Medical marijuana license applicants in Missouri were offered a much-needed reprieve after an appeals court ruled that state regulators cannot keep information from medical cannabis applications secret. In 2018, voters approved a constitutional amendment that legalized medical marijuana, making Missouri the 33rd state to legalize medical cannabis. Soon after, hundreds of business owners who saw a solid business opportunity applied for business licenses for everything from growing and distributing to selling cannabis, and chaos soon ensued.
More than 820 companies were denied licenses. Those companies asked an administrative hearing commission to look into the scoring system used to score candidates, claiming that it was flawed and unfair. Health and Senior Services (“DHSS”), which was tasked with overseeing the license application process, scored more than 1,700 candidates, ultimately awarding state licenses to 60 cultivators, 86 infused manufacturers, 11 testing facilities, 192 dispensaries and 22 transporters.
Consequently, Kings Garden Midwest, a California-based company that had sought and failed to acquire a cannabis cultivation license, filed a lawsuit against the state claiming that the scoring process used to grade applicants was “arbitrary and capricious.” Applicants would be awarded different points for the same or similar answers, and Kings Garden wanted to go over the information on other applications to see if the scoring was actually fair. The court agreed with Kings Garden, stating in a precedent-setting ruling that the information on application licenses could not be kept secret.
Since applications are ranked competitively against each other rather than solely on their own merits, the court wrote, comparing the information in these applications was the only way to find out if the Kings Garden’s application was scored in an “arbitrary or capricious manner.” According to the court, keeping this information from companies seeking to prove whether or not the scoring system was flawed is “unreasonable and absurd.” However, the DHSS, which outsourced the application scoring process to a private company, argued that the constitutional amendment that legalized medical marijuana in the state requires that such information remains confidential.
Lisa Cox, a DHSS spokesperson, says that the department is planning on appealing the ruling at the Supreme Court. Missouri’s licensing process has been upheld by numerous legal challenges, and Greg Wu, co-chair of cannabis law practice group Hardy & Bacon law states that the state will see quite a number of lawsuits regarding medical marijuana applications. Lyndall Frankel, the DHSS’ top cannabis regulator, says that the health department expects to spend at least $12.4 million fighting these suits.
The campaign to accord the cannabis industry equal treatment is likely to notch a win if the DHSS loses its planned appeal to the state Supreme Court. If that happens, the entire sector, including companies such as Chalice Brands Ltd., formerly Golden Leaf Holdings Ltd. (CSE: CHAL) (OTCQB: GLDFF), could regard that as just another step forward, and the push for an improved operational environment for the industry will continue.
NOTE TO INVESTORS: The latest news and updates relating to Chalice Brands Ltd., formerly Golden Leaf Holdings Ltd. (CSE: CHAL) (OTCQB: GLDFF), are available in the company’s newsroom at https://cnw.fm/GLDFF
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