Only seven of the 24 dispensary licenses issued in June managed to get certified by the Division of Cannabis Regulation on Thursday afternoon (Rebecca Rivas/Missouri Independent).

David Huckins, a disabled veteran from Leavenworth, Kan., threw his name into the lottery this spring for a chance to win a social-equity marijuana dispensary license in Missouri.

In June, he learned he landed one of 57 microbusiness licenses meant to benefit disadvantaged business owners – including disabled veterans, those with lower incomes and people with non-violent marijuana offenses. 

The microbusiness program was part of the constitutional amendment to legalize recreational marijuana that voters passed in 2022. 

Huckins was among one of the 24 dispensary licenses and 33 wholesale licenses for cultivation facilities handed out as part of a second lottery held in June —  out of more than 2,000 applicants. 

But Huckins wasn’t officially in the clear until Thursday afternoon, when he received a notice that he passed the rigorous review process to confirm his eligibility. 

For him, it wasn’t a surprise. 

“I got a letter from the Department of Veterans Affairs saying that I have a disability rating that qualifies me for the application process,” he said. “This one was a slam dunk for the state, I feel like.”

Huckins was an outlier, with only seven of the 24 dispensary licenses that managed to get certified by the Division of Cannabis Regulation on Thursday afternoon, according to the division’s report.

The other 17 dispensary license winners were deemed ineligible, largely because of “failure to provide adequate documentation” that the licensee met the criteria. 

Fifteen of the 33 wholesale licenses needed to create marijuana grow facilities were deemed ineligible as well.

That means less than half — 25 of the 57 licenses — were certified.

That’s a significant decrease from the first round, issued last October, when 37 of the 48 were certified. Out of the 11 that weren’t, nine of them were eventually revoked.

While on the surface it sounds like a problem of technicalities, it could speak to the larger problem of the predatory practices surrounding Missouri’s microbusiness licenses — which the division itself has warned about.

“My first impressions are that most of the licenses that weren’t issued,” Huckins said, “were probably due to people or groups with vast resources that have tried to cheat the system by putting in sometimes hundreds of invalid applications.”

The division declined to provide The Independent with a list of the certified licensees. 

However, of the 24 dispensary licenses selected through the lottery in June, The Independent has identified 14 that are likely connected to groups cannabis regulators have cracked down on previously.

The groups include investors from Arizona, Michigan and within Missouri accused of using disadvantaged people as fronts to gain licenses. The strategy involves recruiting applicants to flood the lottery and increase chances of winning.

The Independent has obtained contracts that these groups have circulated to potential applicants, revealing the investors are aiming to shut out the disadvantaged applicants from most of the profit and control of the business.

Lisa Cox, spokeswoman for the division, said the licensees who weren’t certified today were sent notices of pending revocation.

They will have 30 days to respond to the division’s concerns, “during which licensees may submit records or information demonstrating why the license should not be revoked,” she said.

In the first round, it took about three months after the notices were issued to confirm those being revoked, Cox said.

For Huckins, the entire situation is problematic. 

For one, he said, it means less growing facilities that the dispensaries will be able to rely on. But it also impacts the dynamic of the microbusiness marijuana community. Huckins hosts weekly calls among the licensees so they can share knowledge and help each other.

“The general feeling in the community among other people like myself,” who aren’t connected to big investors, he said. “Most of us feel like this is a social-equity program to benefit people that are socially disadvantaged, not a way for millionaires to get richer.” 

Dyllan Davault, a harvester at Robust Cannabis facility in Cuba, Mo., tends to greenhouse plants on May 2, 2023 (Rebecca Rivas/Missouri Independent).

The court debate Tuesday over how Missouri marijuana products get taxed statewide sounded similar to a grammar class on conjunctions and comma placement.

The constitutional amendment voters approved in 2022 legalizing recreational marijuana allowed local governments to impose additional sales tax on the products.

The big question before the three-judge panel of the Missouri Court of Appeals Eastern District on Tuesday was: what did voters intend by “local government?”

Attorneys for St. Louis and St. Charles counties argued the word “and” is key in the definition laid out in the constitutional amendment.

It states that “local government” means, “in the case of an incorporated area, a village, town, or city; and, in the case of an unincorporated area, a county.” 

The counties asked the appellate judges to uphold a lower court’s interpretation in May that both a county and a local municipality can impose a 3% sales tax at dispensaries in their jurisdictions.

However, Florissant-based dispensary Robust Missouri 3 LLC argued that the comma placement is key. 

“While ‘and’ typically functions as a conjunction, here it connects two distinct clauses—one for incorporated areas and one for unincorporated areas — under the framework of ‘in the case of,’ which delineates separate alternatives,” states Robust’s reply brief.

