Judge takes Sarcoxie case under advisement, will make decision in coming days

Days after they were denied cultivation licenses by the state, Sarcoxie Cultivation Centers was first to court on Monday, December 30, arguing their case for a temporary restraining order against the State executing the licensing process.

Sarcoxie Nursery, owned and operated by the Callicoat Family, was denied for a cultivation license on December 26 by the Department of Health and Senior Services.

Court documents show the request for a temporary restraining order citing “immediate and irreparable injury, loss, or damage.” The Sarcoxie legal team, led by Joe Bednar of Spencer Fane, also contended that the state’s use of zip code bonuses defined by employment rates was unconstitutional, as was the limiting of licenses to 60.

Bednar began his statement to the court by calling the Callicoat’s “model applicants,” explaining they have been longtime residents of Southwest Missouri, successful business people, referencing Dr. Paul Callicoat’s standing in the community and the family’s advocacy for Amendment 2, while explaining how much they have invested financially.

Bednar explained that the Callicoat family is the type of applicant voters envisioned when they voted for Amendment 2.

The lawyer explained the purpose of the TRO, challenging the constitutionality of the rules as they pertain to the zip code bonuses, and license caps.

The TRO, Bednar explains, will allow the legislature to contemplate the validity of DHSS’ rules in the Joint Committee on Administrative Rules (JCAR). Bednar contends that the state’s timeline for accepting applications and issuing licenses purposefully usurps the legislature in the process.

Counsel then addressed the constitutional conflict as it pertains to the zip code bonuses. Bednar highlighted and discussed the 10 criteria for numerical scoring approved by the department and the advisory committees:

• Character, veracity, background, qualifications, and relevant experience of principal officers or managers.
• Business plan proposed by the applicant, which in the case of cultivation facilities and dispensaries shall include the ability to maintain an adequate supply of marijuana, plans to ensure safety and security of Qualifying Patients and the community, procedures to be used to prevent diversion, and any plan for making Marijuana available to low-income Qualifying Patients.
• Site security.
• Experience in a legal cannabis market.
• The potential for positive impact in the site community.
• Maintaining competitiveness in marijuana for medical use marketplace.
• In the case of Medical Marijuana Testing Facilities, the experience of their personnel with testing marijuana, food or drugs for toxins and/or potency and health care industry experience.
• In the case of Medical Marijuana Cultivation Facilities, capacity or experience with agriculture, horticulture, and health care.
• In the case of Medical Marijuana Dispensary Facilities, capacity or experience with health care, the suitability of the proposed location, and its accessibility for patients.
• In the case of Medical Marijuana-Infused Products Manufacturing Facilities, capacity or experience with food and beverage manufacturing.

Bednar contended that by limiting the number of cultivation licenses the state is intrinsically negating number six, maintaining a competitiveness in the marijuana for medical use marketplace.

Counsel stated that the number of licenses granted by the state is arbitrary and has no rational basis. Bednar continued by addressing the fifth criteria, “The potential for positive impact in the site community.” Bednar says that not only has the family invested heavily in the redevelopment of a historic property but will offer several jobs. Bednar then explained that the cultivation facility could have an even greater impact, explaining that medical marijuana is often an alternative to opiods and could decrease the use of opioids in the area and by extension help community members decrease their dependance.

Bednar contended that not only are the zip code bonuses unconstitutional, but also impractical. “People move from place to place to be employed,” he said.

He explained that capping licenses at 60 is contrary to the amendment, and points to the state’s issuing of emergency rules where licensees are conditionally denied as awarded licenses are approved. Bednar contended that this process also is unconstitutional and that anyone should be able to apply for vacant or abandoned licenses.

As Bednar closed, he addressed Judge Jon Beetem directly, explaining again the need for the legislature to have an opportunity to review the DHSS rules, explaining that if the legislature fails to act through the Joint Committee on Administrative Rules, then his clients will resume their case and move forward with a trial.

The state’s response came via Ross Kaplan of the Missouri Attorney General’s office.

   

Kaplan began by reiterating a need to maintain the status quo, citing the constitutional mandate for licenses to be awarded and pointing out that the deadline was met. As of December 26, all cultivation licenses had been awarded.

Kaplan addressed the number of 60 cultivation licenses, citing the constitutional amendment mandating a minimum of 60 licenses and explaining that the minimum increases with population data, a minimum of 1 cultivation license if required for every 100,000 residents in Missouri. He further explained that the number serves as a starting point while the state determines need and is adjustable going forward.

Kaplan redirected the claim from the Sarcoxie team that they had no option but to sue the Department, advising that there is an appeals process and the Department has already received two appeals.

Kaplan presented the court with the submission information from Sarcixue’s application, advising that the state began to accept cultivation applications on August 3. Sarcoxie’s application was received on Sunday, August 18. Sarcoxie scored #236. Kaplan addressed the judge, asking if 240 might be a non-arbitrary number.

Kaplan then addressed Sarcoxie’s claim of immediate and irreparable injury, loss, or damage. He stated that while Sarcoxie’s team did not clearly define their irreparable injury or damage the TRO would clearly cause irreparable damage to the state and other businesses as the failure to award licenses within constitutionally defined period would mandate that each applicant would have a clearly defined right to sue the Department for an immediate decision on their application.

Kaplan closes his statement to the court.

Judge Beetem asks Bednar how Sarcoxie defined irreparable injury or harm. Bednar states that the injury to his client is the failure to be licensed and the loss of millions of dollars invested in this process.

Bednar contends that the purpose of their case is not to dispute the rules or the scoring process, but to remove the cap off of licenses.

“This is a capitalistic society, they may do that in Russia,” Bednar says of the limited number of cultivation licenses as he addressed the room. He explained that beer brewers, soy farmers, restaurants, and other businesses do not have set limit allowable. Bednar briefly touched on the “Right to Farm,” as he discusses farming and soy, but moves quickly back to his contention that capping the number of cultivation licenses is unconstitutional and further has no rational basis.

After both parties had said their piece and addressed the court, Beetem sat for only a brief moment before explaining that no decision will be made today.

Beetem advised the room that he will take the testimony provided under advisement but he doesn’t feel he can rule from the bench. He noted to both parties that he understands the importance of the decision, and he will communicate a decision quickly in the coming days.

“We appreciate the opportunity to be heard by the court,” Dr. Callicoat said in a statement after the hearing. “We proposed a sensible resolution that provides for an efficient and transparent process for licensure that citizens can have confidence in. It ensures patients also will have access to the high-quality, safe, and effective medical marijuana that they need and deserve.”