Nebraska Officials Award State’s First Medical Marijuana Business Licenses

“I hope that the individuals that receive these licenses are good people that have every intention of providing good medicine to the people of the state that so desperately need it.”

By Zach Wendling, Nebraska Examiner

The Nebraska Medical Cannabis Commission offered the state’s first medical cannabis cultivator licenses Tuesday, nearly a week after the voter-set deadline of October 1.

Commissioners unanimously offered the first two of up to four cultivator licenses, a move challenging the Nebraska Attorney General’s Office, which had threatened to sue the commission if it did so. The first license offerings went to Nancy Laughlin-Wagner of Omaha, on behalf of the Midwest Cultivators Group LLC, and to Patrick Thomas of Raymond.

Applicants have five business days to accept the license.

‘Do right by the people’

Someone who answered the number listed on the application for Laughlin-Wagner said the group would not immediately comment. Perry Pirsch, a lawyer working with Thomas, told the Nebraska Examiner that Thomas is “grateful for the opportunity that’s been granted to him.”

“I know that he will make the best out of it, responsibly, ethically, within the confines of the law, while trying to do right by the people of the State of Nebraska,” Pirsch said.

Thomas said in his application that he is a lifelong Nebraskan with more than 20 years of experience in agriculture, farming and land management. He is the owner and operator of Thomas Construction, a contracting business specializing in large-scale municipal water main projects. Thomas’s application listed Sarpy County Attorney Lee Polikov as a reference.

Thomas has a hemp cultivation license from the U.S. Department of Agriculture, which he wrote that he would relinquish if he got a state license to grow medical cannabis.

The application for Laughlin-Wagner indicates she will serve as chief executive officer of Midwest Cultivators Group alongside Frank Hayes of Omaha as chief financial officer and Dave Kanne of Carroll, Iowa as chief operating officer.

Laughlin-Wagner is a registered nurse with more than two decades of executive leadership experience in hospital operations and managed care, according to the application. Hayes is the founder and president of Hayes & Associates LLC, a certified public accounting and consulting firm. Kanne has 30 years of agricultural and business management experience as co-owner of a family farming operation since 1993, which has 1,200 acres of corn and soybeans.

“We are committed to ensuring that our operations align with the commission’s standards, Nebraska law and the highest levels of compliance, safety and patient care,” the Midwest Cultivators Group leaders said in their application.

Any licensed cultivator can grow no more than 1,250 flowering plants at one time under commission regulations. The Medical Cannabis Commission plans to license transporters, product manufacturers and dispensaries at a future date.

Unclear rubric scoring

The commission also voted 3-0 to deny two other applications: Crista Eggers, for a facility in Yutan, and Casey Sledge, for a facility in Wayne. Eggers is executive director of Nebraskans for Medical Marijuana, the group that led the 2024 ballot measures that received approval from 71 percent of voters for legalizing medical cannabis and 67 percent of voters for a regulatory system.

Applicants needed an average score of more than 70 on a 100-point scale. Commissioners devised the business metrics but have not publicly released how it set them. The commission received 39 cultivator applications between September 4 and September 23, which were advanced for evaluation based on a random lottery system.

The average scores were 73.33 for Patrick Thomas, 72 for Nancy Laughlin-Wagner, 63.67 for Casey Sledge and 42.33 for Crista Eggers. The commission decided that an average of more than 70 made an application eligible for licensure.

Eggers’s application had the widest range, with evaluators scoring it at 11, 44 and 72 points.

Commissioner Lorelle Mueting of Gretna, a prevention specialist with Heartland Family Service, told reporters after the meeting that the scores closely followed commission regulations, which included requirements for a business and financial plan, growing location, security and more.

“The rubric went right through the regulations,” Mueting said, pulling out her annotated copy of the regulations. “Everything is in here that people needed to submit.”

Commissioners did not explain how Eggers’s scores ranged so widely, and they told reporters they were unwilling to say which commissioners gave what scores.

Public weighs in

The first licenses were set to be awarded September 30 until the September 29 resignations of Commissioners Bruce Bailey of Lincoln and Kim Lowe of Kearney, both of whom were part of an internal three-member evaluation team. Bailey had been the most supportive of a regulated but more permissive medical cannabis system, including for smoking marijuana.

Under the commission’s emergency regulations, set for a public hearing next week, future dispensaries could not sell raw cannabis flower, vapes, smokeables or edibles.

Nearly all members of the public testifying before the commission have opposed the proposed regulations, with some arguing that the voter-approved medical cannabis laws legalized all forms of cannabis for patient use and that smoking, for instance, might provide faster relief than tinctures or pills.

