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Missouri Supreme Court Hears Case On Medical Marijuana Licensing Secrets



State regulators argue that disclosing marijuana licensing information would violate provisions of the constitutional amendment that legalized cannabis in the state in 2018.

By Tessa Weinberg, Missouri Independent

A company denied licenses to grow medical marijuana in Missouri urged the state Supreme Court Tuesday to compel regulators to provide application info that the health department has argued it’s constitutionally obligated to protect.

At issue is the Department of Health and Senior Services’s refusal to turn over applications of successful license holders, despite being ordered by lower courts to disclose them.

DHSS has relied on a provision in the constitutional amendment that legalized medical marijuana in Missouri in 2018. Part of the language voters approved stipulates that DHSS, “shall maintain the confidentiality of reports or other information obtained from an applicant or licensee containing any individualized data, information, or records related to the licensee or its operation…”

In its filing with the Missouri Supreme Court, DHSS argued that the administrative hearing commission acted outside of its authority and requested the lower court’s decision be reversed in order to uphold the confidentiality outlined in the state’s constitution.

James Layton, an attorney arguing on behalf of DHSS, said Tuesday that it is the right of applicants who submitted information for it to be kept confidential and urged the Missouri Supreme Court to “vindicate” the rights of those who invested their money, personal interest and confidential information.

“If that right is to be breached,” Layton said Tuesday, “they are entitled to some process before that happens.”

However, Joshua Hill, an attorney representing the California-based company Kings Garden Midwest LLC, who was denied licenses by the state, argued that people denied licenses have a right to appeal the state’s rejection.

“The state has chosen winners and losers in this case,” Hill said.

Kings Garden filed two applications for licenses to grow medical marijuana, but was denied by the state for each. In its appeal, the company requested that unredacted, complete copies of approved applications be produced, in order to demonstrate its belief that it submitted answers that were similar to successful applicants but received a lower score.

“We know that to be true in this case, because Kings Garden has two identical cultivation applications that were submitted to the department,” Hill said, later adding: “Those two applications were not scored consistently. We had four points on one question—question number four, for example—and 10 points on the other application.”

DHSS’s own scoring guide notes that, “if two applicants applying for the same facility type provide identical responses to a question, the score must be the same.”

DHSS capped the number of licenses it awarded to cultivators, manufacturers and dispensaries and used a private company, Wise Health Solutions, to score applications. The decision to cap the number of licenses issued and concerns over the scoring process have both been the subject of lawsuits and complaints from denied applicants.

In May, a Missouri Court of Appeals in the Western District judge ruled that DHSS regulators were wrong to withhold applications. Since applications were ranked competitively, comparing them against one another was necessary to determine whether the state denied a license in an arbitrary or capricious manner, Judge Lisa White Hardwick wrote.

Hill argued Tuesday that is the only way to have a fair appeal of the state’s decision, otherwise the state can say, “‘Well, the other answers were better and we can’t show those to you because they’re confidential.’”

In its brief, Kings Garden Midwest argued that confidential information is not immune from discovery in lawsuits and noted that the administrative hearing commission entered a protective order. It also allowed for state regulators to redact applicants’ identifying information when providing the documents Kings Garden requested.

Layton argued that the language in the Missouri Constitution does not delegate to the administrative hearing commission the authority to decide what is confidential.

“The (administrative hearing commission) takes the position that it can only do what statutes allow it to do. It has no statute that allows it to close its hearing records, and so none of this stuff gets filed under seal. And so it all becomes public,” Layton said, arguing it’s contrary to the meaning of the constitutional provision.

When asked Tuesday by Chief Justice Paul C. Wilson if DHSS would have the same argument if the context was in a grand jury or civil subpoena, Layton said it would.

“No one has the power to compel,” Layton said.

Hill argued patient privacy would not be put at risk if applications were disclosed, also noting Health Insurance Portability and Accountability Act protections would apply. However, Layton countered that if the lower court’s ruling is upheld, then theoretically patients denied medical marijuana cards could seek the applications of patients who were successful in obtaining them.

Competing applications have been requested “in many, perhaps most, of the 578 appeals still pending at the” administrative hearing commission, DHSS wrote in its brief, with action currently postponed until the issue is addressed in the courts.

Secrecy around basic ownership details of medical marijuana license holders has made it virtually impossible to determine who owns what.

An analysis by The Independent and The Columbia Missourian previously found that of the 192 dispensary licenses issued by the state, there were several instances where a single entity was connected to more than five dispensary licenses—a violation of Missouri’s constitution.

This past legislative session, an effort by state lawmakers to require disclosure of ownership information ran into roadblocks when state regulators suggested they would recommend a gubernatorial veto if it became law.

This story was first published by Missouri Independent.

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