The Missouri Supreme Court Tuesday sent legal tremors through hundreds of pending medical marijuana license appeals, as it agreed with a circuit court decision to open other applications for review in court. Now, as a result of this decision, appealing applicants may demand regulators to provide other applications for comparison, which could lead to revelations of dozens if not hundreds of scoring errors and sloppy procedures and as many more new medical marijuana licenses.
Because of the decision, “Basically all these..cases that are based on arbitrary and capricious scoring, they will be able to compare their scores to the others,” said attorney Joe Bednar of Spencer Fane in Jefferson CIty, who is representing twenty medical marijuana license appeal cases.
[Download the Missouri Supreme Court decision]
The decision in State of Missouri v. Commissioner Renee Slusher, also known as the “Kings Garden” case, hinged on applicant Kings Garden Midwest LLC, charging they did not receive a license, even though their application submission was word-for-word identical to some license winners. Kings Garden, in an Administrative Hearing Commission (AHC) case, which is Missouri’s quasi-judicial regulatory appeals court, charged the state application process was “arbitrary and capricious”, and the only way to evaluate that process was to compare their license application to others.
In the AHC case, the Missouri Department of Health and Senior Services (DHSS), which manages the state’s medical marijuana program, refused to open its application archives, and appealed the AHC decision by Comm. Renee Slusher successively to the Circuit Court, the state Appellate Court, and finally the state Supreme Court on the grounds that a section of the Missouri Constitutional Amendment XIV that legalized medical marijuana requires confidentiality of all application records.
But the Supreme Court disregarded that section in its decision by citing the amendment’s section 1.3(5), which reads, “Such reports or other information may be used only for a purpose authorized by this section.”
According to the Court opinion written by Judge George W. Draper, III, “Because an appeal to the AHC and judicial review is authorized, the plain language of article XIV, section 1.3(5) allows the confidential information to be used for the purpose of an appeal of a license denial.”
Judge Draper later writes, “Because applications are not judged solely on their own merits but are ranked competitively against other applications, the only way to determine whether Department denied Kings Garden’s application in an arbitrary or capricious manner is to compare its applications against information from those of successful applicants. Without all of the information that formed the basis of Department’s decision, no meaningful review of that decision can occur.”
Bednar, in the 20 cases he represents before the AHC, believes this decision will result in many appealing applicants to demand access to the state’s application archives in an effort to to identify patterns of poor decision making.
“We’ve been saying this is a significant case and we can’t go ahead with the appeal until this discovery issue is determined. This Department does not want applicants to have access to information,” he said.
Although DHSS has lost this round, attorney Denise McCracken of cannabis compliance firm Dogwood Advisors, thinks the case is just part of a long-term delay practice to ensure as few medical marijuana licenses are approved.
“They’ve been able to hold off on turning over applications during the application process in discovery in AHC for over two years, for which they deserve a lot of credit for being extremely strategic for how they handled it,” said McCracken.
“They may lower their standards for who they will enter settlement agreements with and they may continue to appeal every decision at every level that awards a new license.”Last month DHSS settled with an applicant to award licenses following an AHC decision citing “obviously inconsistent scoring” by a contractor hired by DHSS. Last year DHSS settled with another applicant, after AHC found scoring errors in the application process.