit has become a minor political football during a divisive reelection campaign for Republican Gov. Mike Parson, whose opponent, Democrat and State Auditor Nicole Galloway, says she would remove DHSS head Randall Williams and lead cannabis regulator Lyndall Fraker. Gov. Parson, referring to the Sarcoxie case as well as cannabis license application appeals pending in Missouri’s Administrative Hearing Commission, vowed to resist the lawsuits, saying Tuesday that, “We’re going to fight against people who sue this state.”

Constitutional questions

The Sarcoxie suit’s questions about an illegal special law due to geographic bonuses in application scoring and the Right to Farm constitutional provision are largely questions of law that almost guarantee the case would need to be decided by the Supreme Court, says attorney Preston.

The state’s Right to Farm constitutional amendment is virtually untested in courts, says Preston. Passed in 2014 by a slim margin above 50%, and backed by the Missouri Farm Bureau, the amendment was intended as a bulwark against efforts to ban genetically modified ingredients and limitations on large livestock operations.

“Normally when you’re examining constitutional issues you look at the past interpretations. For this, in the legal field, these are two brand new constitutional amendments,” said Preston referring to Right to Farm and the state’s medical marijuana constitutional amendment. “Without background on how [judges] interpret either one, it’s going to be a matter of first impression.”

Overall questions about state practices

Besides legal arguments, the complaints filed by Sarcoxie Nursery since last December have aired a series of revelations about state practices. Including:

  • A charge of cozy relations between the state’s deputy director of medical marijuana, Amy Moore and a state cannabis trade group the Missouri Medical Cannabis Trade Association, through her husband Blake Marcus, an attorney who has consulted for Missouri cannabis businesses, and promoted applicants to join the trade group.
  • That $8 million of $25 million total state revenue from medical marijuana licenses has been set aside to fight litigation over the state license process, according to a deposition from DHSS director Dr. Randall Williams.
  • With 853 appeals to the state’s Administrative Hearing Commission, only three judges can hear them and that state attorneys have taken steps to delay hearings for months.
  • Dr. Williams apparently used his personal cell phone to conduct business without downloading messages to state computer servers, a violation of the Missouri Sunshine Law, since official communications are considered public records.

How it ends

Regardless of how the case is resolved, Preston thinks it is unlikely that existing licensees will be affected by any ruling.

“We have [issued] 332 licenses. The vast majority of those license winners have begun construction, some are up and operating, and they paid for their license, acquiring a property right in those licenses. It would be very difficult for those to be pulled back,” said Preston. 

As a result of the case, it’s possible that the geographic bonus could be eliminated, rescoring some applications and moving them up so they can obtain licenses, said Preston. In addition, license caps could be removed due to a ruling on Right to Farm. But, either way the case will have to wind its way through the courts, taking many more months or even years before a ruling. Maybe not until 2022, said Preston.

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Editor Mike is an itinerate reporter, recovering political consultant, and strategy game devotee.