Missouri’s medical marijuana program director Lyndall Fraker says his agency will not issue regular reports on cannabis sales numbers, is not considering creating a new batch of licenses, is not likely to revoke licenses for facilities not operating by the mandated one year mark, and says lack of minority license ownership not a concern of Missouri’s program. Fraker made these comments during a wide-ranging exclusive interview with Grown In this week.
[Interview edited for grammar and brevity]
Grown In: Let me just start off by asking, will the state publicly report monthly sales numbers like Michigan does or Illinois does?
Fraker: No. At this time, we do not plan to do that. There was nothing in our Constitution or program that identified that we do share those business numbers. Our program’s set up, I think, a little bit differently in regard to the businesses themselves and being kind of a free market program. Other than just regulating the licenses, we don’t regulate pricing or anything like that. There may be some accumulation that the state does through the Department of Revenue with sales tax revenue. That may be something that’s done. But we do not plan to do it at our department here.
GI: We’re getting close to the deadline in January of the one year mark when licensed cannabis businesses are supposed to be operating, and a lot are not open. Do you have plans to revoke any licenses in January?
Fraker: You know, our plan is to work with all the entities that were issued the licences, and we are already doing that. We have a variance procedure in place. We have a change request procedure in place. And we’re certainly working with both of those now with various entities.
So, to answer your question, we really don’t want to revoke anyone. We want to make sure and try to help them all be successful. But we do not have a plan for a blanket extension or anything like that. All will be dealt with on an individual basis. Because everybody’s circumstances are different as to why they may be delayed or may have been delayed.
GI: Do you have a protocol or a procedure in order to make decisions about those licenses? There are another set of people that are down the line that likely would get a license that probably want a chance.
Fraker: Well, the Constitution and the rules themselves called for us to have the variance procedure in place and the change requests. So, basically they’ll just have to make a case for their extensions to us. And then we’re gonna do everything we can to help bring them into compliance, but, as you know, we’re gonna have to approve it prior to the year deadline. So those folks that are waiting in the wings, so to speak, they’re gonna know probably right around that one year time frame, whether there may be something that would become available or not.
GI: What sort of a review would the state conduct for these variances? What are the sort of things that you look for?
Fraker: Number one, I think if they made a good faith effort to, try to get the business stood up. There’s gonna be a handful out there that maybe have not been doing anything. And they’re gonna have to have a mighty good reason to be able to request an extension if they haven’t done a thing.
Then you’re gonna have some that will have made good faith efforts. Maybe there’s very good reasons why they haven’t. We know that Covid could’ve affected some businesses. We certainly realized that there were investors that had planned to maybe help certain entities or maybe their financial portfolios changed after the initial Covid situation. So, we understand those kinds of things have occurred. I think our intention is just to try to help all of them become successful. But they all will be dealt with on an individual basis.
GI: What about sales of licenses? Would the state allow that or or consider some sort of review of the license they wanted to sell their stake?
Fraker: Yes. There’s a change request process that is in the rules to seek a change in the ownership. Obviously, if it’s more than 10% then we have to approve that. And then there’s also a procedure if they wanna sell the whole entity, the whole shooting match, so to speak. But that’s gonna mean that they’ll have to wait the year and have a plan in place to be fully commenced and really, they shouldn’t expect to be able to sell unless they’re fully operational.
GI: If somebody was not able to get their business up and running to a satisfactory level, would you allow them to sell their license, or would you require them to forfeit?
Fraker: Again, they’ll have to wait the year if they’re gonna completely sell. And I think we would look at all situations. I would not tell you that we would not not consider it, but the intention all along was to make sure that these folks were more successful and if their intention was to try to get a license and then sell it immediately, I don’t think that’s what the voters in Missouri really expected with this program.
GI: When would the state consider creating a new batch of licenses?