Attorneys for Robust said Tuesday that voters didn’t intend for two local governments – in its case, St. Louis County and the City of Florissant — to both add taxes, resulting in a 14.988% sales tax rate. That’s before a statewide 6% adult use marijuana tax is added in, making the total sales tax at the Florissant dispensary 20.988%.

To put that in perspective, the highest adult-use marijuana sales tax in Missouri is in Florissant’s neighboring cities of Hazelwood and St. Ann, with 17.988% or 23.988% total.

Looking beyond the grammar, appellate judges asked about the possibility of “absurd outcomes” that St. Louis County Circuit Judge Brian May wrote about in his ruling if the court accepted Robust’s definition of local government.

May wrote that if Robust’s interpretation of the amendment were accepted,  “then a municipality or city would essentially be given carte blanche to ignore any county ordinance or regulation, including those related to public health and safety wholly unrelated to the taxing issue.” 

May was largely talking about public health regulations because public health in Florissant is regulated by St. Louis County.

On Tuesday, Judge Robert Clayton asked Robust’s attorney Eric Walter: “If we accept your definition, all those county regulations or everything else will be no longer applicable on these particular types of businesses.”

Walter replied that the Missouri Department of Health and Senior Services, the state agency tasked with regulating cannabis businesses, requires “that you’re compliant with all the local government regulations.”

Both attorneys for the counties and Robust declined to comment on Tuesday’s hearing. 

Following May’s ruling, the Missouri Association of Counties executive director Steve Hobbs said the association has strongly advocated that counties have the ability to do levvy their own taxes.

“The bulk of the counties around the state had gone to the voters and asked them to implement this tax,” Hobbs told The Independent in May. “And I think every one of them approved of it. I think [the ruling] removes some uncertainty from those counties.” 

On the other side, leaders of the marijuana industry have called the effort to collect both taxes an “unconstitutional money grab” that violates the terms of the amendment.

Jack Cardetti, spokesman for the Missouri Cannabis Trade Association said the appellate judges Tuesday seemed “very prepared and well versed on the issue.”

“Obviously much of the discussion centered around the definition of local government in Missouri’s Constitution, which we saw as a good sign,” Cardetti said. “As we enter year two of Missouri cannabis consumers paying roughly $3 million more each month than they should, we hope to bring customers relief as quickly as possible.”

A similar appeals case out of Buchanan County is also pending.

St. Joseph dispensary Vertical Enterprises sued Buchanan County Collector Peggy Campbell, arguing that it, too, would be “irreparably harmed” if both taxes were imposed.

Also in May, Circuit Judge Daniel Kellogg ruled that the marijuana law does not limit the taxing power of counties within corporate limits of towns and cities.

A hearing date for this case has not yet been set.

The story has been updated to include the statewide 6% adult use marijuana sales tax. 

A St. Louis liquor store hung a sign announcing Gov. Mike Parson's executive order to ban intoxicating hemp beverages (Rebecca Rivas/Missouri Independent).

While a large part of Missouri Gov. Mike Parson’s ban on intoxicating hemp products may be on pause, plans are underway to kick it back up next summer, according to a preliminary budget request by the Missouri Department of Health and Senior Services.

The department has asked for $877,000 to fund “food inspection and litigation requirements” to implement Parson’s Aug. 1 executive order to ban unregulated psychoactive products. 

Those funds would become available on July 1, if lawmakers approve the request as part of the state budget by May. 

Parson’s executive order “prohibits the sale of foods containing psychoactive cannabis compounds in Missouri, unless originating from an ‘approved source,’” the budget request states.  

With Missouri regulations in flux, what’s the difference between hemp and marijuana?

When the order went into effect on Sept. 1, the governor was hoping to utilize compliance officers at both the state’s Division of Alcohol and Tobacco Control  and DHSS’ Bureau of Environmental Health Services to implement the ban.

However, those plans quickly came to a halt when the Secretary of State Jay Ashcroft rejected the emergency rules that would have given the alcohol division the authority to conduct inspections. 

That meant that the state’s food inspectors were left to handle compliance on their own. 

Then the governor asked Missouri Attorney General Andrew Bailey to create a new specialized unit to assist the state’s alcohol and tobacco regulators in cracking down on intoxicating hemp products, Parson announced at a Capitol press conference on Sept. 10. 

However the next day on Sept. 11, state food inspectors showed up to Franklin County VFW Post after receiving a tip that the veterans were serving hemp-derived THC drinks at their bar. 

