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Key vendor in Missouri’s medical marijuana program hit with $28 million judgment

Key vendor in Missouri’s medical marijuana program hit with $28 million judgment

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Legal marijuana growing in Missouri

A strain of marijuana called Power Plant is photographed on Saturday, Feb. 22, 2020, at the University City home of a grower who is cultivating in his basement legally for personal use. Photo by Christian Gooden, cgooden@post-dispatch.com

JEFFERSON CITY — A company hired by the state to score applicants for medical marijuana licenses has lost a $28 million lawsuit brought by one of the jilted companies.

In the latest legal fallout from Missouri’s rocky rollout of its medical marijuana program, Wise Health Solutions was sued by GMT Consulting, which had joined a rush of companies seeking a license to sell, grow or distribute medical pot in 2019.

When it didn’t receive a license in 2020, GMT sued, saying Wise’s scoring method was flawed and “corrupt,” resulting in the company not being awarded a license by the Missouri Department of Health and Senior Services.

The case eventually went to an arbitrator, who found in favor of GMT, saying Wise “negligently performed its consulting duties for DHSS, which caused GMT Consulting, LLC to be wrongfully denied dispensary licenses.”

A Buchanan County judge signed off on the award in July.

Now, GMT is in court in Cole County seeking to force the $28 million to be paid out by Wise’s insurance company, Illinois-based Hiscox Insurance Co.

Gov. Mike Parson’s administration says the decision against Wise Health is not an indictment of the state’s scoring system.

“While DHSS was not involved in that matter, the issue appears to be a terms dispute with an insurance company and a non-execution agreement, not a decision by a court on the merits of scoring,” DHSS spokeswoman Lisa Cox said Tuesday.

In a statement Tuesday, the Missouri Medical Cannabis Trade Association, or MoCannTrade, also downplayed the case.

“This litigation between two private parties doesn’t include the state and will have zero impact on Missouri’s more than 150,000 medical cannabis patients, our industry, or Missouri’s program,” the statement said.

Yet, the court case represents another black eye for the handling of the medical marijuana program by Parson’s administration.

Voters approved the legalization in 2018, but it has been beset by legal challenges. In 2020, lawmakers questioned why the state was limiting the number of licenses to sell, grow and distribute the drug.

GMT was the first company to file a lawsuit against Wise after the scoring revealed the winners and losers in the application process.

GMT is a St. Charles-based company registered to Tobias Licker, which had applied for four dispensary licenses, one each in St. Louis, St. Louis County, Webster Groves and Pacific.

An attorney for GMT did not return messages.

Wise Health is a Missouri-based venture between Dallas-based Veracious Investigative & Compliance Solutions International and California-based Oaksterdam University, an unaccredited California-based institution that provided for-profit “boot camps” to coach would-be applicants. The scoring process was designed to be blind, meaning that identifying information of applicants is stripped from the forms so the scorer only judges based on the quality of the answers provided.

Chad Westom, a managing director of Nevada-based Veracious Compliance Solutions, which helped create Wise Health, did not respond to a request for comment.

The concern raised by lawmakers and losing applicants is that the Oaksterdam-coached clients may have used specific wording in their applications that won them preferential treatment by scorers.

Rejected applicants have complained that Wise assigned different scores for some of the same answers on applications.

The state had to hire outside law firms to help it handle the onslaught of legal challenges. Money generated from the medical marijuana program is supposed to go to veteran services after paying for the cost of running the program, and the department has had to dip into the newly created veterans fund to deal with legal expenses.

While Wise Health was paid $2.1 million from the state, more than $6.7 million in legal fees has been paid out by the state in the aftermath of the company’s work.

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