JEFFERSON CITY — The state’s medical marijuana director said Wednesday officials didn’t know a company was involved in medical marijuana business-training “boot camps” until after the state had selected the company to grade applicants for state licenses.
Director Lyndall Fraker, during a hearing of the House Special Committee on Government Oversight, said the state Office of Administration chose the scorer, Wise Health Solutions, which is a venture owned partially by Oaksterdam University, an unaccredited institution that provided so-called “boot camps” last year.
Fraker and Department of Health and Senior Services chief counsel Richard Moore said they still had found no evidence of a conflict of interest by its scorer, and said no training seminars were held after Wise Health was named the state scorer in August.
“Once we received the initial information that the boot camps occurred, we reached out and they confirmed that there was no boot camps that occurred after the award of the contract to Wise,” Moore said.
Fraker said he found out about the seminars before the state began issuing licenses in December.
“These folks have applicants who have been their customers, who have given them money,” said Rep. J. Eggleston, R-Maysville, “and now they may recognize the answers on the tests, and that might taint the whole grading system.”
Fraker asked if Eggleston knew of any Oaksterdam students who won licenses.
“That’s not my job to know. That would be more your job to know,” Eggleston said.
The questioning came as state regulators continue to defend licensing decisions for the medical marijuana program. More House hearings are possible. Medical marijuana sales are supposed to start this summer.
Lawmakers also asked about scoring discrepancies. Some applicants have said that identical answers on cultivation and dispensary applications, for example, received different scores.
While the same scorer graded the same question for dispensaries, a different scorer handled the same question for cultivators, which could have led to different scores for the same question, the officials said.
“This is a subjective process,” Moore said.
Lawmakers also asked how Fraker got his job. He said he was contacted about the job by Dr. Randall Williams, director of the Department of Health and Senior Services, and Robert Knodell, an aide to Gov. Mike Parson.
Fraker, at the time, was a term-limited state representative who had also been a county commissioner and a Walmart manager. He said he had no prior working relationship with Williams, and said he didn’t talk to Parson personally about taking the job.
Fraker said “we would talk to anybody,” when asked whether the office had a policy on speaking to lobbyists or industry representatives.
When asked if anyone asked for a rule change outside of normal rule-making procedures, Fraker said, “No, we had — we made a point to be sure and not refuse to talk to anybody. ... If it was a suggestion about a rule then we certainly asked them to send it (the comment) in on our portal.”
Fraker and Moore acknowledged out-of-state companies won licenses, but said the constitutional amendment legalizing medicinal marijuana allows out-of-state ownership so long as the entities don’t own a majority stake.
“As long as they were a 49% or a less-than-50% owner, that was OK,” Fraker said.
Fraker also said a limit on the number of licenses was justified, even as the vast majority business groups that applied were rejected.
Officials have said that licensing too many businesses would increase the risk of marijuana entering the illegal market, especially if demand didn’t meet supply.
Moore said the department is planning on spending millions of dollars to defend its licensing decisions in court.
“It’s certainly going to be millions of dollars,” Moore said. “I can’t tell you if it’s going to be $2 million or if it’s going to be $6 million.”
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