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Legal bills from Missouri's medical marijuana program expected to linger into next year

Legal bills from Missouri's medical marijuana program expected to linger into next year

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First day of medical marijuana sales in Missouri

People wait in line to buy medical marijuana at N'Bliss Cannabis, 1266 Old Orchard Center near Manchester, on Saturday, Oct. 17, 2020. Today marks the first day medical marijuana is available for purchase legally in Missouri. Photo by Christine Tannous, ctannous@post-dispatch.com

JEFFERSON CITY — Missouri health officials expect to spend at least $12.4 million fighting legal challenges to the state’s medical marijuana program.

In testimony to a House committee Monday, the director of the program, Lyndall Fraker, said Missouri will spend an estimated $6.2 million in the current fiscal year and an equal amount in the year beginning July 1.

That means less money from the proceeds of the program will be going to veterans, spurring questions from lawmakers about the current management of the program, which was approved by voters in 2018.

Fraker, a former lawmaker, said he’s not pushing for significant changes.

“Right now, we’re doing what we believe we should” Fraker said.

But he acknowledged that defending the lawsuits represents a major cost to the program.

“It’s a little bit less than our total expenses,” Fraker said.

Questions about the program surfaced when more than 850 applicants for licenses to grow, sell and manufacture medical marijuana appealed after they were denied a license from the state.

The state says limits on licenses are designed to reduce oversupply and stymie diversion of marijuana to the black market.

The money spent on legal fees to private law firms comes from fees medical marijuana cardholders and business applicants have paid the department. Those fees, after covering the cost of running the program, are supposed to be deposited into a new Veterans’ Health and Care Fund.

Of the 852 applicants who appealed, about 150 have been decided or dismissed, said agency attorney Amy Moore. Last month, two applicants who had been rejected were awarded licenses to begin growing marijuana by the state’s Administrative Hearing Commission.

In the 15 months since the department has issued licenses, about 25% of the companies are operating, Fraker said.

About 80,000 people have received medical marijuana cards, allowing them to purchase cannabis products at licensed dispensaries.

Rep. Cody Smith, R-Carthage, who chairs the House Budget Committee, suggested it might be cheaper to award more licenses in order to bring an end to the legal appeals.

Smith said there were “serious unintended consequences” to the decision to limit licenses that have resulted in “staggering legal fees.”

He also said the slow rollout of the program has sent people to purchase cheaper pot on the street, rather than at a more expensive licensed dispensary.

“I think the unmet demand is encouraging a black market in Missouri,” Smith said. “If there were more facilities on board, prices would go down.”

Fraker disagreed, saying if more licenses are added, the state will have to spend more to regulate the industry.

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