Commander Jason Stanfield took to social media, saying the state’s “raid” of the VFW Post on 9-11 was disrespectful. 

The incident gave the Missouri Hemp Trade Association a window to request a temporary restraining order, as part of a lawsuit filed in late August to halt the governor’s order.

While the association didn’t get the restraining order, it got assurance from the state that regulators will essentially stop its enforcement efforts.

In response to the temporary restraining order request, Richard Moore, general counsel for DHSS, said in a letter that the state’s health regulators will stop embargoing — or tagging — products simply because they contain hemp-derived THC. 

“In regard to psychoactive cannabis products, the department will focus its efforts on the identification of  ‘misbranded’ products,’” Moore wrote to the Missouri Hemp Trade Association’s attorney, Chuck Hatfield.   

Currently, the compliance effort focuses on just THC products that children could mistake for regular food or candy — not banning all intoxicating hemp products like Delta-8 beverages sold at bars or liquor stores.

When Parson signed his executive order, he said his primary focus was to protect children consuming the products that resemble popular candy, like Lifesavers, or fruity drinks.

“If the department identifies any such misbranded products, it will refer those products to the Missouri Attorney General’s Office for  potential enforcement under the State’s Merchandising Practices Act…” Moore wrote in his letter.

That is expected to change next summer, if the department’s budget request goes through.

The requested funding would allow the department to hire two full-time public health environmental specialists at $125,000 and to contract five more inspectors at $400,000. Of that, two of the contracted positions would be funded on a one-time basis “to stand up the program” at $150,000. 

“The use of contractors for a portion of this work is preferred due to the expected decrease in market availability of this product over time,” it states, “with their services not expected to be needed more than two or three years.”

The total seven inspectors will conduct site visits statewide “to assess retailer and wholesaler inventory for unregulated psychoactive cannabis in foods,” it states. 

The department estimates that 40,000 food establishments and smoke shops and 1,800 food manufacturers could potentially be affected by the governor’s order, the request states, “but the majority of these facilities are at low-risk of requiring investigation.”

“It is estimated that all seven inspection staff can conduct 2,900-3,500 site visits annually,” it states. 

The department also budgeted $160,000 to hire two full-time attorneys, in the event that business owners challenge enforcement actions.  

Meanwhile, the Missouri Hemp Trade Association’s ongoing lawsuit might impact the plan, as well as potential legislation that could give the state even more authority — or, on the other end, loosen regulation on intoxicating hemp products. 

Because hemp isn’t a controlled substance like marijuana, there’s no state or federal law saying teenagers or children can’t buy products, such as delta-8 drinks, or that stores can’t sell them to minors.

And there’s no requirement to list potential effects on the label or test how much THC is actually in them. State lawmakers have failed to pass such requirements the last two years.

Post-harvest employees at BeLeaf Medical’s Sinse facility await union election results on Feb. 6 at the St. Louis Public Library Barr branch (Rebecca Rivas/Missouri Independent).

It’s been more than seven months since employees of St. Louis-based Beleaf Medical cannabis company held an election to unionize.

The majority of the ballots — 11 of the 16 — have remained closed.

“It’s been quite a while,” said Will Braddum, a post-harvest technician at the company’s Sinse facility in St. Louis. “We’re just like, what is happening? Why is this happening? We’re just kind of in the dark waiting.”

The reason behind the delay is likely that Braddum and his fellow “post-harvest” team members exist in a gray area in national labor law — which could change if their union drive is successful. 

Not long after Braddum and other employees filed their union petition last September, the company argued before the National Labor Relations Board that the employees aren’t manufacturer workers — they’re agricultural workers. 

And agricultural workers don’t have the right to unionize under the country’s labor laws.

But Braddum and his fellow employees — along with the regional director of the NLRB — believe they’re more like workers at tobacco processing plants, who courts repeatedly have found aren’t agricultural workers. 

“I’ve never touched a living plant at work,” Braddum said, who is organizing with the United Food and Commercial Workers International Union Local 655. 

The company has taken this fight all the way up to the national five-member board, asking them to set a national precedent on whether employees who process the dried marijuana plants have the right to unionize. 

And that’s likely why it’s taken so long for the regional director of the NLRB – who twice sided with the employees — to open the ballots, said St. Louis labor attorney George Suggs.

“If this is a unique situation, there’s no reason for [the regional director] to get out front by opening those ballots,” Suggs said. “Ultimately, the board will resolve it.”

But that doesn’t mean the fight would be over, Suggs said. 

If the national board sides with the employees, then the company will likely refuse to bargain in order to land the decision in a federal court. 

