Why Missouri marijuana still has a trust problem

Welcome to The Weekender.

Missouri's marijuana industry has always carried around a suspicion problem.

No proof of corruption or a smoking gun, just a nagging sense that a market created by voters, limited by government and worth hundreds of millions of dollars was never as open, transparent or competitive as advertised.

And for anyone looking for reasons to take that suspicion seriously, the past few months have delivered.

In February, State Auditor Scott Fitzpatrick released a blistering audit of Missouri's 2019 medical marijuana licensing process. The state had promised a blind scoring system, designed to award licenses based on merit rather than connections. Auditors concluded there was reason to believe the system could be gamed.

Applicants were allowed to create their own identifying numbers. Some, according to the audit, used identifiers that could make them recognizable — initials lifted from company names. In the small sample reviewed by Fitzpatrick's team, those applicants won licenses at nearly six times the rate of applicants who did not use potentially recognizable identifiers.

The audit also flagged something else worth holding onto: scorers were instructed by the contracted scoring company, Wise Health Solutions, to take limited notes — explicitly, the audit said, to reduce the records available in the event of lawsuits.

The Division of Cannabis Regulation disputes the audit as "baseless," "flawed" and "egregiously inaccurate." And that rebuttal matters. A flawed process is not the same thing as a corrupt one.

But you don't have to prove a conspiracy to do damage. The audit showed that a system built to inspire public confidence left behind enough gaps, inconsistencies and litigation to cast what Fitzpatrick called a "shadow" over the program.

Then came reporting last week on Good Day Farm.

Good Day Farm was the top donor to the 2022 campaign to legalize recreational marijuana in Missouri. Its Jefferson City lobbying team is led by Steve Tilley, a former House speaker and one of the most prominent lobbyists in Missouri cannabis politics. And its attorneys were involved in drafting the constitutional amendment.

When that amendment passed, it preserved a license cap meant to prevent one entity from owning too much of the dispensary market but left out language from the medical marijuana program that also restricted "common control" and "management."

Critics argue that omission created room for a company to build a network through a constellation of LLCs, affiliated entities and management agreements without technically owning licenses in violation of the 10% cap.

Records obtained by The Independent show Good Day Farm and affiliated entities are now tied through ownership records, management structures and acquisition agreements to more than 60 of Missouri's 224 dispensary licenses.

That’s more than a quarter of the market.

A class-action lawsuit filed last week alleges Good Day Farm has created an illegal cartel — coordinating pricing, supply and retail operations across dispensaries that don't all share the same name. The allegations remain allegations, and Good Day Farm has not responded to The Independent's request for comment.

The sequence of events is hard to ignore.

A company helped bankroll legalization. People connected to it had proximity to the drafting table. The amendment approved by voters narrowed language governing control of dispensary licenses. And the company's affiliated network later grew into the dominant retail force in the state.

None of that, nor Fitzpatrick’s audit, proves the fix was in.

But it does help explain why some people believe it was.