Is Gov. Mike Parson’s administration running a drug cartel for well-connected producers and sellers of medical marijuana? Or is the administration simply regulating the new medical marijuana industry that Missouri voters authorized when they amended the state constitution?
One would think that our state’s free-market Republicans would avoid having the state run a cartel — defined as an association or group of suppliers or manufactures that collude to limit supply so as to fix prices — and would allow all qualified businesses to compete. Instead, the state is giving the appearance of choosing between well-connected winners and unconnected losers. Those unconnected losers may be at least as qualified as the winners.
Who owns these winning applicants? The constitution says that entities that own marijuana businesses must have Missouri citizens as majority owners, but the state has resisted telling the public who these people are.
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The constitutional article that the voters overwhelmingly approved requires the state to grant a minimum number of licenses. This is intended to prevent state officials from restricting the availability of medical marijuana by granting few or no licenses. The constitution also allows — but does not require — the state to limit the number of licenses for cultivation, manufacturing of products, testing, and retail dispensaries.
The constitution, which authorizes a scoring system, also says one of the state’s goals is “maintaining competitiveness†in the marketplace for medical marijuana.
The Parson administration hired a Nevada firm called Wise Health Solutions to grade the applications. There already are numerous complaints about inconsistent scoring that will dump plenty of unnecessary work on the lawyers, Administrative Hearing Commission (which hears the first appeals), and the courts.
The state’s process has generated about 2,200 applications for licenses, but only 348 applications have been awarded licenses. The state reportedly estimates that 800 of the rejected applicants will appeal to the Administrative Hearing Commission or will bring lawsuits. The state seems to assume that many rejected applicants will not be able to afford lawyers to appeal.
For lawyers, the bonanza is especially impressive. Because of the large number of appeals, the state is seeking to hire lawyers to represent the state in these proceedings. Their legal fees will be paid from the fees and taxes that the medical marijuana program produces, instead of going to veterans’ programs.
The appeals process will be a mess. The top scorers, I assume, are the 348 applicants awarded licenses. While it may be convenient for the state to issue only a small number of licenses, that does not make it right.
The real question is: what are the minimum standards to obtain a license? Were only 348 applicants able to meet minimum standards? Or were there many — perhaps hundreds — of qualified applicants rejected because the Parson administration seeks to limit the supply to benefit the successful (and perhaps well-connected) applicants?
The state is required to approve or reject applications within 150 days. The administration should: 1) set a minimum score to separate those applicants that qualify from those not qualified, and tell applicants where they ranked (which the state is doing) and whether they met the minimum qualifications; and 2) allow qualified applicants that were not included in the initial groups of licensees to apply — without again paying the fees ($6,000 for dispensaries; $10,000 for cultivators, for instance) — when the initial groups are fully processed. That would allow orderly development of a competitive marketplace, which is preferable to the noncompetitive cartel currently being launched.
The public’s right and need to know the identities of the owners of these businesses is vital to knowing whether state officials are doing their jobs honestly and competently.
Without question, this marijuana roll-out has been challenging for state officials, and in some respects, the state has risen to the challenge. But the Parson administration has no business creating an anti-competitive cartel for medical marijuana producers and sellers, and must let a market develop in which qualified businesses can compete. Nor should the state deny the public the right to know who owns these businesses. The state is their regulator, not their partner. The state’s duties are to protect the public, not favored private interests.
Michael A. Wolff is a retired Missouri Supreme Court judge and chief justice, former dean and professor emeritus of 51ºÚÁÏ University Law School, and has served as a senior adviser to the 51ºÚÁÏ County prosecuting attorney. He represented New Approach Missouri in a ballot challenge to the 2018 constitutional amendment proposal that the voters approved. He does not represent applicants or have a financial interest in the medical marijuana business.
