The majority of Missouri's medical marijuana businesses recently have been granted extensions after failing to meet a one-year operating deadline, state authorities told the News-Leader this week. That means roughly 260 out of 370 licensed marijuana companies won't have to be open for business until as late as September, rather than one year from the time they were licensed as required under state regulations
, authorities said. Marijuana program documents provided to the News-Leader in early January and early February show that roughly 20 more cannabis companies have also asked for deadline extensions. The question of whether a company gets an extension carries high stakes because, under state rules authorized by the constitution, a marijuana venture's "license or certification may be revoked" if a licensed facility "has not passed a commencement inspection within one (1) year." So far, 78 commercial licenses are completely approved to operate, state records showed on Tuesday
. Another 62 companies are in "in progress" with their final inspections, and thus considered almost ready to operate, according to a representative for Missouri Medical Cannabis Trade Association. The trade association said Monday that Missouri's 102,000 medical marijuana patients can expect to see more marijuana businesses continue to open each week through "late winter" into the rest of the year. State marijuana authorities told the News-Leader in a Monday email that each deadline extension "is specific to each licensee’s circumstances," and the extended deadlines range from January to September. The "majority" of the licensees are "scheduled to be operational before June," authorities said.
A new industry, hit hard by COVID
The backstory to the deadline "variance requests" received by Missouri's medical marijuana program reflects the saga of a new and highly-regulated industry born in the last decade. Authorized by voters through a state constitutional amendment in 2018, Missouri medical marijuana reached its most fledgling stage of development less than two years later, only to be battered by the COVID-19 pandemic, key players say. Meanwhile, would-be entrepreneurs wanting to participate in Missouri's legal marijuana market were already somewhat hobbled in terms of access to capital, just like their counterparts in every other U.S. state with some form of lawful weed. Federal prohibition, functionally in place since Congress passed the "Marihuana Tax Act" of 1937, makes it pretty much impossible for banks to extend garden-variety business loans to any type of cannabis venture. After an application process that attracted accusations of conflicts of interest
, in December 2019 and January 2020 Missouri medical marijuana authorities handed out roughly 370 licenses
for businesses including dispensaries, cannabis cultivation centers, manufacturing centers, transportation services and testing labs. Far more applications came in than the number of licenses made available by the state, which opted to keep the number of dispensaries and other businesses at minimum levels established in the voter-approved medical marijuana plan. By mid-March, Missouri began contending with COVID-19, a response that involved the Missouri Department of Health and Senior Services, the state agency in charge of medical marijuana. As the pandemic raged largely unchecked through the Missouri population, the marijuana industry began trying to build out. Some licensees began seeking "minimum standards reviews" and "commencement" approvals to get marijuana-growing centers and dispensaries online. As the News-Leader previously reported, it looked like many companies, including ones in the Springfield area, weren't close to opening their doors
. (At the same time, one of Springfield's dispensaries was among a handful vying to be first opened last fall
, the News-Leader reported.) On Sept. 22, three weeks before the state's first dispensaries opened in the St. Louis region — five weeks before they started opening in southern Missouri — state authorities issued a "guidance letter"
for marijuana companies that offered "some notes on what may or may not be considered favorably in any requests for extension of a facility’s operational deadline." In late 2020 and early 2021, the News-Leader asked for lists of the companies that had asked for a deadline extension, or "variance," up to the end of January. State records show that at that time, 278 companies were asking for a break on their deadline. In an email relayed Monday through a spokesperson, Missouri marijuana authorities at DHSS told the News-Leader that not every company got an extension. At least four companies were denied, while "several" were required to revise their deadline extension request. Among the "approximately" 260 requests that were approved, some were "approved with modification," DHSS said. What happens if a company gets a deadline extension, then breaks the new deadline? "It will depend on the circumstances," DHSS said in its Monday statement. "The licensee may request an additional variance, but whether that request is granted will depend on the licensee’s particular circumstances."
What's behind the delay?
Jack Cardetti, a prominent political consultant who serves as chief spokesperson for industry group MoCannTrade, insisted that "new facilities will be coming online every single week." Cardetti said that the MoCannTrade membership, which includes many of the licensed businesses, has reported four big hurdles as they work to open up their dispensaries, cultivation centers and so forth. The first one is the difficulty in accessing loans. "This is all done with liquid capital," Cardetti said. "And obviously, with the huge turbulent stock market last year, that did hinder some groups from raising capital." But that problem could go away in the medium term. Dan Viets, a Missouri attorney and longtime cannabis activist who served as chair of the New Approach group that pushed Missouri's medical marijuana constitutional amendment, predicted Monday that major cannabis reform on the federal level is on the horizon, including banking reforms that would let marijuana companies get loans. The reason? Now that the Democratic Party has a majority in the U.S. House and can split a 50-50 tie in the Senate with the help of Vice President Kamala Harris, Viets believes federal lawmakers will act before the midterm elections of 2022. (Viets also said he thought that if Congress had passed marijuana reform before Inauguration Day, former President Donald Trump would have let it go forward, but that the Trump-era Senate majority leader, Kentucky Republican Mitch McConnell, was "going to do everything he could to stop any kind of marijuana law reforms.") Now, New York Democratic Sen. Chuck Schumer holds the majority leader's gavel. "That is a fundamental game-changer," Viets said. "We're going to see banking reform, we're going to see tax reform, and we're going to see the repeal of federal marijuana prohibition coming in this session of Congress." Cardetti said trade association members reported that local government "delays" also formed an obstacle to complying with regulations not under state marijuana program control: planning and zoning and occupancy permits, for example, and various local safety measures required for cultivation and manufacturing licensees. "We had weeks," Cardetti said, "if not months, where local government wasn't meeting in person, they didn't have their offices open because of the pandemic." Cardetti said two forms of construction delay were the other two problems that bedeviled the MoCannTrade membership's quest to get Missouri medical marijuana open for business: Sometimes COVID-19 outbreaks would sideline construction crews until workers had time to recover and get out of isolation. Other times, it was just hard to obtain necessary supplies, particularly raw materials and equipment needed for growing cannabis or manufacturing "infused products." Examples include sophisticated lighting and humidity controls, devices for extracting THC from raw cannabis flower and other items made in what Cardetti called "small, sort of densely-populated factories." "Almost all of the equipment for manufacturing," Cardetti said, "is high-tech equipment that is made in shops that, quite frankly, were shutting down for months at a time. And so a lot of the equipment in the industry has been delayed, and of course you can't get approved for commencement unless you have your equipment on site."
'I could have had my business running, if I'd gotten that license'
Viets, the Columbia-based lawyer who chaired the New Approach board, said, "The fact of the pandemic has, I think, led DHSS to be more lenient than they might have been otherwise." But, Viets said, applicants "should have already had their financing lined up" at the onset of the process. "At some point, and I think not very far in the future, people are going to expect these licensees to be doing business." People who applied for a commercial cannabis permit but were turned down by state authorities are the people most upset by the deadline extensions, Viets said. "There were many, many more applicants than licenses issued," Viets said. "Those folks who did not get a license, they're the ones who are going to be saying 'what the hell is going on? I could have had my business running, if I'd gotten that license.'" Viets, who said he currently represents a half-dozen would-be licensees in Missouri administrative appeals, also said, "What I'm more or less anticipating is that some of these folks may start to file lawsuits and say the constitution means what it says, and the constitution says these businesses should be up and running by now, or (denied applicants) should get that license." News-Leader investigative reporter Gregory Holman has been following Missouri marijuana news since shortly before voters added medical marijuana to the state constitution in 2018. Send news tips to [email protected], and please consider subscribing to support vital local journalism.