Last year in a statewide referendum, the citizens of Missouri voted to legalize medical marijuana when they passed a constitutional amendment by a margin of 66 percent to 34 percent. The amendment requires the Missouri Department of Health and Human Services (MDHHS) to generate rules and regulations toward the creation of a program designed to make medical marijuana available to Missouri residents by the beginning of 2020.

During the last week of May, ahead of the June 4, 2019, deadline for the issuance of final rules that would allow for persons to apply for licenses and certifications associated with a new Missouri medical marijuana business, a number of new regulations in the form of “emergency rules” were issued by the MDHHS.

The New Rules in General

Missouri will begin accepting applications for licensing and certification of medical marijuana facilities for cultivating, infused products manufacturing, dispensing, testing and transporting on August 3, 2019. Missouri either will approve or deny applications accompanied by nonrefundable fees within 150 days of receipt. Application fees for dispensary and manufacturing facilities are $6,000, and $10,000 for cultivation facilities.

As part of the application process, the applicant must include a form that shows the entire facility’s ownership structure and that the application entity is majority owned by Missouri residents. To prove Missouri residency, the form must include a statement that the owner or owners have resided in Missouri for at least one year, and do not claim residency in any other state or country. The application also must include an attestation that no owner has a disqualifying felony offense record.

The application must show that the chosen location for the facility meets all zoning restrictions and include a map of the surrounding area. Unless allowed expressly by local government, no facility may be sited within one thousand feet of any then-existing school, daycare center or church.

Once the application is approved and the facility is set up, it must pass a “commencement inspection” before final approval is granted to operate the facility. It is anticipated that a key aspect of this inspection will be to ensure zoning compliance and the existence of a security system that meets the regulatory requirements, as follows:

• Security equipment designed to prevent unauthorized entrance into limited-access areas (such as electronic card access systems, biometric identification systems or their equivalent)
• Exterior lighting to facilitate surveillance, exterior barriers, and video and electronic monitoring
• An alarm system including a mechanism for automatic notification to law enforcement agencies of unauthorized entry into a facility
• A hired security manager.

Licenses are valid for three years and generally will be renewed except for good cause. The annual fee to operate a dispensary or manufacturing facility will be $10,000, and $25,000 for a cultivation facility. The annual fees will be assessed 30 days after license or certification is issued. MDHHS will inspect facilities at least annually, with or without prior notice.

Medical marijuana will be strictly controlled through a tracking system in Missouri, intended to cover “seed to sale.” Facilities are required to keep records associated with the tracking system for five years.

The Application Design

In its latest batch of rules, MDHHS set forth the facility license application and scoring criteria that will be used in evaluating all licenses submitted for each type of medical marijuana facility. The topics include and are weighted as follows:

• General character, qualifications and experience of the principal officers or managers of the applying entity (12%)
• The business plan proposed by the applicant (20%)
• Site security (20%)
• The experience of the entity operators in a legal cannabis market (8%)
• The potential for the entity’s positive impact in the community (16%)
• Maintenance of competitiveness in the medical use market (4%).

The final 20 percent is specific to the particular type of facility for which license or certification is sought and generally concerns the particular experience the applicant has for that specific type of service. For example, for cultivation, specific experience in agriculture, horticulture and health care is sought. For dispensary, the focus is on health care experience, suitability of location and accessibility for patients.

The applications are heavily weighted with an emphasis on security and industry experience. This may mean that the ideal applicant will show a partnership between Missouri residents and outside Missouri entities that have experience in the legal cannabis field. A review of the application topics demonstrates that ownership or management of the entity must employ (or have access to) persons with experience in pharmaceutical or other highly regulated industries, the ability to hire and train employees to work in this industry, security expertise and a solid business plan. Ownership must have significant liquid assets ranging from $150,000 for dispensaries and manufacturing facilities up to $300,000 for cultivators. The business also must demonstrate that it has adequate protection in the form of professional liability, product liability, business interruption and property insurance.

Getting into the market now in Missouri is an entity’s best chance of securing what will likely be a coveted license or certification (or licenses/certifications for those seeking a vertical setup). Putting your best foot forward in the application process, with the help of experienced legal counsel can help you secure that license or certification in Missouri.