“Employers have this ability to string out the results of a campaign,” especially among businesses where there’s lots of employee turnover, Suggs said.

By the time there’s a resolution a couple years down the road, he said, union support has eroded. 

“That’s the tactic,” Suggs said. “That’s what employers have been doing over the 40-plus years that I’ve been practicing labor law.”

A long fight ahead

Over the seven months of waiting, employees have noticed changes in their job descriptions that likely improve the company’s position in the case.

“It just seems like they’re trying to push our jobs more and more in the direction of quote unquote farmers,” said Ahmad “Jxggy” Haynes, a post-harvest technician at BeLeaf Medical’s Sinse facility. 

He said the company has hired temp workers to do the manufacturing work, including packaging, that he and other the union members were doing before.  

The company began hiring temps right after the employees filed a petition to form a union in September 2023, according to a recording of a recent staff meeting led by a company human resources representative and obtained by The Independent .

At the meeting, the HR representative said Beleaf has “burned through” 150 temporary employees since October. He told the temps they shouldn’t expect to be hired on full time anytime soon, but they should still feel part of the team. 

Twice so far this year, NLRB Regional Director Andrea Wilkes – who oversees a swath of six states in the Midwest —  has ruled that post-harvest employees’ work is similar to that of employees in a tobacco processing plant. 

“Removing the veins from tobacco leaves and fermenting the leaves has been held to be outside the definition of agriculture,” under federal labor law, Wilkes wrote in her Jan. 25 ruling.

The company’s response to her decision indicates that union employees likely have a long fight ahead of them.

According to a Feb. 13 letter from Beleaf’s attorney to Wilkes, the company plans on fighting their employees’ unionization efforts all the way to federal court. 

“Although we understand and respect the Board’s recent decision on this issue, we are preserving this issue for presentation to the United States Court of Appeals for the 8th Circuit,” the letter states.  

The company can get into court by refusing to bargain with the union, creating “a technical violation,” Suggs said. 

That will lead to filing a petition for review in a federal court, Suggs said, so they can challenge the underlying issue in this case — whether these are agricultural workers — “in front of a bunch of federal judges.”

“That’s become a bigger problem, particularly in the Eighth Circuit,” Suggs said, “because you’ve got a number of very conservative judges who are kind of hostile to the labor movement generally.”

Sean Shannon, lead organizer with UFCW Local 655, said it’s obvious this has been the company’s plan all along.

“They clearly stated their intention to bring this as far as the 8th Circuit Court – which is several steps into the fight – in their original statement,” Shannon said of the company’s February letter. “I feel nothing but clear intent to obstruct this union at all costs, which ironically proves just how much these folks need a union.”

The microbusiness program was sold to Missouri voters as a way to help victims of the war on drugs get a toehold in this burgeoning industry (Rebecca Rivas/Missouri Independent)

Destiny Brown thought she had been recruited last year to own and operate a small-scale Missouri cannabis dispensary — and get paid $200,000 to do it. 

Cannabis investor Michael Halow told Brown, who is Black, that her disabled veteran status and the marijuana offense on her father’s record qualified her for a Missouri microbusiness license. The qualifications were designed for these licenses to end up in the hands of disadvantaged business owners, including disabled veterans, those with lower incomes and people with non-violent marijuana offenses.

Brown didn’t closely read the 40-page contract she signed with Halow, but says he repeatedly told her he would help her with $2 million to get the business up and running, according to a transcript of Brown’s interview in March with the Missouri Division of Cannabis Regulation investigators. 

“Mike just said he had money to do that,” Brown told officials, according to the document The Independent obtained through a public records request. “He always says that. He just said, ‘I have the money. I can help.’” 

He never told Brown that the contract’s fineprint aimed to give Halow full ownership of the business while using her as the legal front of it. A felony on Halow’s record could potentially disqualify him from holding a license himself.

Brown — who told state regulators she lives in Arizona and declined to be interviewed for this story — was among 16 people who won the lottery for Missouri microbusiness dispensary licenses last October. Six were connected to Halow, and each of those licenses has since been revoked.

After Brown got the license, she hired a lawyer and separated herself from Halow and his consultants. She gave cannabis regulators agreements she signed or that Halow had sent her — including documents the state previously did not have, according to legal filings. 

The agreements stated she would not be allowed to sell any marijuana products in Missouri until ownership changed hands to Halow, or until Brown repaid the full $2 million plus interest.  

Halow’s hired consulting firm, Cannabis Business Advisors, was listed as the designated contact on more than 400 of the 1,048 Missouri dispensary applicants, a practice known as flooding the lottery. The six winners connected to Halow all had similar contracts — each of which are technically complicated and ensure he ends up with control of the business, according to legal filings.

