Hicks introduces Marijuana Freedom Act during special session

On Wednesday, at the beginning of a special legislative session called by Governor Mike Parson to address income tax cuts, Representative Ron Hicks, R-Defiance, filed and introduced HB2, a modified version of Hicks’ Cannabis Freedom Act filed earlier this year during legislative session.

That bill gained traction with some grassroots organizations but faced criticisms within the Assembly and the cannabis industry as being too broad and lacking structure in some areas.

One of the biggest points of contention, according to sources, was that Hicks’ original proposal would have replicated an entire department within state government that already existed. The Cannabis Freedom Act called for the authority of adult use marijuana to be delegated to the Department of Agriculture, necessitating staffing and resources to be replicated for a marijuana regulatory authority while another would continue to simultaneously exist administrating medical marijuana in the state under the authority of the Department of Health and Senior Services.

It was considered a non-starter for some members in a fiscally conservative legislature.

Hicks’ new version, dubbed the Marijuana Freedom Act, enshrines all regulatory authority over medical and adult use marijuana to DHSS, by mandating the creation of the “Marijuana Enforcement Authority” under the Department. The bill states, “The authority shall have oversight and auditing responsibilities to ensure that all marijuana being grown in Missouri for personal use is accounted for and shall implement an inventory tracking system as provided under subsection 2 of this section. The authority shall require that each marijuana business keep records for every transaction with another marijuana business or consumer. Inventory shall be tracked and updated after each individual sale and reported to the authority.” those obligations are the same currently held by the Section for Medical Marijuana Regulation over medical marijuana cultivators, both residential and commercial, in the state.

Hicks’ original bill, The Cannabis Freedom Act, was a hodgepodge of virtually every piece of legislation concerning medical and adult use marijuana that had been proposed in recent years at the Capitol.

The Marijuana Freedom Act hits many of the same points as Hicks’ previous filing.

   

HB2 would allow for the legalization of marijuana for adults 21 and over while removing marijuana from the drug schedule.

The bill would also allow legal marijuana businesses to deduct expenses and receive tax credits disallowed in their federal tax returns while ensuring the ability of banks and financial institutions to service legal marijuana businesses in the state.

The Marijuana Freedom Act would provide protections for medical marijuana patients and legal marijuana users in relation to both family court and existing probation and parole sentences as well as automatic expungement for offenses “involving marijuana, marijuana products, or marijuana drug paraphernalia committed prior to the enactment of sections 196.3000 to 196.3048.” The bill also allows for current sentences, ongoing supervision, and court-ordered restitution to be vacated. For persons that qualify for their sentences or supervision to be be vacated, HB 2 also creates a six-week work training program designed by DHSS in conjunction with the division of workforce development. The  program would train and educate the person for workforce entry into the marijuana industry.

The bill would also effectively allow unlimited licensing in Missouri. The bill contains an outline of what would be required of applicants for marijuana licenses.

