Springfield News Leader
by Gregory Holman
16 March 2021
Missouri health authorities recently began revoking a handful of medical marijuana business permits after most of the state’s would-be cannabis companies weren’t ready to open for business roughly a year after winning the licenses, which would allow them to grow and sell the plant for lawful patients provided they met their “commencement” deadlines.
Many of Missouri’s cannabis companies got extensions on their operating deadline, the News-Leader reported last month. A trade association representative said most companies cited problems stemming from the COVID-19 pandemic and the inevitable hurdles involved in raising capital for an industry that’s mostly prohibited from using the regular banking system due to marijuana’s federal status as a controlled substance.
But not every company got an extension, and getting one doesn’t mean Missouri companies have all the time they want to get their marijuana businesses through “commencement inspection” and ready to open up, officials with the Missouri Department of Health and Senior Services told the News-Leader late Monday night.
“Revocations for failure to pass a commencement inspection within the required timeframe may yet be issued for any of the facilities that have received an extension of the original deadline or whose extension requests are still pending,” medical marijuana regulators in Jefferson City said, in a statement relayed through a spokesperson.
The highly competitive permit application process attracted more than 2,100 applicants for about 370 business licenses, as the News-Leader reported beginning in 2019. (Marijuana licenses for patients wanting to use the plant for treatment is a separate story: More than 102,000 people have applied for a patient or caregiver card, state records show.)
While setting up the business-permit process at the onset of Missouri’s medical marijuana program in late 2018 and early 2019, state health department leaders opted to go with business-license minimums established in Missouri’s medical marijuana constitutional amendment.
Meanwhile, some marijuana patients and people in the marijuana business community advocate a regulatory approach that would eschew the minimums. Instead, those advocates would prefer letting the market decide how much demand there might be for companies that operate dispensaries or growing centers.
But others say that Missourians voted for a system that would ensure patients could access medical marijuana and that state authorities could regulate the number of businesses providing it.
Testing, transport, manufacturing companies revoked
The companies revoked so far wanted to operate in marijuana transport and testing, and in the field of manufacturing products like edibles and vape cartridges, state records show. State authorities said Monday that all of the licenses revoked since Feb. 9 were “all for failure to pass a commencement inspection by the required date.”
Botannis Labs — a marijuana testing company that planned to use commercial space owned by the Morelock Builders family located near Mother’s Brewing Company and Route 66 in the heart of Springfield — had its license revoked by Missouri medical marijuana authorities on March 2.
The company, which said in December 2019 that it was backed by investors in St. Louis and New York, had been bullish about its prospects.
“We are in fact the first Missouri medical marijuana license ever awarded, in downtown Springfield,” company lobbyist Jeffrey Altmann told the News-Leader on Dec. 19 of that year.
News-Leader attempts to contact Altmann by phone and email for new comment on Monday were not successful.
At the time, at least one local economic development leader with the city of Springfield hailed the news that Botannis was coming to town, because testing-lab jobs are thought to be some of the best-paying ones in the cannabis field. But on Monday and Tuesday, city officials and a key Missouri State University economic development leader said the failed lab doesn’t mean bad news for Springfield’s capacity to develop more well-paying scientific jobs.
Allen Kunkel, who leads the Jordan Valley Innovation Center and serves as associate vice president for economic development at Missouri State, said MSU and its counterparts in the region are churning out science graduates all the time, and as the pandemic recedes, people want to work.
“I can’t image anyone would have a hard time attracting people to fill those,” Kunkel said Tuesday.
303 Cannabis, a transport company that planned to operate out of a historic Main Street storefront in Poplar Bluff, met the same fate on Feb. 11. Another transport company based in the Kansas City region, Charas Capital, was revoked two days earlier.
A Rolla company linked to Cure, a multistate marijuana operator out of Colorado, once planned to manufacture products like edibles or vape cartridges at facilities in Rolla and Jefferson County. Its two licenses were pulled Feb. 16, according to state records DHSS provided to the News-Leader Monday.
These companies are just two of 29 examples of lawful medical marijuana business permits that state health authorities deactivated in one way or another, in recent months.
The news was first reported early Monday by GrownIn, a cannabis news website covering heartland legal-marijuana states including Missouri, after Missouri authorities said they mistakenly posted a “draft document” in January that listed the fizzled firms. After a few days online, the state health department took the draft list down from the internet, GrownIn reported.
On Monday News-Leader reached out to nine companies with the most recently deactivated licenses to test, manufacture or transport marijuana products.
Five of the nine companies surrendered their licenses voluntarily beginning in September last year, not long after state officials issued a “guidance letter” for marijuana companies that offered “some notes on what may or may not be considered favorably in any requests for extension of a facility’s operational deadline.”
None of those five responded. Through a spokesperson, state health authorities said they “do not require that a licensee give us a reason for surrendering its license” and declined to otherwise respond to News-Leader questions as to why the licenses were voluntarily let go.
‘Complete boondoggle’: Revoked licensee speaks out
Of the four companies with revoked licenses — all of which were revoked beginning in February for failing to meet the operating deadline — only Daniel Moore with 303 Cannabis responded to a News-Leader request for comment on Monday.
Moore, a lawyer based in Poplar Bluff, said he also put in an application for a dispensary permit, to be located in the same old town storefront where the transport company would be headquartered.
The dispensary application was denied, so it seemed “pretty much useless,” Moore said, to try operating a transport company without the accompanying retail store. Complicating matters, dispensaries are allowed to transport their own cannabis products, so long as they comply with all of the state’s security rules for transport companies, Moore said.
Moore said he’s now one of roughly 800 marijuana appellants seeking to get their license denials reversed by the Missouri Administrative Hearing Commission.
“We’ve had very little done,” Moore told the News-Leader Monday. “I’ve sent some discovery (requests), which they’ve never really answered.”
Moore described the licensing process — which quickly attracted accusations of conflicts of interest on the part Wise Health Solutions, a third-party company that Missouri health officials hired to assist in “blind-scoring” marijuana business license applications — along with the subsequent appeals process, “a complete boondoggle.” That’s partly because it takes a long time for appellants like him to get a hearing in front of the hearing commission, Moore said.
“If we could get in front of that hearing examiner,” Moore said, “I think we would have excellent chances of prevailing.”
But if he did prevail, people who already won licenses in late 2019 would have a big head start in entering the Missouri cannabis market, Moore said.
Moore said he advocates getting rid of the constitutional license minimums being used as a cap on the number of Missouri marijuana companies, then letting market forces sort out how many cannabis companies could do business in the Show-Me State.
“Why not let free enterprise dictate who has a license and who doesn’t?” Moore said Monday. “What’s wrong with capitalism? I don’t understand (the state’s current policies), it just stops the growth of everything, looks like to me.”
Moore and hundreds of other denied-license appellants have been watching the hearing commission’s actions. Late last month, the commission gave two cultivation licenses to applicants linked to a company called Heya, which had been turned down for a ruling that “disappointed” the state health department, according to reporting by the St. Louis Post-Dispatch.
According to the commission ruling, one of the Heya growing-center applications “received a lower score, as compared to other applicants, for identical or nearly identical answers on 11 questions.”
News-Leader reporter Gregory Holman has been following medical marijuana news since fall 2018. Send news tips by emailing email@example.com and consider supporting vital local journalism by subscribing.