Committee raises concerns over Missouri marijuana regulators’ guidance and authority at JCAR hearing

The Joint Committee on Administrative Rules (JCAR) convened on Wednesday to scrutinize the handling and issuance of guidance documents and the scope of rules promulgated by Missouri’s Division of Cannabis Regulation (DCR). Concerns arose regarding the issuance of guidance that appear to serve as supplemental rules, bypassing the standard rule-making process.

Chairperson Senator Nick Schroer spearheaded the discussion, expressing concerns over the Division’s approach to guidance and the validity of some guidance documents and their use.

Amy Moore, Missouri Division of Cannabis Regulation Director, reiterated multiple times that the Division does not view guidance as an extension of rules, but rather intends it to be used to assist licensed marijuana operators in the state in interpreting existing rules and law.

“[The guidance] is not establishing a new requirement,” Moore explained. “It’s not establishing a new policy. All it’s doing is giving examples, discussing with our licensees what we expect to be compliant or not. That’s our view of what we put forward here. There’s nothing expanding. There’s nothing establishing a new statement of general applicability, a new requirement, or a new policy.”

But Moore’s view of guidance isn’t shared by marijuana licensees in the state according to Christopher McHugh, CEO of Vertical, a St. Joseph-based operator with cultivation, manufacturing, and retail licenses.

“In response to, all of the benefits from the guidance that I’ve been offered this morning, I don’t see them,” McHugh continued. “I didn’t ask for them, and I don’t want them. I just want to make that clear. I’m not trying to be rude, but any impression that you might have that the industry wants some of this, I disagree with.”

“I think it’s important for the committee to understand that the guidance that we’ve been talking about, whether you agree with it or not, whether you think it’s understandable or not, it is law to us. Because if we do not follow it, our compliance officer will come in, show us the guidance, show us how we’re not following it, and they have the power to lock up that product in Metrc.”

“So from my perspective, I don’t understand the marginalization of the guidance,” McHugh said. “It is what we have to follow.”

Two points that were referenced multiple times by Senator Schroer and Representative Peter Merideth over the course of the hearing were the use of guidance to effectively restrict packaging regulations beyond what is included in rule, and the scope of authority for DCR in how rules were created.

Schroer singled out language in guidance that seemingly expands existing rule for allowable packaging inclusions where the document specifically states that the inclusion of robots and aliens would not be compliant, “Do you think the statement barring the use of robots and aliens… is a statement of general applicability?”

“What I can say is the guidance doesn’t bar anything,” Moore replied. “We’re giving examples to guide. We’re answering questions that are asked. But in the end, if someone, put a robot that was not in the shape of a human on a package, and we found them in violation, I think that that would be an inappropriate, determination on our part because in the end, what matters is what the rule says, and the guidance does not itself bar anything,” she said.

But that explanation does not completely align with the experience of operators, industry sources told Greenway. Throughout the short history of legal marijuana in Missouri, operators have repeatedly been flagged or denied for violations that don’t exist strictly in rule due to subjective interpretations by regulators.

One example of that was presented in discussion of DCR guidance regarding the inclusion of QR codes on packaging and restrictions placed on the code itself. An unexpectedly combative issue on the day.

“The QR code limitations in the rules state, all marijuana product packaging design, including that for exit packaging, My only utilize… a QR code linking to a website where a purchaser can learn more about the product, and I think that’s fine,” Schroer stated. 

“However, the packaging label and product design guide on page 6 further goes into detail that the QR code may not include a logo or an image, and that the QR code may only be black or white. These additional statements are not in the promulgated rule,” Schroer questioned Director Moore, saying,” So my question to you would be, how does the text of the rule limit the colors or the images on a QR code?”

Moore explained, “Because the text of the rule limits the colors or images for the packaging as a whole, which the QR code would be part of,” she continued, “Everything that’s on the packaging is subject to the limitation on colors.”

“There isn’t any limitation explicitly on the QR code. There is a limitation on the number of colors that can be on the package. You cannot include colors on the QR code in violation of the rule that applies to all packaging,” she said.

Representative Merideth drilled down on that idea, listing examples and asking if a QR code could serve as a second logo on packaging, utilizing color while maintaining compliance with the rule as written, separate from the guidance. 

“As we’ve discussed, the guidance does not prohibit anything new. So that’s a new circumstance,” Moore said. “Just like all of our licensees have come to us with all of their new circumstances. We would look at that and look at the rule itself. And since we haven’t addressed that in the guidance…”

“You have addressed it in the guidance,” Representative Merideth protested. “That’s the problem.”

    

Moore reiterated that guidance itself does not prohibit any action and that DCR staff would refer to the rules to make a determination, but Merideth probed further.

“But you just said ‘We haven’t addressed that in the guidance’, so we would have figure it out. The problem is you have addressed it in the guidance, so you’ve preemptively issued a new rule outside of what’s in the rules,” he stated.

“It’s not a rule if it doesn’t matter,” Moore replied.