Missouri cannabis leader accused of using ‘predatory’ contracts to win social-equity licenses

But Halow is not alone in this strategy.

The microbusiness program was sold to Missouri voters as a way to help victims of the War on Drugs get a toehold in this burgeoning industry. But contracts obtained in recent months by The Independent reveal out-of-state companies or cannabis industry insiders have repeatedly attempted to use qualified applicants to win the licenses but then largely shut them out of the profit.

Last year, The Independent revealed that a Michigan-based company was recruiting people on Craigslist to enter Missouri’s social equity license lottery using contracts forcing them to eventually relinquish all control — and profits.

The two licenses connected to the company were revoked, though the company is appealing that decision. 

The Independent reported in July on Missouri cannabis leader John Payne using agreements for some applications that would give him and his partners 90.1% of profits and majority control of the business.

Legal experts who reviewed Payne’s contracts called them unfair and potentially predatory. This summer, cannabis regulators opened an investigation into one license connected to Payne that was awarded in October to verify whether they “continue to be majority owned and operated by eligible individuals.” 

The investigation is ongoing, a department spokesperson told The Independent.

Joseph von Kaenel, a St. Louis corporate governance attorney who reviewed Payne’s contracts for The Independent, said the documents presented to Brown are just as problematic. 

“It’s really the same old story we’ve seen of unscrupulous promoters trying to find a disadvantaged person,” von Kaenel said, “and have them front the business and then take it over when they can’t pay.”

The revocations of the five licenses still connected to Halow are being appealed with the legal representation of St. Louis-based law firm Armstrong Teasdale. 

It’s the same law firm Payne claimed wrote the contract that The Independent obtained for his client this spring. Even though the firm’s name appears in the contract, Armstrong Teasdale adamantly denies preparing or providing it to Payne. 

Halow declined to comment in a phone call with The Independent, and his attorney did not respond to requests for comment.  

Brown has also appealed the state’s decision to revoke the license with the Administrative Hearing Commission, a group of five judges who hear state licensing disputes. However, the commission found her complaint was filed after the deadline, which puts her case at risk of being dismissed.

Investing in the Future

According to Halow’s LinkedIn page, he lives in Puerto Rico and “holds numerous cannabis licenses spanning multiple states.” 

“But I’ve always had my eye on the bigger picture – championing social equity and empowerment,” he stated in a recent post. “It’s why I’m dedicated to mentoring underrepresented candidates and guiding them through the complex licensing process.”

While that may be his goal, he’s also faced controversy in Arizona over his practices obtaining social-equity licenses. 

In August 2023, he was sued by a woman who said Halow recruited her to apply for the social-equity license and then took over the business license without her knowledge or permission.

Halow and his Wyoming-based companies Investing in the Future LLC and Helping Handz won the suit and he retained the license. The judge awarded him $45,000 in legal fees. 

Halow’s LinkedIn page says he studied in criminal justice and business at University of Texas at El Paso and Arizona State University.

In 2003, a grand jury in El Paso indicted Halow on several counts of sexual assault of a child, along with several more for producing child pornography. The charges were dismissed as a part of a plea agreement, in which he pled guilty to a second-degree felony offense of aggravated assault. He received three years of community supervision.

The constitution states that people with a “disqualifying felony” can’t work in the industry, but it doesn’t specify what types of felony offenses. It exempts marijuana offenses that are eligible for expungement. It also says that if it’s a nonviolent felony offense, employees are in the clear if it has been more than five years since the charge. 

For other felonies, “more than five years have passed since the person was released from parole or probation, and he or she has not been convicted of any subsequent felony criminal offenses,” it states.

According to DHSS, a lot of their review is subjective.

“What is written into law is then applied to each individual record, so it is a case-by-case analysis and can’t simply be determined by a checklist of potential offenses,” Lisa Cox, a spokeswoman for DHSS, told The Independent last year.

The contract

Brown told state regulators this spring that she filled out an “inquiry” online, stating that she’d like to run a dispensary to help veterans like herself. 

Halow’s brother, whose name Brown says she doesn’t remember, responded by calling and requesting documents, including her driver’s license and veterans disability paperwork. He asked her to sign several agreements that she thought were outlining how the business would be run and that she would be paid $200,000 to do it. 

She didn’t realize that the documents would give away ownership of the company to Halow after the license was issued.

She also didn’t know about Ever Eco LLC, which is the business the microbusiness application was filed under.