• All applicants shall be twenty-one years of age or older; and
• All applying individuals or entities shall be registered to conduct business in the state of Missouri.
• All applicants seeking licensure as a marijuana business shall comply with the following general requirements:
  • (1) All applications shall contain the name and address of the applicant;
  • (2) All applications for marijuana commercial growers and marijuana processors shall contain the name, address, and global positioning system coordinates and the legal description of the property;
  • (3) All applications for licenses authorized under this section shall be made upon forms prescribed by the authority;
  • (4) All applications shall identify the city or county in which the applicant seeks to obtain licensure as a marijuana business;
  • (5) All applicants shall submit a complete and accurate application to the authority before the application may be accepted or considered;
  • (6) All applications shall include all attachments or supplemental information required by the forms supplied by the authority;
  • (7) All applications shall be accompanied by a full remittance for the entire amount of the application fees;
  • (8) All applicants for a marijuana business license authorized under sections 196.3000 to 196.3048, including:
    • (a) Individual applicants applying on their own behalf;
    • (b) Individuals applying on behalf of an applying entity;
    • (c) All principal officers of an applying entity; and
    • (d) All owners of an applying entity, shall undergo a Missouri criminal background check within thirty days prior to applying for the license;
  • (9) All applicable fees charged for the criminal background check are the responsibility of the applicant and shall not be higher than fees charged to any other person or industry for such background check;
  • (10) All applicants, or applying individuals if an entity, shall establish their identity through submission of a color copy or digital image of one of the following unexpired documents:
    • (a) Front and back of a Missouri driver’s license;
    • (b) Front and back of a Missouri identification card; or
    • (c) A United States passport or other photo identification issued by the United States government; and
  • (11) All applicants, or applying individuals if an entity, shall submit an applicant photograph.
• A person or entity applying for a marijuana business license shall submit the following to the authority:
  • (1) Business-formation documents, which may include, but are not limited to, articles of incorporation, operating agreements, partnership agreements, and fictitious business name statements;
  • (2) Financial information pertaining to the operations of the marijuana business, which shall include the following:
    • (a) A list of funds belonging to the applicant held in savings, checking, or other accounts maintained by a financial institution. The applicant shall provide for each account the name of the financial institution, the address of the financial institution, account type, account number, and the amount of moneys in the account;
    • (b) A list of loans made to the applicant. For each loan, the applicant shall provide the amount of the loan; the date of the loan; term of the loan; security provided for the loan; and the name, address, and phone number of the lender;
    • (c) A list of investments made into the marijuana business. For each investment, the applicant shall provide the amount of the investment; the date of the investment; term of the investment; and the name, address, and phone number of the investor;
    • (d) A list of all gifts of any kind given to the applicant for the applicant’s use in conducting marijuana business activities. For each gift, the applicant shall provide the value of the gift or description of the gift and the name, address, and phone number of the provider of the gift;
    • (e) A complete list of every individual who has a financial interest in the marijuana business but is not an owner of the marijuana business;
    • (f) Whether the applicant has an ownership or a financial interest in any other marijuana business licensed in Missouri; and
    • (g) A complete and detailed diagram of the proposed premises. The diagram shall be to scale and shall show the following:
      • Boundaries of the property and the proposed premises to be licensed, including all boundaries, dimensions, entrances and exits, interior partitions, walls, rooms, windows, doorways, and common or shared entryways. A brief statement or description of the principal activity to be conducted therein shall also be included;
      • The location of marijuana business activities that will take place in each area of the premises and the identification of limited-access areas;
      • Where all cameras are located and a number assigned to each camera for identification purposes; and
      • If the proposed premises consists of only a portion of the property, which part of the property is the proposed premises, and the use of the remaining property.
      • If the applicant is not the landowner of the real property upon which the premises is located, the applicant shall provide to the authority a document from the landowner or the agent of the landowner that states that the applicant has the right to occupy the property and acknowledges the applicant may use the property for marijuana business activities for which the applicant is applying for licensure. An applicant shall also provide a copy of the rental agreement, as applicable.
      • If the applicant is the landowner of the real property upon which the premises is located, the applicant shall provide to the authority a copy of the title or deed to the property.
      • If the applicant is applying for a marijuana commercial grower license, the applicant shall also submit the following:
        • (1) For indoor and mixed-light cultivation, identification of all power sources for cultivation activities including, but not limited to, illumination, heating, cooling, and ventilation;
        • (2) If the applicant is proposing to use a diversion from a waterbody, groundwater well, or rain catchment system as a water source for cultivation, the following locations on the property diagram with locations also provided as GPS coordinates in latitude and longitude:
          • (a) Sources of the water used, including the location of waterbody diversion;
          • (b) Pump location and distribution system; and
          • (c) Location, type, and capacity of each storage unit to be used for cultivation;
        • (3) A proposed cultivation plan, which shall include identification of all water sources used for cultivation activities;
        • (4) Evidence of insurance including, but not limited to:
          • (a) General liability insurance;
          • (b) Workers’ compensation insurance; and
          • (c) Product liability insurance; and
        • (5) Any additional information required by the authority.
• The authority shall be authorized to issue the following types of marijuana processor licenses based on the level of risk posed by the type of processing conducted:
  • (1) A nonhazardous marijuana processor license; or
  • (2) A hazardous marijuana processor license.
• In addition to the application requirements under this section, a marijuana commercial grower or marijuana processor shall demonstrate to the authority that the grower or processor has a bank account and shall provide growth estimates, processing estimates, and predicted electrical and water usage to grow or process marijuana.

While open licensing could be a benefit for smaller operators or applicants who were unsuccessful in securing a medical marijuana license; the bill also does not restrict the number of licenses an individual or single entity may own, and with no residency requirement, the Marijuana Freedom Act effectively opens the floodgates for out of state operators like Cresco, Curaleaf, and Scott’s to establish or purchase businesses where they’ve struggled to find footing previously, creating an influx of corporate cash into Missouri’s marijuana market.

Recently, Oklahoma, the state most commonly pointed to by some advocates as the epitome of an open and free market, issued a moratorium on licenses for the next two years. Overwhelmed by the massive influx of applicants and licenses, the state has struggled to regulate businesses and product. As Okalahoma has begun implementation of testing requirements and seed to sale tracking state regulators have struggled to keep up with its more than 10,000 active licenses. The moratorium began on August 26 for new dispensary, grower, and processor licenses.

A few of the things the Marijuana Freedom Act does not do, the bill does not include employee protections for marijuana use from private employers; it does not prevent schools, hospitals, care facilities, etc. from restricting use or possession of marijuana; and it does not offer residency protections for renters or leases.