*Updated August 20, 2019
Missouri voters decided several statewide ballot issues on November 6, 2018. Among them were three initiative petitions dealing with medical marijuana: Amendment 2, Amendment 3 and Proposition C.
Voters chose Amendment 2, which will:
• Allow the use of marijuana for medical purposes and create regulations and licensing/certification procedures for marijuana and marijuana facilities – dispensary, cultivation, testing, and marijuana-infused product manufacturing facilities. The amendment creates licensing fees for such facilities;
• Impose a 4 percent tax on the retail sale of marijuana for medical purposes; and
• Use funds from these taxes for health and care services for military veterans by the Missouri Veterans Commission and to administer the program to license/certify and regulate marijuana and marijuana facilities.
Amendment 2 does not change federal law, which makes marijuana possession, sale and cultivation a federal offense.
The Missouri Department of Health and Senior Services (DHSS), named in the Constitutional Amendment as the state agency to administer the medical marijuana program, began accepting marijuana facility license applications August 3, and DHSS extended application submissions from the August 17 deadline until 4:30 p.m. on Monday, August 19. DHSS learned during the first several days of receiving applications that many applicants found it helpful to have representatives immediately available to answer questions about how to submit applications.
The basis for the extension was anticipation of high volume of facility application submissions near the end of the application window. And those predictions came true.
According to the DHSS, about 2,100 facility applications were received by the extended deadline. The application system received more than 1,200 applications in the three days leading up to the deadline, including more than 800 applications in the final 24 hours. An official count of facility applications received was to be available August 20. A breakdown of applications by geographical location and facility type will be publicly available in coming weeks.
Other MMJ Issues Fail in Missouri, Back to 2004
Now, returning to Election Day. Missouri voters on November 6, 2018 had two other choices in the lineup of medical marijuana issues.
Amendment 3, which failed, would have imposed a 15 percent tax on the retail sale of marijuana, and a tax on the wholesale sale of marijuana flowers and leaves per dry-weight ounce to licensed facilities; and use funds from these taxes to establish and fund a state research institute to conduct research with the purpose of developing cures and treatments for cancer and other incurable diseases. Amendment 3 would have designated the initiative petition’s contact person as the research chairperson of a newly created research institute funded by fees and taxes.
Proposition C, which also failed, would have changed state statutes, not the State Constitution. It would have removed state prohibitions on personal use and possession of medical marijuana, removed state prohibitions on growth, possession, production and sale of medical marijuana by licensed and regulated facilities, imposed a 2 percent tax on the retail sale of medical marijuana, and the tax funds would be used for veterans’ services, drug treatment, early childhood education and public safety.
Medical marijuana had been on the minds of a few Missouri legislators since 2004. It was some 15 years ago in the Missouri General Assembly when House Bill 1348 was introduced by then-State Rep. Vicki Walker (D-Kansas City), legislation that called for the legalization of the use of marijuana for medical purposes. The bill, co-sponsored by then-State Rep. Tom Villa (D-St. Louis City), received a hearing in the House Health Care Policy Committee, but did not advance.
During legislative sessions in 2004 to 2013, one bill was filed each session by Democrat House members to change the laws regarding the classification of marijuana as a controlled substance and legalizing the use of marijuana for medical purposes. (No marijuana bill was filed in 2005.) In 2014, a House bill proposed a pilot program for medical marijuana and a Senate bill would have legalized medical marijuana and established a tax on its sale of 8 percent. Then, during regular sessions in 2015 through 2019, multiple bills each year were filed by Democrats and Republicans regarding medical marijuana. However, none of the House or Senate bills were approved.
Responsibilities of DHSS
The Department of Health and Senior Services is tasked with implementing the following provisions:
• Issuing registrations to qualified patients and their primary caregivers.
• Licensing and certification of medical marijuana cultivation facilities.
• Licensing and certification of medical marijuana dispensary facilities.
• Licensing and certification of medical marijuana-infused products manufacturing facilities.
• Licensing and certification of medical marijuana testing facilities.
For facility applicants, the fees for applying were stiff: $10,000 fee for a cultivation facility, $6,000 for a dispensary or manufacturing facility, $5,000 for a testing lab, $5,000 for a transporter. Annual fees will also be collected from the selected, licensed businesses. For a cultivation facility, the annual fee will be $25,000. Other annual fees will be $10,000 for a dispensary or manufacturing facility, $5,000 for a testing lab, $5,000 for a transporter.
Potential businesses seeking licenses have been pre-filing applications along with fees throughout 2019. As of early August, $4.2 million in application fees had been received via pre-filed application forms. According to DHSS, pre-filed forms and fees for 134 cultivation facilities, 334 dispensaries and 94 manufacturing facilities had been received.