“So your position is just ultimately, this is null and void. It’s just if they want to consult it, they can, or they can just consult the rules,” Meredith questioned. With Director Moore once again stating that DCR guidance is viewed only as an example for licensees, not a determining document, but that statement would seemingly directly conflict with response as the Representative moved forward.

“What you’re telling them is that you think that it has to be black and white,” Merideth continued. “Those are very explicit language that it cannot include a logo. So even if one of their 2 logos is on the QR code. This says that it can’t include a logo.”

“That is, what we believe would be noncompliant. Yes,” Moore answered.

When the Representative asked for a specific reference to that interpretation in the rules, Moore replied, “There is no language that says this is not compliant. We have our rules that have to work together, and that is what we believe when you look at the rule about colors and logos, how that should apply to the QR code,” Moore said.

From issues with packaging design and naming products to using licensed brands, Missouri marijuana regulators have become increasingly more stringent in their restrictions, culminating in guidance and final rules that have created a detailed and lengthy process that operators call overly complex and confusing. Moore’s explanation of deeming a color-laden QR code non-compliant, despite a lack of foundation in rule is a key example of that confusion and frustration one operator said.

Critics argue that guidance and rulemaking, such as the stipulation that “All marijuana product packaging design, including that for exit packaging, may only utilize— A. Limited colors, including a primary color as well as up to two (2) logos or symbols of a different color or colors, whether images or text, including brand, licensee, or company logos, provided that the widest part of a logo or symbol is no wider than the length or height, whichever is greater, of the word “Marijuana” on the packaging;” is clear in its language and that additional clarification from guidance documents further defining the Division’s interpretation of the rule go against the nature of the intent in prior meetings and hearings.

“[In May] we had a committee hearing, in this room. I know there was a lot of discussion on what the previously submitted rule meant. And was it one color? Is it the gradations, can you do several different colors? And I think the language that was finally, agreed upon, the limited colors, including a primary color as well as up to 2. I think that the intent therein was to allow for the gradation, to allow all these other colors. And when I’ve got constituents coming to me saying, ‘I thought we nipped that in the bud. I thought this new language would allow for limited colors and not just 1 single color on the package.’ Now they see in the guidance that the primary color or it says limited colors means that the entire package must be limited to only 1 color. It’s concerning to certain members that have come to me, and myself, that believe – or could believe, that this is kind of backdooring to the original purpose of the original rule,” Senator Schroer stated.

Moore strongly disagreed with the Senator’s assertion.

“That it was never our intention to move off the concept of the original rule, and we made that very clear both to this committee and to the association as we discussed it during the committee hearing process. Since we had that committee hearing process, I have heard this idea that somehow we misled you or misled others in our intent, and I 100% Dispute that and take it personally.”

Moore continued explaining that while others may assert that restrictions are too stringent, she has heard feedback saying the state’s rules don’t go far enough to protect children from marijuana packaging.

“I hear from some of your colleagues who think that we didn’t go far enough. I hear from a lot of interest groups, particularly ones who are watching our poison control numbers climb and climb and climb with no stop to the slope of kids 5 and under, exposed to marijuana products since legalization,” Moore told Representative Merideth.

But the poison control numbers referenced by Moore are somewhat misleading in that context, a point raised by Merideth. “Products that are not at all going through your regulatory process at all are all over the place among consumers. Right? And, Arguably, the more we regulate this with details and things that drive up costs, aren’t we also making it even more likely that It’s cheaper to get things in other ways, and that might actually endanger kids more?” he asked.

Still, others argue that color restriction and oversimplifying packaging may have the opposite effect on dissuading children. Pointing to the language of the guidance issued by DCR, the contention has been made that a solid-colored package and secondary logo coloring is more akin to the vast majority of children’s products and treats like candies and breakfast cereals than a complex mixture of geometric patterns and shapes as described by Schroer during the hearing.

At the conclusion of the hearing, the Chair proposed that the Director draft a report addressing concerns about the department’s issued guidance and their legal standing.

In Schroer’s words, the report will assert that “to the extent that the department has issued guidelines that are statements of general applicability without engaging in the rule-making process, those guidelines have no legal effect.”

Those guidelines referenced by Schroer include:

• Guidance which prohibits the use of aliens and robots on packaging, even those aliens and robots are not shaped like humans.
• Guidance that a “primary color” may not include patterns or additional shades, or gradients, of the packaging’s chosen primary color.
• Guidance that requires a QR code cannot include a logo or image and may only be in black and white.
• Guidance on new product.
• Guidance that each SKU must be approved prior to use as more than one SKU could share the same packaging and labeling design.
• Guidance requiring the item approval application checklist, requiring submission of the items beyond the package or label design itself, including certifications of child-resistant packaging and FDA compliance.
• As well as any waivers of rules issued by the department that constitute statements of general applicability and change the effective date of rules, including but not limited to a waiver stating that the licensee may display information on the label that is not allowed by rule.
• Waivers of requirements for quality management systems, certain testing requirements, labeling requirements, and the use of barcode scanners.