Missouri cannabis regulators announced yesterday that they plan to abide by a federal judge’s order eliminating the state’s cannabis license rule requiring majority ownership by Missouri residents. The rule was made permanent in a lighting fast eight-minute federal bench trial, Toigo v. DHSS, last week.
“We are happy to have clarity on how we should handle the ownership residency requirement in the Missouri Constitution,” Lisa Cox, spokesperson for the Department of Health and Senior Services told the Missouri Independent, “and will comply with the court’s decision.”
The case is one of a trio of federal cases across the country challenging local residency requirements for cannabis license ownership, including cases pending in Detroit and Portland, Maine. Missouri’s unwillingness to appeal their case to a higher court makes it less likely that other states will have success carving out special circumstances for local residents.
Mark Toigo, the instigator of the eponymous lawsuit, owns a small chain of dispensaries named “Organic Remedies” in Pennsylvania and is a minority owner of Organic Remedies MO, which owns a cultivation license in Chaffee and three dispensary licenses in Fenton, Sedalia, and Cape Girardeau. Toigo filed suit against Missouri regulators because he wanted to take majority ownership of the Missouri locations, and seek additional investment from out of state.
“It’s about not being handcuffed,” Toigo told Grown In yesterday. “It’s about having options. For us it was economics. We have Missouri licenses and we want to grow and help the program grow.”
Now that the residency requirement has been lifted, Toigo plans to expand his Chafee facility.
“Having discussions on how you could grow, was kind of moot, because you couldn’t go very far. This has opened up the pathway for free enterprise,” he said.”
While Missouri has approved 152 dispensaries for operations of 192 licenses awarded in September 2019, as of October 8, only 35 of 60 cultivation licenses have been approved for operations. Many outside investors and Missouri operators have blamed the state’s residency requirements on the slow growth of cultivation sites, which typically need $12 to $15 million of capital to get started.
“It was more difficult to raise money with the 51% Missouri requirement,” said Mitch Meyers, chair of St. Louis-based Beleaf Co. It is possibly why some groups did not get operational. We played by the “then” rules and got our capital from Missouri owners. I’m frankly surprised that the law wasn’t challenged much sooner in the process given it sounds like a federal law we can’t get around.”
“Our system and the United States constitution does not envision this sort of ‘protectionism’ between the states,” said Jon Loevy, an attorney and owner of five retail licenses in Missouri under the Justice Grown brand. “Hopefully this ruling is the end of the litigation.”