According to the state’s response to Brown’s April appeal of the license revocation, Ever Eco is an Arizona limited liability company formed on July 23, 2023. At the time of filing, Halow was listed as the sole member and manager of Ever Eco — yet he was not listed as an owner or designated contact in the microbusiness application.

A month later, and after the application was submitted, the business’ articles of organization were amended to remove Halow as the sole owner and operator, replacing him with Brown.  

The license’s designated contact was Maxime Kot, with Cannabis Business Advisors. In her interview, Brown said she had never met or heard of Kot. 

On Oct. 17, the department requested that Ever Eco provide several documents, including all agreements, verbal or written. 

A couple weeks later, Kot responded to the department, saying her company was “unable to provide the requested information and documents due to a lack of response or interest by the purported owner.”

However, on Nov. 15, Brown’s attorney requested that Kot be removed as designated contact. The attorney then provided a number of documents, including a memorandum of understanding, a consulting agreement, a promissory note and a conditional management services agreement.

Each document was signed by Brown, either on behalf of herself or on behalf of the company, with a separate signature block for Halow, the response states. 

The memo of understanding and promissory gave Halow the right to convert the loan he promised to provide Brown’s LLC into 100% of the “membership interest” — or all of the profits and voting rights of the business.

The state revoked the license on seven grounds, including that the application included “false or misleading information” and the licensee withheld information.

Armstrong Teasdale is not representing Brown in her case. However, in the appeals of the other five licenses Halow is connected to, his attorney responded to the state’s allegation that the licensee “entered into an agreement that transferred ownership and operational control to another entity.” 

“…this contention envisions a hypothetical situation at most,” Halow’s attorney writes, “as the documents alleged to grant such ownership and operational control are expressly conditioned on DHSS approval and such rights for third parties are optional to exercise, not mandatory.”

In Brown’s March 4 interview with cannabis regulators, her attorney said she wants to move forward with the license. 

“She has every intent of it,” he said. “And from everything I can see, she’s more than qualified under the program and is eager to move forward either way. So, whatever we can provide to you to allay any concerns, just let us know.”

A St. Louis liquor store hung a sign announcing Gov. Mike Parson's executive order to ban intoxicating hemp beverages (Rebecca Rivas/Missouri Independent).

Missouri Gov. Mike Parson’s ban on intoxicating hemp products hit another hurdle on Tuesday, resulting in an indefinite pause on a huge part of the effort.

Richard Moore, general counsel for the Missouri Department of Health and Senior Services, said in a letter Tuesday that the state’s health regulators will stop embargoing — or tagging — products simply because they contain hemp-derived THC. 

“In regard to psychoactive cannabis products, the department will focus its efforts on the identification of  ‘misbranded’ products,’” Moore wrote to the Missouri Hemp Trade Association’s attorney, Chuck Hatfield.   

When Parson signed his executive order on Aug. 1, he said his primary focus was to protect children consuming the products that resemble popular candy, like Lifesavers, but contain the intoxicating compound of the cannabis plant, THC.

“I trust that you understand that the consumption of these products may be dangerous,” Moore states, “and that under no circumstances should they end up in the hands of Missouri’s children.”

The department’s effort will now focus on just that — not banning all intoxicating hemp products.

“If the department identifies any such misbranded products, it will refer those products to the Missouri Attorney General’s Office for  potential enforcement under the State’s Merchandising Practices Act…”

Missouri VFW inspected by state regulators as part of ban on intoxicating hemp products

The letter comes after the Missouri Hemp Trade Association filed for a temporary restraining order against the department on Monday in response to the department inspecting a VFW post on Sept. 11, Hatfield said. 

“We asked for the (temporary restraining order),” Hatfield said, “and in response, we got this letter, which is the same thing we would have accomplished with the (temporary restraining order.”

The motion for the restraining order states that the governor’s order directs the department to “designate foods adulterated simply because they contain hemp products, in direct contravention of Missouri law.” 

In Moore’s letter, he acknowledges that state law says, “a food shall not be considered adulterated solely for containing industrial hemp, or an industrial hemp commodity or product.”

It is the same law fueling the Missouri Hemp Trade Association’s lawsuit against the governor’s ban. 

As of Sept. 12, the Missouri Department of Health and Senior Services officials have inspected 74 establishments this month and found intoxicating products at 42 of them, said Lisa Cox, spokeswoman for the department.

During the visits, inspectors have asked the store owners to destroy the products within the facilities. If they don’t, inspectors tag them as embargoed.

According to Moore’s letter, all psychoactive cannabis products that the department has tagged as an embargoed product will be referred to the attorney general’s office for evaluation of misbranding violations. 