Maggie Ballard, also a prevention specialist at Heartland Family Service with Mueting, thanked the commission Tuesday for its work on a task she said is “as challenging as giving a cat a bath.” She said she particularly appreciated restrictions on smoking. Ballard testified in support of Gov. Jim Pillen’s (R) appointment of Mueting to the commission in May.

“I just want to echo my appreciation and the appreciation of many, many Nebraskans that are either unaware of these meetings or have been way too afraid to speak up at these meetings, because they understand how polarized this topic has become,” Ballard said.

Lanette Richards of Scottsbluff, executive director of Monument Prevention, another drug prevention organization, also thanked the commission for regulations she said protect children.

“Even though this commission is setting guidelines for medical marijuana, we all know there is no difference between marijuana and medical marijuana,” Richards said.

Christy Knorr of Omaha, a hospice nurse, said a physician’s oath to do no harm includes medicine. She spoke of her wife’s fight with multiple myeloma, for which Knorr said marijuana helped provide some relief. Her wife died almost five years ago, and cannabis was the only medication to help take the edge off so she could sleep.

“People deserve choices in what medications they take,” Knorr said.

Lia Post of Springfield, a longtime medical cannabis advocate who said the medication helps her avoid opiates or other addictive substances, spoke in defense of Eggers as a mom who is trying to help her son. Post said whichever commissioner scored Eggers an “11” shouldn’t be on the commission.

“I would trade everyone in this room for one Crista Eggers, including myself,” Post said.

Next steps and legal threats

The commission’s regulations are in temporary “emergency” status, lasting up to 180 days max. The rules will go up for a public hearing at 1 p.m. October 15 at the Nebraska State Office Building for up to three hours. No commissioner will be in attendance.

Commissioners will decide after that hearing whether to finalize the regulations, which would require approval from Attorney General Mike Hilgers (R) and Pillen.

Zachary Pohlman, a deputy solicitor general for Nebraska, in March told state lawmakers during a legislative hearing on a separate legislative bill that federal law continues to criminalize marijuana. Pohlman said that if the Medical Cannabis Commission “tries” to issue licenses, “the Attorney General’s Office will challenge that action as preempted and unenforceable.”

A spokesperson for the AG’s Office declined Tuesday to comment on that previous position, which Hilgers has shared in court filings and public events.

Former State Sen. John Kuehn (R) of Heartwell, a longtime marijuana opponent, continues to try to fight the laws in court, including through a similar preemption lawsuit. A Lancaster County District Court judge dismissed Kuehn’s latest lawsuit in June, which he is appealing to the Nebraska Supreme Court.

In a brief Monday to the Nebraska Supreme Court on that Kuehn case, the AG’s Office, as well as an outside attorney for the Medical Cannabis Commission, did not repeat the licensing argument but suggested another legal path to the courthouse door.

“The State itself could even challenge the Medical Cannabis Laws if, for example, it charges a defendant with illegal possession of cannabis, and the defendant raises the [Nebraska Medical Cannabis] Patient Protection Act as a defense,” the brief states.

Since the voter-approved law took effect in December, patients have legally been able to possess up to 5 ounces of medical cannabis in Nebraska with a health care practitioner’s recommendation.

The AG’s spokesperson declined to say Tuesday whether the state plans to challenge patient possession or whether any related guidance has been issued to local law enforcement.

Medical Cannabis Commission members have entered closed sessions at nearly every meeting to discuss “imminent” or “pending” litigation, which included Tuesday. Commissioners declined to comment on possible legal threats.

‘Good medicine’

Eggers, while not addressing her license application, asked commissioners to release the business grading rubric while expressing her gratitude for moving forward with licensing.

Said Eggers: “I hope that the individuals that receive these licenses are good people that have every intention of providing good medicine to the people of the state that so desperately need it.”

The next scheduled regular meeting of the commission is 1 p.m. November 3 in the Nebraska State Office Building.

Bo Botelho, general counsel for the Nebraska Department of Health and Human Services, which is assisting the Medical Cannabis Commission, said the rubric won’t be made public until after licenses are awarded. He said state agencies don’t typically disclose how evaluators score applications or contracts, partly so applicants answer equally.

“Like taking a test, if you know this question is worth a lot more, you may put a lot more information in there and not so much in the other ones, but those other ones are just as valuable,” Botelho said. “That’s why we generally don’t tell them how the scores are being divvied. We want the best response across the board.”

Botelho said “there’s no public purpose” to releasing who gave what score to which applicant.

“If there is a public purpose, I guess that argument can be made,” he continued. “But I would be afraid of that being used to maybe intimidate or harass an evaluator.”

This story was first published by Nebraska Examiner.

Photo courtesy of Chris Wallis // Side Pocket Images.

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