Missouri cannabis regulators are fighting in the state’s Western Appellate Court an effort to reveal the state’s pool of cultivation license applications. If the regulators lose, the state’s application scoring system could be overturned.
Kings Garden Midwest, a rejected Missouri cannabis cultivation license applicant, contends, “that the scoring process used by the Department was arbitrary and capricious in that other applicants were awarded more points for the same and/or similar answers provided by Kings Garden.” The group’s position is explosive, in that it charges that the entire scoring system is broken, and that as a result, no applicants’ score should be accepted as valid.
[Download Kings Garden appellate briefs]
“It’s impossible to litigate and appeal if you don’t have access to the applications of the successful applications to compare.” said attorney and cannabis advocate Dan Viets. “I think that a possible motivation for DHSS is to want to keep that information secret. It will likely demonstrate how arbitrary the scoring process really was.”
The Department of Health and Senior Services (DHSS) is the Missouri agency that regulates medical cannabis.
“DHSS is in a tricky position. They were required to put together an entire program under the constitutional deadlines, but those deadlines left little room for mistakes,” said Missouri cannabis law attorney Denise McCracken. “All you have to do is read the 800-plus [AHC cannabis application] complaints to see there were real problems with scoring applicants,”
Kings Garden, a California-based cultivation company and the “disappointed applicant”, as it is referred to in court, brought its complaint to the Missouri Administrative Hearing Commision (AHC), a quasi-judicial body for license appeals, last August. The AHC has not made a decision in Kings Garden’s case, but did award Kings Garden the right to discovery for every cultivation application so they can be compared and evaluated against their awarded scores.
The AHC has fought that decision tooth and nail, arguing that the Missouri state constitutional amendment legalizing medical cannabis guaranteed application information would remain confidential, and that revealing application information would give Kings Garden a competitive advantage over other applicants. It “will have a chilling effect on the number of quality applicants who may seek licensure,” according to a filing by DHSS.
“I think they are keeping a lid on it because once it is discoverable, it’s going to open a Pandora’s box for DHSS, even under protective review by a commissioner,” said McCracken. “I suspect that the commissioner will see far more problems than an individual appellate or disappointed applicant can see. And DHSS has made statements to the effect that it wants to limit the number of licenses out there, particularly cultivation licenses.”
Kings Garden argues that promised confidentiality has no standing when it comes to legal discovery. “Private and confidential banking information, health information, trade secrets, confidential expert reports, etc., are all ordered to be produced in the context of discovery because the documents are relevant to the underlying action,” says Kings Garden in its appellate brief.
“The sole issue for the Court is,” says Kings Garden’s appellate brief, “Does the provision of the Missouri Constitution prohibiting public disclosure of information prohibit denied applicants from obtaining information relevant to their appeals through the discovery process?”
Viets, who advocates for no license caps, believes the state is likely to lose in the Appellate Court.
“They could save a tremendous amount of money and a tremendous amount of work by simply issuing more licenses,” he said.
DHSS attorneys appealed the AHC ruling first to the circuit court, where they lost, and then to the state appellate court, where oral arguments are expected on May 4. Both parties, Kings Garden and DHSS, have submitted their written arguments to the court.
