Validation, Verification, and Revocation: What does conditional approval mean to new licensees?

I was naïve. In December of 2018, a friend asked me when I thought she would be able to legally buy medical marijuana from a local store. I did some quick and dirty math in my head and replied, “May or June of 2020.” I was looking at the Constitutional deadlines and considering how long it takes a plant to go from clone to harvest. I wasn’t considering all of the bureaucratic red tape that would prevent cultivators from putting those first clones in place much less getting harvested product to manufacturers and dispensaries. My new estimate for those who ask is sometime in January of 2021.

Missouri is not the worst of the roll-out horror stories. After all, we have a regulatory scheme in place and it has only been 16 months since the election. Still, frustration is mounting as licensees learn there are still more hurdles before they can begin operations. So this month I want to answer the key question, what is “conditional approval” and can they do that?

Article XIV was written with timelines built-in for the initial application process. Those timelines indicate that any application submitted had to be approved or denied no later than 150 days after it was submitted. Nothing in the timeline for approval/denial contemplates a “conditional” approval/denial. So where is the authority to do so coming from?

In both Missouri and Federal courts, there are a variety of cases that address conditions placed by administrative agencies on permit and license applications. Those are usually about some action the agency expects the applicant to take when they begin operation. In all of those cases, the court basically states that unless the phrase “final decision” (or something like it) appears in the enabling language the authority to approve or deny an application includes the authority to conditionally approve or deny it. In this case, the license is conditioned on the completion of the verification process and a commencement inspection.

It is possible that a court would interpret the deadlines in Article XIV as being for a final approval decision. After all, the Article is required to be interpreted with the goal of patient access in mind. However, even if a court determined that DHSS does not have the authority to issue “conditional approval” DHSS would still be authorized to engage in the verification process they are currently conducting.

There are two regulations which DHSS may rely on authority to prevent licensees from beginning operations. First, 19 CSR 30-95.040(1)(D) which explicitly prohibits any facility from beginning full operation until after the commencement inspection. This provision would be in effect even if the approval would not have been characterized as “conditional.” Additionally, this seems a reasonable requirement for a facility that is cultivating, manufacturing, or selling consumable products. Much in the same way a food processor/manufacturer or restaurant may not begin work until after a final inspection. The actual timeline for getting the inspection is the problem. Delays due to the volume of work and the current public health crisis mean that even the most prepared facility has still not be given its commencement inspection.

   

The second provision is 19 CSR 30-95.040(1)(F) which lists all the reasons that a license may be suspended, denied, or revoked. The very first of these is a misrepresentation on the application or a failure to perform as described in the application. This is the crux of DHSS’s verification process. They are pouring through un-redacted applications and looking for ways to independently verify the information included. This is technically a process they could do at any time, even years after a licensee began operations. Originally the plan may have been to only perform in-depth reviews if a complaint was made or if something suspicious stood out to DHSS staff. However, the level of scrutiny on DHSS at this time has made the need to prove the quality of the approved applicants even more urgent.

The short answer to the question of whether DHSS has the authority to do the verification process is, “yes.” The more legally interesting question of the authority to issue “conditional” approval/denials hasn’t really been answered. The key thing for licensees to remember is that is probably doesn’t matter whether the approval was conditional or final. The verification process is still authorized and the commencement inspections are still a reasonable requirement. The next question is how many applicants who were initially denied and who currently have appeals pending will end up getting a license after the verification process is done? At this point, it is anyone’s guess.

Sharon Geuea Jones is a lobbyist and attorney in Missouri. She has advocated on behalf of her clients in the legislature since 2002. After the recent adoption of the medical cannabis amendment in Missouri, Sharon began assisting clients in understanding and forming the regulations for the new industry. She has written multiple articles for professional publications and is a frequent speaker on issues of advocacy and legal strategy. She currently resides in Columbia, Missouri. You can learn more on her website www.jonesadvocacy.co.

This article is for general informational purposes only. This information is not legal advice and it should not be considered to create an attorney-client relationship. You should always consult an attorney for advice regarding your individual situation. Federal laws currently conflict with Missouri law legalizing cannabis use and possession.