Missouri’s inaugural medical marijuana facility application period ended recently (on August 19, 2019). Now that the smoke begins to clear from the application process, hopeful applicants can focus their energy on fostering relationships so that their businesses can launch as soon as possible. With even the earliest anticipated harvest being at least several weeks after licenses are issued in December of this year, Missouri residents can expect this new industry to begin taking shape in the early months of 2020.
The Missouri Department of Health and Senior Services (“Department” or “DHSS”) is expected to issue 348 facility licenses (60 cultivation facilities, 192 dispensaries, 86 manufacturing facilities, and 10 testing laboratory facilities). The Department has reported that over 2,100 applications were received—and this was after the Department extended the deadline 40.5 hours from 11:59 p.m. (CST) on August 17 to 4:30 p.m. (CST) on August 19. The extension was announced on August 15, just two days before the original deadline, and HeplerBroom’s cannabis law practice group has already heard rumblings about potential litigation from applicants whose information was submitted prior to the announcement.
With the time and effort (and money) spent by organizations in finalizing their applications, litigation regarding license issuance has always been a likelihood here, as it has been in other states. Applicants retained and consulted with attorneys, financial professionals, risk management companies, local law enforcement, horticulturalists, physicians, chemists, and others who could advise on key aspects of the proposed facilities and the applications. Behind the scenes, these same applicants began hiring construction firms, architects, lighting engineers, security companies, and others to assist with designing and building the facilities. A key concern looming in the background for all applicants is banking, as marijuana remains an illegal Schedule I substance under the federal Controlled Substances Act of 1970; in light of this illegality, federal laws and regulations (e.g., money laundering statutes) deter most banks from touching funds related to marijuana, lest these institutions risk losing their deposit insurance. That said, HeplerBroom has been keeping an eye on the Secure and Fair Enforcement Act (“SAFE Banking Act”), a proposed federal law that would provide a safe harbor for financial institutions that provide banking services to legal cannabis-related businesses. As of the time of this blog posting, the House bill has been placed on the Union Calendar for a vote, and the Senate bill is still in committee.
After licenses are awarded, the work for new Missouri medical marijuana facilities will be far from over. Final approval to cultivate, manufacture, dispense, test, or transport marijuana is contingent upon a commencement inspection by the DHSS to ensure the facility’s compliance with all state and local requirements. These inspections are intended to occur within one year of license issuance, and the failure to pass such an inspection could result in license revocation. The regulations promulgated by the DHSS feature specific requirements for waste disposal, inventory and quality control, storage and transportation of marijuana, product labeling and packaging, and facility security, among others, and various cities and municipalities have enacted ordinances with additional requirements. At HeplerBroom, we continue to work with our clients to help them exceed these minimum requirements, and we continue to monitor litigation in other states to best advise our clients on how to protect themselves both now and as the medical marijuana industry blooms in Missouri.