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Missouri faces complaints over how it licensed marijuana businesses. So who won?

Missouri faces complaints over how it licensed marijuana businesses. So who won?

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ST. LOUIS — As Missouri lawmakers meet again Wednesday to hear complaints about how medical marijuana business licenses were awarded, a review of state records shows some of the country’s biggest pot chains and board members of a Missouri trade group among the top winners.

While the Department of Health and Senior Services has released only select information about the companies that won 338 licenses to grow, process or sell marijuana, a review by the Post-Dispatch of the latest available records and business registration reports shows out-of-state pot executives as well as board members of a key trade group are tied to about two dozen business groups that won five or more of those licenses or licenses to test or transport marijuana products.  

The records shed some light on the largest of Missouri’s new marijuana businesses, as hundreds of spurned applicants allege scoring discrepancies and conflicts of interest by a company hired by the state to blindly score more than 2,000 applications from 700 groups. The Missouri House Special Committee on Government Oversight on Wednesday holds its second hearing this month to question DHSS officials about those complaints.

DHSS faced a big challenge in setting up the state’s medical marijuana program, but locals have long expressed concerns that they could be boxed out of the industry by out-of-state companies or Missourians with influential ties, said Tim McCorkle, a pharmaceutical engineer with a Fenton-based CBD retailer that is appealing license denials. 

“They (DHSS) had to create a program out of nothing,” McCorkle said. “But how do we know at the street level that ‘organization X’ got five licenses and everybody knows they’re not from around here? So how did that pass the system?”

Exact ownership of the marijuana businesses remains unclear. DHSS, arguing that secrecy is  required due to rigid language included in last fall’s constitutional amendment legalizing medical marijuana, has revealed only select information about the applicants: the names of the limited liability companies, or LLCs, that applied and a principal contact for each group. Some applicants spoke publicly about their plans, but the records don’t reveal investors or others with ownership stake, such as Sen. Doug Libla, R-Poplar Bluff, a vocal critic of the licensing process, who revealed last week that he invested in a group that was denied licenses

Based on a review of the latest publicly available records, the limited liability companies that won a total of 338 Missouri licenses to grow, process or sell marijuana — as well as 10 licenses to test marijuana and 21 licenses to transport marijuana — amounted to about 130 separate business groups, linked through business registration reports and a spreadsheet of principal contacts for marijuana license applicants released by DHSS last year.

The group that won the most licenses, the Pennsylvania-based multi-state marijuana business Justice Grown, did not list local affiliates. The group won the maximum three cultivation, three manufacturing and five dispensary licenses allowed any one group. 

The group, which filed as as JG Missouri LLC, is linked through the same contact listed on registration reports and DHSS records to two other groups that won licenses in Missouri: TC AppliCo LLC, and Growing Jobs Missouri, which won seven licenses. Vince Field, the principal contact for all three groups, did not respond to requests for comment. 

Other large, multi-state marijuana business or companies outside Missouri that won licenses include: 

• Phoenix-based Harvest House of Cannabis, which won seven licenses as Harvest of Missouri. Harvest is in the process of acquiring Chicago-based Verano Holdings, which won four Missouri marijuana business licenses. The $850 million acquisition is the largest in the marijuana industry’s history.

• Grassroots OpCo, which is tied to Grassroots Cannabis, eight licenses.

• Boca Raton, Florida-based Bloom Medicinals, eight licenses.

Standard Wellness, which has businesses in Ohio and Utah, six licenses.

• Holistic Missouri, which is linked to Washington, D.C.-based Holistic Industries, six licenses.

Other groups that appeared to have won at least five or more licenses include those tied to board members of the Missouri Medical Cannabis Trade Association, or MoCann, which was founded by legalization advocates.

Board Chairman John Curtis and three other board members, for example, are executives with BeLeaf Medical, which won the second-most number of licenses in the state. The business, which since 2015 was one of two Missouri companies allowed to grow hemp to produce CBD oil, won a total of 10 marijuana business licenses. BeLeaf managers include MoCann advisory board members Mitch Meyers, Dr. Stephanie Cernicek and Kevin Riggs. 

Other board members include:

• Brad Goette, who was listed as a manager for three limited liability companies that won a total of seven licenses: Nirvana Bliss, 5150 Processing, and Bold Lane Logistics. Goette is a former Dirt Cheap and MillerCoors executive and treasurer of a political action committee that gave $157,600 to candidates and causes in 2017, including efforts to legalize medical marijuana.

• MoCann board member Joseph “Chip” Sheppard, who was listed as general counsel for BD Health Retail, which won five licenses.

• Former board member Jack Ray Mitchell, who was the association’s government affairs chair, and was listed as the principal for MBD, which won six licenses through similarly named limited liability companies, and as the president of Missouri Hemp Company, which won one marijuana business license. 

• MoCann’s spokesman, Jack Cardetti, a former Democratic operative who once served as Gov. Jay Nixon’s spokesman, said he is an investor in QPS Missouri Holdings, which won six licenses, with other local partners and the Michigan-based marijuana company C3 Industries.

“It should come as no surprise that some of the most engaged, talented, professional and prepared Missourians that are seeking to get into this industry would be successful in license applications,” Cardetti said. “A lot of our board members showed initiative early on and a willingness to give up their time to help build the industry here.”

While Missouri law required that any applicant have at least 51 percent ownership by Missouri residents of at least a year, the law also included an applicant’s relevant experience in scoring criteria. That led to many Missourians partnering with out-of-state firms, consultants or workers, Cardetti said. 

“It would make a lot of sense for Missourians to partner with people in experience in other states,” he said. 

Despite complaints, Missouri licensed more businesses than any other state with legal medical marijuana besides Oklahoma, Cardetti said. 

“There was a lot of opportunity to get into the industry,” he said.

There were at least two groups that won five or more licenses that registered with local owners not affiliated with MoCann’s board of directors. Macon farmer Richard Gunnels’ group Agri-Genesis won nine licenses to open three cultivation facilities, a manufacturing plant and five dispensaries there.

Gunnels, who doesn’t use marijuana but was interested in growing it to help neighbors who use it as medicine, started the group with his wife and eventually partnered with three people from outside of Missouri to add experience, he said. But he turned down multi-state firms like Cresco and Columbia Care that offered him partnerships that would have violated the state’s rule about 51 percent ownership, he said. 

“The only way to get experience is from out-of-state,” he said. “But I had to find a partner where I could be 51 percent owner and we could still work together.” 

Jack Suntrup of the Post-Dispatch contributed to this report. 

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Reporter covering breaking news and crime by night. Born in Algeria but grew up in St. Louis. Previously reported for The Associated Press in Jackson, Mississippi and at the Wichita Eagle in Wichita, Kansas.

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