Draft rules regarding changes to security and transportation are causing operators in the industry to question what the rationality is behind the proposals.
One of the requirements for regulation of Missouri’s marijuana industry is that the Department must promulgate and enforce rules and regulations in a way that is not unduly burdensome to license holders.
While in many industries and with respect to other enforcement agencies and regulatory authorities, the term “Unduly burdensome” may be quite subjective, in the case of Missouri’s cannabis industry, the term is defined as – “measures necessary to comply with the rules or ordinances adopted pursuant to this section subject licensees or potential licensees to such a high investment of money, time, or any other resource or asset that a reasonably prudent businessperson would not operate the marijuana facility.”
For operators in the state, that clarification is an important distinction, especially as the Division of Cannabis Regulation moves to revise existing rules that businesses have operated under successfully for multiple years.
While a revision of existing regulations is necessary, along with the creation of new rules, operators are examining proposed draft rules and finding revisions and new regulations that many view as counterintuitive and cumbersome
In examining the draft rules for Facility Security, we find multiple instances where this is apparent.
One such change is in camera coverage.
“All limited access areas, except for bathrooms, locker rooms, lactation spaces, and closets smaller than three feet (3’) by three feet (3’).”
By definition, a “Limited Access Area” means any area within a facility other than the initial public access point where individuals are screened for approval to enter, meaning any: office, conference room, break room, training area, storage room, medical room, cafeteria, records room, server room, etc. that exceeds the 3’ by 3’ requirement inside a facility would be subject to being recorded. Combined with a requirement that would necessitate all cameras “operate in such a way as to provide continuous monitoring and allow identification of people and activities in all lighting levels, and that are capable of being accessed remotely at all times by the department or a law enforcement agency in real time,” the draft rules would make it so that the Department and law enforcement agencies would have constant, unfettered access to every aspect of life and operations inside a facility. Every moment of work, break, training, programming, and decision-making would be recorded and even more – accessible in real-time.
In contrast, the Department itself, a state-funded entity, does not have the same security requirements. While the Department of Health and Senior Services may have no need for that level of security, it’s important to note that even maximum security prisons in Missouri do not necessitate the same level of oversight for their administration and administrative offices, even those inside secure perimeters.
Outside of the exhaustive reach of the scope of the change to camera coverage, the measure would be costly and time-consuming for many operators to implement.
Another rule change garnering attention from operators is a change to language involving storage for dispensaries.
“Dispensary licensees must store all marijuana product in a locked vault or warehouse when the dispensary facility is not open for business.” While a requirement to store product in a safe and secure manner is essential to promoting best practices and ensuring safety, the draft makes no concession for other storage methods including secure or affixed cases. Meaning that all marijuana material would have to be transported in and out of storage daily.
For context, neither pharmacies nor stores that sell firearms are required to remove product from a secured display or controlled access room to a separate storage vault.
For existing operators, this could mean a requirement to build or contract a warehousing location or remodel existing facilities in effort to be able to facilitate the required amount of storage alongside stored product and inventory.
That could be made even more costly by the requirement that “Video cameras must provide coverage of all marijuana product, from at least two (2) angles, where it is grown, cultivated, manufactured, stored, weighed, packaged, sold, rendered unusable, or processed for sale.” This could mean substantial changes for existing operators and require more space or expansion not only for storage but to ensure that each product is viewable at all times from multiple angles.
For cultivation licensees, greenhouse facilities would now be required to have the same exterior fences currently mandated for outdoor grows. Additionally, the draft rules propose that both greenhouses and outdoor grows would need to ensure those fences are “Screened such that the cultivation area is not easily viewed from outside the fence.”
The addition of the fence requirement for existing greenhouses, as well as the requirement to implement measures to obscure the cultivation area from the outside, will be costly for many cultivation licensees.
A subtle but substantial change comes in revised language pertaining to reporting malfunctions and outages. “Licensees shall make a reasonable effort to repair a malfunction of any security equipment within seventy-two (72) hours after the malfunction is discovered. A malfunction occurs when any piece of security equipment fails to work as designed or intended, even momentarily, either through defect, power outage, security breach, internet outage, compromise, or other reason. A licensee shall notify the department within twenty-four (24) hours after a malfunction is discovered. For any planned security outage, for software updates or any other reason, the licensee must first notify the department at least twenty-four (24) hours prior to the planned outage.”
The addition of the word momentarily could shape this rule as an onslaught of paperwork and reporting for operators and could create issues with existing providers and equipment to ensure the ability to track all moments of downtime or malfunction.
One significant change proposed in the draft rules has been met with positive feedback from those inside the industry. The use of motion detection being authorized rather than 24/7 recording, is seen as a positive for operators. The change could mean substantial savings for video and data storage. That savings may be necessary with the increased number of cameras required by many facilities proposed under the drafts.
A final note of importance, the language of the draft rules does not apply exclusively to comprehensive licensees, microbusiness facilities will be required to implement the same measures and abide by the same rules as the existing medical and comprehensive facilities. Microbusiness facilities offer a lower threshold to entry and a substantially lower price for buildout for cultivation/manufacturing spaces, but those who are hoping to secure a microbusiness license should be active during the feedback period as well.
The Division of Cannabis Regulation released 18 draft documents containing between 1 and 14 pages last week. You can see a full list of documents and the draft rules of each here https://health.mo.gov/safety/medical-marijuana/draft-rules.php
The Department of Health and Senior Services Division of Cannabis Regulation responded to Greenway‘s inquiry regarding proposed draft language saying, “It is important to note that these rules are not final—they are only in draft form at this point. We will continue to work on these drafts and expect they will be revised before filing based on continuing research and public input. Any suggestions from the public on program implementation or rule drafting, including industry suggestions, will be reviewed starting as early as this week. Once rules are in final form, we’ll be working to address any questions that remain.”
For those looking to comment on the draft rules, you can submit feedback here, https://health.mo.gov/safety/medical-marijuana/suggestions.php
The Department is also currently still accepting suggestions regarding Amendment 3 itself in order to craft regulations and draft rules. You can find that form here https://stateofmissouri.wufoo.com/forms/m1p9djdq0if974p/
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