Limits are in place on how many licenses can be awarded to begin the program. For dispensaries, each of Missouri’s eight Congressional districts can be awarded up to 24 dispensaries (a total of up to 192 dispensaries in the state). Up to 86 manufacturing licenses, 60 cultivation licenses and 10 testing licenses will be issued, based strictly on application scores, not by location. DHSS determined that as many as 10 medical marijuana testing facilities could be licensed in Missouri. Article XIV of the Missouri Constitution calls for “at least two” testing facilities for the new program. Testing facilities will be licensed to acquire, test, certify, and transport marijuana.
As of August 15, some 236 completed applications had been received through the Department’s secure, online registry for cultivation, manufacturing, dispensary, and testing laboratory facilities. And then came the deluge of facility applications leading up to the August 19 extended deadline. Awarding of licenses to successful applicants will be completed by December 31. The Missouri cannabis business is soon to descend throughout the state.
Before we envision what’s coming, let’s see how we got to where we are today.
Lyndall Fraker Leads MMJ Program
DHSS got the ball rolling on December 18, 2018, announcing that former State Rep. Lyndall Fraker (R-Marshfield) and Amy Moore would be joining DHSS as Director of Medical Marijuana and Deputy Director/Counsel for Medical Marijuana, respectively, and that the Department would begin accepting applications and fees for the following medical marijuana facilities beginning in early January: cultivation, infused products manufacturing, and dispensary.
DHSS noted the application fees were non-refundable and the early submission of application fees did not guarantee a license or provide any competitive advantage in the application process. DHSS met the January 5 requirement to collect nonrefundable fees for facilities as specified in Constitutional Amendment 2. Facility pre-filing moved along. As of Feb. 20, a total of 434 pre-filed facility license application forms and fees totaling $3,128,000 had been received by DHSS.
In January, DHSS began the rulemaking process for Missouri’s medical marijuana program. The program’s rules are to efficiently regulate and control the cultivation, manufacturing and sale of marijuana for medical use. As part of its effort to gather all relevant input, DHSS in January established a page on its medical marijuana program website where it began releasing initial drafts of its rules for public review, suggestions and comments. DHSS hosted an evening forum in Jefferson City to accept suggestions from the public regarding the formation of program rules and regulations. “The input received at the first forum hosted in Jefferson City was very helpful to us,” Fraker said. Additional public forums in late February and March were held in Poplar Bluff, Ferguson, Kansas City and Springfield. DHSS released its first draft of rules specifically focused on qualified patients and primary caregivers.
In mid-March, DHSS released additional drafts of rules for cultivation facilities, dispensary facilities, infused products manufacturing facilities, and medical marijuana establishments in general. Soon after, draft rules for facility evaluation criteria and medical marijuana testing facilities were released, followed by draft rules for transportation and physicians/health care providers. Article XIV of the Constitution tasked DHSS with having all rules finalized by June 4. DHSS continued accepting feedback on all drafts of rules via an online suggestion form until May 15. All rules were finalized and available to the public May 24. And the department began accepting facility applications on August 3, per guidelines set in the Constitutional Amendment.
Researchers from the University of Missouri provided DHSS in April with a quantitative market analysis for medical marijuana operations in Missouri. While the M.U. report detailed projections for the state’s medical marijuana market, the Constitution is clear that there will be at least 60 cultivation licenses, 86 infused products manufacturing licenses and 192 dispensary licenses (at least 24 per congressional district).
MMJ Program Transparency Emphasized by DHSS
DHSS issued a request for proposals for an independent blind scorer for medical marijuana license and certificate applications. A company from Carson City, Nevada, Wise Health Solutions, LLC, was awarded a one-year contract by DHSS to score applications for prospective Missouri medical marijuana businesses. (Six other companies also submitted bids for the job.) As a blind scorer, the reviewers will not be able to see the name of the company or its owners when scoring each application.
“We are committed to transparency and fairness and want to emphasize that the reviewers of applications will be blinded to the identity of applicants,” said Dr. Randall Williams, DHSS Director. “Those granted a license or certificate will be selected solely upon the content of their applications, and those assigning scores to applications will have no access to applicants’ identifying information.”
In April, a contract awarded by Missouri for “seed-to-sale” tracking software came under protest. Metrc received the bid to use its tracking software, but BioTrackTHC, the company that came in second, issued a formal protest. Both companies are top providers nationwide of seed-to-sale tracking. In May, Missouri officials rejected the challenge by BioTrackTHC. The state’s purchasing division director said the contract with Metrc does not allow Metrc to charge additional fees, responding to a point raised by BioTrackTHC in its protest.
DHSS established 11 advisory committees — one for each of the application scoring criteria established by the Missouri Constitution — to review the drafted application scoring questions. Members were selected by the Department with consultation of members of Governor Mike Parson’s cabinet, based on the member’s expertise or background in the subject matter under the purview of the committee. DHSS allowed public feedback regarding the drafted questions through an online suggestion form.
Facility license application forms and instructions became available online June 4. DHSS and contracted partners have until December 31 to review and score applications prior to licensing.
