A bipartisan panel of Missouri legislators grilled Missouri’s medical marijuana director Wednesday over perceived issues with the Show-Me State’s budding legal cannabis system.
Republicans and Democrats on the House Special Committee on Government Oversight persistently questioned Lyndall Fraker, who oversees the state’s medical marijuana program, about the licensing of medical marijuana businesses and related topics.
Committee members, who were joined for the afternoon by House Minority Leader Crystal Quade, D-Springfield, were curious about recent accusations of perceived conflicts of interest with the state-contracted “blind scoring” company that judged the marijuana business permit applications awarded in December and January.
There were roughly 348 winners out of 2,200 applicants.
Representatives also had questions about equity for minority groups, patient access to medicinal cannabis and the potential for black-market weed to exist even after legal dispensaries are running.
The voter-approved constitutional amendment that made Missouri medical marijuana legal in late 2018 is becoming an everyday reality, but not without growing pains along the way.
‘It’s a joke’
“It’s a joke,” said one Springfield-area man when the News-Leader texted him to ask his opinion of the hearing.
Josh Loftis owns an Ozarks-based consultancy that helps lawful Missouri patients and caregivers set up their own home growing operations. He traveled to Jefferson City on Wednesday to attend the hearing in person.
“The talk about the intent of the voters to limit licensing (is a problem),” Loftis added. “I’m sitting in a room of people who know the intent, and we are all shaking our heads in disbelief. And the obvious lack of understanding of how this ties to the black market just dumbfounds me.”
Lawmakers led with different preoccupations, though, and appeared laser-focused on why the state health department opted to work with Wise Health Solutions, a Nevada-based company hired through a state bidding process to “blind score” medical marijuana business applications.
Rep. Nick Schroer, R-O’Fallon, wanted to know how and why Wise Health was chosen, expanding on questions he asked last week at a similar oversight hearing.
“We wanted to, whenever possible, to remove the appearance of political pressure,” said Richard Moore, general counsel for the Department of Health and Senior Services, which includes the medical marijuana program.
Early on, Fraker said, the top leadership of the state health department agreed that a third-party scoring company would be the fairest way to apportion a limited number of marijuana business licenses among thousands of applicants.
Quade, Springfield’s lone Democrat in the House, questioned whether limiting the number of legal dispensaries, grow operations and edibles manufacturers was even needed.
Quade said that she appreciated health department officials for their previous statements that making sure patients have access to cannabis is their “north star.” Then she asked whether Fraker believed that “lifting the cap on the amount of licenses would increase patient access.”
In one of many carefully worded responses, Fraker replied, “I think it would be wrong to say that it wouldn’t. The possibility certainly would be there that it could. I also believe that the intent of the voters with this particular program was to have a very well-regulated program.”
Thus, the department kept to the constitutional minimum number of licenses outlined in the text of Amendment 2, Fraker said. He noted that among all 33 U.S. states with medical cannabis laws, Missouri is expected to “have more licenses issued for cultivation than any other state except for Oklahoma.”
But, Quade noted, CBD shops and pharmacies aren’t limited by licenses.
“That should be a topic of conversation for us,” she said.
Lawmakers also continued a theme from a hearing last week. They wanted to know whether Nevada-based Wise Health or its corporate parents were vetted for conflicts of interest as the Missouri’s Office of Administration awarded it a contract to score the marijuana business permit applications. Meanwhile, did Wise Health act appropriately before and after winning the contract?
Quade told Fraker, “I would love to get OA in here at some point to discuss some of this that you may not know.”
Conflicts of interest?
Schroer wanted to know if Wise Health principal C. W. Westom, tied to Oaksterdam University, a company forming part of Wise Health’s “partnership,” had disclosed any conflicts of interest when they bid on the blind scoring contract.
“They had to sign attestations,” Fraker said.
“They did not disclose any,” said Moore, the health department’s lawyer.
Rep. Jered Taylor, R-Republic, wanted to know how the department prepared for medical marijuana before the elections of November 2018, when it seemed clear that at least one of three marijuana items on the ballot would pass. What steps did the health department take?
“I wasn’t there,” Fraker said. His employment didn’t begin until early January 2019.
Moore, the lawyer, wasn’t there either. He said he spoke to his and Fraker’s boss, health department director Randall Williams. “Due to the fact that there were three separate amendments pending, there was not an extensive amount of work done. As soon as Amendment 3 — 2 — passed, we jumped in.”
Taylor pressed on. “We all knew, I think, that one of the three were going to pass. Why weren’t steps taken to prepare?”
“I can’t answer that,” Fraker said.
Taylor asked Fraker about his own hiring process, Fraker’s background (17 years as a Walmart manager, two years as a county commissioner and eight years as a state lawmaker), the University of Missouri study that wrongly predicted Missouri’s cannabis patient counts and the role of global “big four” consultants Deloitte in setting up Missouri’s program.
But he dwelt at length on the role of Wise Health, wanting to know why Missouri’s first request for “blind scoring” proposals attracted zero companies interested in the contract. After state officials revised the RFP, seven companies sent in bids. Why? Taylor asked. What were the changes?
“There were very few changes,” said Moore, the health department lawyer. But the key change was that Missouri adjusted a provision in the contract that prohibited the winning blind scorer from doing business in the state of Missouri for a certain period of time after the contract’s end.
“I can’t recall (how much the prohibition was reduced),” Moore said, “if it was five (years) and we lowered it to three, or three and we lowered it to two.”
Taylor asked Fraker what other changes were made to the proposal for the blind scorer.
“That’s the only one I recall,” Fraker said. “I wasn’t involved in that process at all.”
He repeatedly noted that the state bidding process runs through the Office of Administration.
Last week, Westom, the Wise Health principal, told the News-Leader every aspect of his company’s application-scoring process was “above reproach.”
Rep. Maria Chapelle-Nadal, D-University City, brought up social-equity themes that echoed questions raised in other states considering medical marijuana programs.
“I’m gravely concerned,” she told Fraker.
“How many people of color are in your office?” she asked.
“None,” Fraker answered.
“And you understand that’s a problem, sir?” Chapelle-Nadal said.
“I understand that’s very important,” Fraker responded.
Chapelle-Nadal was also curious about scoring bonuses for would-be marijuana companies in high-unemployment ZIP codes.
“In the inner city, where unemployment is 5.2 percent, how many facilities were granted contracts?” she asked.
“I have no idea,” Fraker said.
Chappelle-Nadal and Quade both asked Fraker about the cost of defending lawsuits by jilted marijuana business applicants and other perceived “mistakes” on the part of the state health department. Would the legislature have to appropriate taxpayer money to solve Missouri medical marijuana problems?
“First of all, it won’t be the taxpayers, it’ll be the veterans fund,” said Moore, the health department counsel. Constitutionally, proceeds from the medical marijuana system are to benefit veterans’ programs. Moore said it depends on how many lawsuits are filed — officials expected at least 600 — and how much it costs to defend them.
“It certainly is going to be millions of dollars, but I can’t tell you if it’s going to be $2 million or $6 million,” Moore told Quade.
Before yielding her question time back to the Republican chairman of the oversight committee, Chapelle-Nadal said, “Across the board — black, white, urban, rural, Republican, Democrat, people are upset.”
Gregory Holman is the investigative reporter for the News-Leader. Email news tips to firstname.lastname@example.org and consider supporting vital local journalism by subscribing.