A state appeals court ruled Tuesday that Missouri regulators were wrong to withhold copies of successful medical marijuana applications from litigants who are appealing a denied license.
The Missouri Court of Appeals in the Western District sided with a California-based company that argued it needed copies of those applications to prove it was wrongly denied two licenses to grow medical marijuana in Missouri.
Judge Lisa White Hardwick wrote that applications were ranked competitively against other applications. So the only way to determine whether the state denied a license in an arbitrary or capricious manner, she wrote, is to compare unsuccessful applications against successful ones.
“Without all of the information that formed the basis of the [Department of Health and Senior Services’] decision,” Hardwick wrote, “no meaningful review of that decision can occur.”
A spokeswoman for the department said DHSS was reviewing the court’s ruling and considering next steps, including taking the case to the Missouri Supreme Court.
The state’s decision to withhold virtually all information about successful medical marijuana applicants has come under increased scrutiny in recent weeks.
The program has long endured accusations of wrongdoing, most notably surrounding irregularities in how license applications were scored.
Recent analysis by The Independent and The Missourian of the 192 dispensary licenses issued by the state found several instances where a single entity was connected to more than five dispensaries.
The state constitution prohibits the state from issuing more than five dispensary licenses to any entity under substantially common control, ownership or management. But because ownership information is considered confidential by DHSS, it’s impossible to determine if that regulation is being followed.
Lawmakers attempted to force the department to turn over ownership records to legislative oversight committees. But the effort was abandoned when DHSS made it clear Gov. Mike Parson would veto any legislation that contained the requirement.
Tuesday’s ruling was the result of an appeal filed with the state’s Administrative Hearing Commission by a company called Kings Garden Midwest LLC.
The company applied for two licenses to grow medical marijuana. The state denied both applications. In its appeal, the company argued that it submitted answers on its applications that were the same as answers submitted by successful applicants but it received a lower score.
To prove this claim, Kings Garden requested that the department provide copies of successful applications.
DHSS objected to the request, arguing that the constitutional amendment approved by voters in 2018 that legalized medical marijuana requires it to keep all information filed in license applications strictly confidential and immune from disclosure under any circumstances.
The administrative hearing commission ordered the department to turn over the documents requested to Kings Garden, but allowed for it to redact applicants’ identifying information.
DHSS then asked a circuit court to intervene and block disclosure.
The circuit court sided with Kings Garden, and DHSS appealed.
The appeals court ruled Tuesday that not allowing Kings Garden access to successful applications would lead to the “unreasonable and absurd result that unsuccessful applicants pursuing an appeal … would be denied access to information that was an integral part of the department’s decision to deny their application.”
In February, the administrative hearing commission ordered the state to issue two medical marijuana cultivation licenses to companies that had previously been denied. In its ruling, the commission pointed specifically at irregularities in scoring.
DHSS is appealing that decision.
This article by Jason Hancock is published by permission of The Missouri Independent.