DHSS determined that as many as 10 medical marijuana testing facilities could be licensed in Missouri. Article XIV of the Missouri Constitution calls for “at least two” testing facilities for the new program. Testing facilities will be licensed to acquire, test, certify and transport marijuana.
Rules and Regulations Posted for MMJ Program
The final rules, which are 11 separate rules, are now posted on the DHSS website. The rules went into effect on June 3 and will remain in effect until the proposed rules (which are the same rules as the emergency rules) and any changes based on public comment, are in effect. Article XIV of the Constitution tasked DHSS with having all rules finalized by June 4. Public comments on the proposed rules were accepted during the month of July, and a public hearing held on the proposed rules.
The department thanked members of the public for their input throughout the drafting process. DHSS received more than 500 comments regarding the rulemaking process and rule suggestions, which significantly aided in the drafting process. Further, DHSS thanked the members of the 11 advisory panels who provided guidance and ultimately approved the facility application questions and methodology which will be used to select license recipients.
Patient and Physician Info Announced by DHSS
On June 4, DHSS announced the release of Medical Marijuana Registry (MMR) sample forms and instructions as required by Article XIV of the Missouri Constitution and its associated rules. The forms were published at www.medicalmarijuana.mo.gov as sample forms for educational purposes to prepare the public and interested stakeholders regarding information that must be submitted in the application process using the secure, online MMR. This system became available to accept patient and caregiver applications. The department began processing qualified patient and caregiver applications ahead of schedule on June 28. Since then, DHSS has approved more than 5,000 applications.
According to State Rules and Regulations, one patient certified by their doctor may grow their own medical marijuana for a $100 fee if they don’t grow more than one-fourth pound each month, and they cultivate not more than six flowering marijuana plants, six nonflowering marijuana plants over 14 inches tall, and six clones – plants under 14 inches tall – at any given time in a single, enclosed and locked facility.
DHSS reminded the public that the Physician Certification Form must be dated no more than 30 days from the time the qualifying patient submits their application through the secure, online registry. At this time, the Physician Certification Form will be completed in paper form. Patients should download the Physician Certification Form and take it with them to their medical exam. A Missouri-licensed physician, active and in good standing, is required to complete and sign the certification. The patient will then photograph or scan the Physician Certification Form and submit it as an attachment with his or her application.
MMJ Facilities Applications Finalized Beginning August 3
Meeting another guideline set by the Missouri Constitution, the DHSS’ Section for Medical Marijuana Regulations began accepting applications for medical marijuana facilities beginning 12:00 a.m. on August 3. All applications were to be filled out directly on the secure, online registry.
DHSS published facility application tutorial videos online to assist applicants through this process and allow them to become familiar with the actions that needed to be taken, such as creating a user account and uploading documents. A criminal background check is also part of the application process, and the Missouri State Highway Patrol form, registration codes and instructions form were available online. All owners who hold any portion of the economic or voting interest of the facility who will also have access to medical marijuana or the medical marijuana facility, and all officers, directors, board members, managers and employees named in the facility application must submit fingerprints for a criminal record check in order for the application to be considered complete.
December 31 is the deadline by which DHSS must begin approving or denying business applications. Medical marijuana is not expected to be available commercially to Missouri consumers until Spring 2020.
The People Speak; Government Acts
The people of Missouri spoke in November 2018, approving Constitutional Amendment 2. Eleven states and Washington, DC, permit recreational and medical marijuana use. Twenty-two other states, including Missouri, allow marijuana for medical use only. Only three states adjoining Missouri allow any use of marijuana: Illinois (medical use and recreational), and Arkansas and Oklahoma (medical use only).
Recent weeks have been busy for many governmental entities across Missouri. City councils, county commissions, planning and zoning boards and others have been discussing and enacting changes in local laws after the statewide vote approving Amendment 2.
Government entities are tackling issues such as distance limitations between medical marijuana facilities and churches, daycare centers, elementary schools and secondary schools; local business license requirements; plans and documentation requirements for the medical marijuana licensee to submit to the local government; facility signage that conforms to state and local standards; and residential cultivation standards, according to state regulations.
Interested? Lathrop Gage Can Help With Your Issues
This new medical marijuana industry will soon take hold, and when the Department of Health and Senior Services begins issuing business licenses in early 2020, new issues will arise that will require more attention. These include licensing challenges, licensing enforcement issues, landlord/tenant matters, employer/employee issues, environmental questions, local government issues, and the list goes on.
Lathrop Gage Consulting and Lathrop Gage LLP have been involved with this new industry since Day 1 and have already assisted in the preparation and filing of multiple Missouri medical marijuana licenses. We can put our experience to work for you. We are a full-service operation with a breadth of coverage in areas where issues will arise.
Please contact us at 573-893-5398 or on our website, www.lathropgageconsult.com.