Bi-partisan committee questions departmental oversight of marijuana regulation in hearing

The Joint Committee on Administrative Rules held a routine hearing on Wednesday to approve minutes from previous meetings and approve the final version of a report prepared by the Committee addressing concerns over the administration of rules governing marijuana licensees and business in Missouri.

While the meeting was brief, the unanimous approval of the report paired with the concerns raised by committee members will echo throughout Missouri’s cannabis industry.

Representative Peter Merideth, D-St. Louis, called on the Division of Cannabis Regulation to consider the findings of the report and act in accordance, “I hope that we understand that this (report) puts the department on notice here. If they end up trying to enforce these things that don’t appear to be rules that were done properly or in line with statute, I think it says very clearly in the report, that that subjects them (DCR) to attorney fees as well. That’s a cost to the state, and I really want to stress that when they go forward enforcing these, they consider that because the point of this program, we’re supposed to also be adding revenue, not increasing costs to the state. Not to mention all these businesses that are going to have to come out of pocket and fight in court if they go after this.”

Merideth expanded his point, encouraging DCR to reevaluate the implementation and requirement of some of the rules on a temporary basis, “In the last year, we talked a little bit about the prospect of delaying the application of these rules. Not just those that were issued through this process, but their overall rules about packaging, which seemed to have a whole lot of confusion around (them). I hope the department is listening and still will consider doing that. I heard, literally just today, a very specific example of some denials that were made where the denials weren’t even consistent with the guidance that the Department had given, weren’t consistent with the examples that would have apparently failed for the same reasons, and this is not just in one instance, but in three or four aspects of it.”

“What that says to me is that they (DCR) have a real problem on their hands with figuring out how to enforce this and doing some testing of their standards,” Merideth continued, “So that companies can go forward with their business and patients can go forward with receiving the products that they are wanting to get while they figure this out, rather than trying to jump into it and ultimately forcing costs and litigation or costly litigation that’s going to cost our state money and these businesses money and really help no one. I hope that they will consider that very strongly and understand this to be a statement from the legislature of how we feel right now on this, given this is a unanimous vote.”

Senator Nick Schroer, R-St. Charles, Chair of the committee, added to Merideth’s critique saying, “I appreciate the bipartisan nature of protecting the separation of powers and ensuring that, as you stated and I’ve stated previously, we don’t have these runaway agencies that are unlawfully creating rules by way of guidance like we all have assumed in rules that they have done here today. And we are therefore recommending that the Department stick to the regulatory scheme that this Committee passed. This Committee worked to an agreement between the Department, between the industry, and between the public who voted for these amendments to the Constitution into place.”

Schroer continued, explaining the perspective of the Committee and its members, “It’s not necessarily policy-oriented, we’re more looking at preserving what the will of the people really wanted, and that’s a very open but protective and safe medical and recreational program.”

Senator Holly Thompson Rehder, R-Sikeston, was the first to voice concern seemingly aimed directly at the leadership of DCR, rather than the rules and guidance itself. “I’m very concerned that this is now a repetitive issue that we have found within the Department on these businesses, and I think that as a committee, I would like to recommend that we look into it a little deeper,” the Senator said. “Do we have someone at the Department who is our main issue? That is not following the process and the things that have been implemented? I think that it’s time that we drill down and find out exactly what’s going on at DCR because I and Representative Merideth, in the last two days, have been given some different examples of some declines or kickbacks, saying, you know, this isn’t going to work because X,Y, and Z, when X, Y, and Z was actually by the book, (according to) the regulations that we have in place. I think that it’s time we take a deeper look into who within the department is making these bad judgment calls for these companies.”

Schroer echoed Senator Thompson Rehder’s call to action, “I’ve talked to some members about possibly forming an exploratory committee or a joint committee to investigate some of these claims because I think they are very disturbing.” Schroer continued, “I’ve shared with the Department that certain members in the industry are afraid to come forward because they have felt like there’s been some vindictive applications of the rules or misapplication of the rules, and that’s what they’re afraid of. They’re afraid of becoming a whistleblower, and if that is true, I think that we do need to figure out who in the Department is in charge of doling out these penalties or not approving certain applications, in a vindictive nature.”

Representative David Tyson Smith, D-Columbia, voiced concern over how the direction of rule application and guidance and whether the intent of application is to enforce the will of the people or to dictate the nature of regulation to individual beliefs. “With this industry just getting off the ground, you’re gonna have people behind the scenes coming in and they feel like this is the time to start passing regulations and start over-regulating, to get things in line with what they want before it gets too far down the road and it’s more difficult.”

Representative Louis Riggs, R-Hannibal, didn’t mince words in his assessment of the problematic nature of enforcement at DCR and cited language specifically from the Missouri Constitution when saying, “I’m interested in three words: arbitrary and capricious. You know, personality is one thing policy is another and if we’ve got some bad actors who are in the middle of this, I would concur with Senator Rehder, it’s time to start thinking a little deeper and finding out what precisely is going on, and who the problem child or children are here.”