“The department has no intention at this time to embargo additional psychoactive cannabis products as adulterated,” the letter states. “Further, within 30 days after referral to the attorney general’s office, the department will release all currently embargoed products and remove all embargo tags.”

Once embargo tags are removed, it states, such products will not be subject to an embargo as long as there is no court order prohibiting its sale or ordering its destruction. 

“Pending further action from the General Assembly as to intoxicating cannabis products,” the letter states, “the department believes that channeling  future enforcement authority via the Merchandising Practices Act is the best way to ensure that Missouri consumers know what they are purchasing and ingesting, and to keep harmful products out of the hands  of children.” 

Missouri Hemp Trade Association spokesperson Craig Katz said the association supports the attorney general’s efforts “to prosecute bad actors marketing counterfeit and misbranded hemp products to children.”

“This is the appropriate regulatory and law enforcement focus,” Katz said. “We hope to follow this with a strong legislative effort in 2025 to further assure consumers and other stakeholders that hemp products are safe, tightly regulated, and available to ensure public safety.”

There are about 9,000 retailers statewide currently selling hemp-derived beverages and edibles. Hemp industry leaders argue the order also bans products that aren’t attractive to children, have gone through lab testing and are only sold to customers 21 and up.

Hatfield said the association never believed stores should stop selling intoxicating hemp products that don’t market to children. But the department’s Tuesday letter gives the green light to begin sales again, he said.

“In light of yesterday’s letter,” Hatfield said, “hemp sales are back on.” 

VFW Post 2661 in Washington, Missouri (Photo by Max Mueller).

Not long after Commander Jason Stanfield had lowered the flag Wednesday to honor the lives lost on Sept. 11 at his Franklin County VFW Post, he learned state food inspectors had arrived. 

“It’s not an easy day,” Stanfield said. “9/11 is a tough day for all of us, particularly for veterans. I was not in the best mindset.”

The regulators said they had received a complaint that the post’s bar had been selling seltzers that contain hemp-derived THC — which has the same intoxicating effect as THC from marijuana that’s sold at dispensaries. 

The bar was selling a brand of fruity seltzers called UR Lit, which contains 5mg of Delta-9 THC.

While hemp is federally legal, Missouri recently joined a growing number of states trying to ban all intoxicating hemp products.

When Gov. Mike Parson signed his executive order on Aug. 1 to ban the products, he said his primary focus was to protect children consuming the products that resemble popular candy, like Lifesavers, or fruity drinks.

Given the governor’s goal, Stanfield said he was surprised the state wanted to inspect the post, where members are well over 21.

“There’s not a whole lot of kids that run around the VFW,” he said. 

Since the ban went into effect on Sept. 1, Missouri Department of Health and Senior Services officials have inspected 74 establishments and found intoxicating products at 42 of them, said Lisa Cox, spokeswoman for the department. 

On a social media post on Wednesday, Stanfield described the inspection as a “raid,” but Cox said that description is “misleading” because there were just two inspectors responding to a complaint. 

“The two inspectors were let inside through a locked door upon request,” Cox said, “but quickly recognized that the VFW Post did not pose an immediate cause for concern, specifically in regard to Missouri children. As a result, zero product was embargoed or destroyed.”

Cox said the department has “no plans in place of returning to the establishment.”

Hemp and marijuana are essentially terms the government uses to distinguish between the part of the cannabis plant that can get you high when smoked – that’s marijuana – and the part that can’t — that’s hemp. 

But with a little science and extraction, people can enhance the small amount of the naturally occurring THC, or the psychoactive component, in hemp to make edibles and drinks. 

Because hemp isn’t a controlled substance like marijuana, there’s no state or federal law saying teenagers or children can’t buy products, such as delta-8 drinks, or that stores can’t sell them to minors, Parson said. 

And there’s no requirement to list potential effects on the label or test how much THC is actually in them. State lawmakers have failed to pass such requirements the last two years.

Stanfield said the state ban is harmful for VFW members who are trying to recover from alcoholism or opioid addiction. 

“I have testimony after testimony in my post alone of people that are still alive today,” Stanfield said, “because they use cannabis to get off of their opioids that they were addicted to.”

During the inspection, he said the DHSS employees told him that the drinks were considered “adulterated.” If a product is considered adulterated, DHSS has the authority to embargo it – which means put a tag on it until the department gets a court order to destroy it. 

Stanfield points to the state law that says, “a food shall not be considered adulterated solely for containing industrial hemp, or an industrial hemp commodity or product.”

That line was added to Missouri’s law in 2018, after Congress legalized hemp as part of the federal Farm Bill. It was part of a Missouri House bill that brought the state’s definition of hemp in alignment with the federal government’s.