Fraker: First of all, we would have to determine whether there was a need. I don’t know if you have read any information that’s out there about our program and how much product the 60 cultivation facilities would produce. But based on the patient base that was approved in the Constitution, those 60 facilities should produce enough medical marijuana for about 300,000 Missouri patients.
We don’t expect to get to that level and patient base, probably for, who knows, five or six years. Our projections were to get to about 150,000 patients after three years, and I think we’re pretty well on track with that with our 70,000 now, after less than a year and a half. So, like I said, the determination would have to be made whether we needed more facilities. And beyond that, we really haven’t developed any criteria yet for how to do that.
GI: So, basically, you’re looking directly at the number of patients that are out there. That’s your guiding star.
Fraker: I think it is. Because we’re a medical-only program. Because there’s limits in the amount of product that each patient can have. You know, as an example, if we would have issued a license to every cultivation applicant, I think there were 578 or something like that. It would have produced over 8 million pounds of marijuana, which would have been enough for, like, three million patients,
So, what happens? What happens with that product when you’re only gonna sell to 150,000 patients? What happens with that? You and I both can guess, right?
GI: So, you’re telling me that your consideration won’t include cost in the market. It’s purely the number of patients.
Fraker: I think you have to find a happy medium. But, every program is different. Again, the 60 cultivation facilities should supply 300,000 patients, which is still double what our patient base will be after three years. And, you know, we’re certainly gonna take a look at issuing more licenses at whatever point we feel like we need to help with the cost, too. I mean, I think again we have to find that happy medium.
GI: How many cultivators do you think you’re gonna have by the end of the year?
Fraker: We have twelve I believe right now, licensed. And another 18 would put us at 50%. So, I don’t know that we can quite get there or not, but I think it would be a good goal to shoot for. Say, 25 or 30 facilities by the end of the year.
GI: Cultivators have had a lot of struggles getting up to speed. It’s taken a long time to get product to market. Why do you think that’s the case?
Fraker: I’m a home builder, and I’ve been a contractor a lot of my life. And I’ll tell you, if you went out here and bought a vacant piece of ground and wanted to build a home on it, you’d be looking at a minimum of six months by the time you put your driveway in and you get your water and your sewer and electrical to the facility. And then many times you’re waiting on building regulations or architect plans.
Again, we’re talking about a 2,000 square foot home. In many cases, some of these facilities that were seeing that are coming online now, you’re talking about 30, 60, 90,000 square foot facilities, if they happen to be a triple licensee on the cultivation facilities.
And you’ve got some, they were operating at five months, which is really pretty doggone amazing. And some of them were in existing buildings, but still dealing with the city and the county regulations in many cases can just take months.
So, I know you hear that a lot or you hear people say that, but I think those of us that have really been in the building business understand how long it can take. And I’m pretty impressed by most of the operators that we have up and running now and how fast they have been able to do it.
You know, we have two testing facilities operating. Some of that equipment lead time is months. And just getting it ordered and not knowing they would have a facility until January of this past year and being able to be operational and ready by September.
I just respectfully disagree when people say it’s taken too long. We were the fifth fastest state in the nation, with one of the most regulated programs, probably in the nation. And, I’m very proud of our team and very proud of the operators that are up there operating
GI: Would the state be supportive of a referendum to legalize recreational candidates?
I can’t answer for the state. I really can’t. It’s probably gonna come up on the ballot in November of 2022 from what they tell us. If it’s gonna be the same kind of a program, then we certainly know that we’ll probably be the oversight agency and we’ll certainly deal with whatever hand we’ve been dealt.
GI: Missouri has few Black and Latino-owned cannabis license holders. Is that a problem?
Fraker: It hasn’t been so far my knowledge, That criteria was not specifically spelled out in the Constitution. Certainly there were some questions in the scoring categories that involved [the] economic impact of the local communities where they’re gonna apply for and things like that.
But, we didn’t have that criteria as part of the scoring process because the Constitution didn’t allow us to. So, we had no control over any of that.