It is the same law fueling the Missouri Hemp Trade Association’s lawsuit against the governor’s ban. 

“I will continue to comply with federal law and sell these products until they’re not legal,” Stanfield said, “to give my veterans a non-alcoholic option in a place where they can come and be with other veterans and not have to consume alcohol.”

A St. Louis liquor store hung a sign announcing Gov. Mike Parson's executive order to ban intoxicating hemp beverages (Rebecca Rivas/Missouri Independent).

Missouri Attorney General Andrew Bailey is creating a new specialized unit to assist the state’s alcohol and tobacco regulators in cracking down on intoxicating hemp products, Bailey announced at a Capitol press conference Tuesday afternoon. 

The announcement comes after Gov. Mike Parson’s ban on these products hit a delay of up to six months.

The ban was supposed to take effect on Sept. 1, after Parson signed an executive order on Aug. 1 to remove all hemp-derived THC edibles and beverages from store shelves. However last month, Missouri Secretary of State Jay Ashcroft rejected the emergency rules detailing how it would have been enforced.

With Missouri regulations in flux, what’s the difference between hemp and marijuana?

That meant regulators at the Division of Alcohol and Tobacco Control didn’t have the authority to enforce the ban among stores that have licenses to sell liquor or tobacco products — which is where the vast majority of products are being sold, Parson said. 

Ashcroft’s action did not prevent the Department of Health and Senior Services’ regulators from investigating nearly 60 facilities, Parson said.

“DHSS investigations have confirmed our fears,” Parson said. “Product after product resembles popular snacks and candies that would be hard for me to determine that contained cannabis, let alone my five-year-old granddaughter.”

Because hemp isn’t a controlled substance like marijuana, there’s no state or federal law saying teenagers or children can’t buy products, such as delta-8 drinks, or that stores can’t sell them to minors, Parson said. 

And there’s no requirement to list potential effects on the label or test how much THC is actually in them. State lawmakers have failed to pass such requirements the last two years.

Parson said the main target of his order are companies that sell intoxicating hemp edibles that mimic popular candy. However, hemp industry leaders argue the order also bans products that aren’t attractive to children, have gone through lab testing and are only sold to customers 21 and up.

“The Missouri Hemp Trade Association agrees that illegal products should be removed from store shelves,” said Craig Katz, spokesman for the association. “But DHSS is casting such a wide net that it is not differentiating legitimate products from bad products, and in the process, it is trampling on the constitution and ruining small businesses.”

The association has decried DHSS’ enforcement of these products. It filed a lawsuit on Aug. 30 in Cole County Circuit Court in hopes of stopping the governor’s ban through a preliminary injunction. The association argues the products are legal and state law prohibits regulators from deeming them as “adulterated.”

“DHSS must stop seizing and destroying products that are legal and follow the letter of the law,” Katz said.

At the Tuesday press conference, Bailey said his office will create a “dedicated electronic repository” for the Division of Alcohol and Tobacco Control to submit actionable referrals to his office. The division will be responsible for “investigating its licensees, collecting evidence of deceptive marketing practices,” Bailey said. 

Bailey’s specialized new unit within his office’s Consumer Protection Division will work with the ATC to offer legal support, he said. His office will use its authority under the Missouri Merchandising Practices Act to bring legal action against licensees who continue prohibited practices related to unregulated psychoactive cannabis products, he said. 

“The ATC will assist by making its investigators available as witnesses for legal proceedings resulting from actionable referrals,” Bailey said. “Our enforcement toolkit will be robust from cease-and-desist letters and investigations to subpoenas and lawsuits to referrals for criminal prosecution where appropriate.”

He believes this partnership will lead to a significant reduction in these products.

“We’re committed to keeping unsafe products away from our kids,” Bailey said, “and ensuring that those who break the law are held accountable.”

This story was updated at 4:15 p.m. to include the Missouri Hemp Trade Association’s comment.

Hemp and marijuana are essentially terms the government uses to distinguish between the part of the cannabis plant that can get you high when smoked – that’s marijuana – and the part that can’t — that’s hemp (Rebecca Rivas/Missouri Independent).

Missouri Gov. Mike Parson has vowed to run intoxicating hemp products out of Missouri, banning their sale and threatening penalties to any business that makes or sells them.

In many ways, it’s the latest showdown between the marijuana industry — which has operated legally in Missouri since 2018 but is outlawed federally — and the hemp industry, whose products were legalized by the 2018 Farm Bill.

But at the end of the day, what’s the difference between intoxicating hemp products and intoxicating marijuana products?

Hemp and marijuana are essentially terms the government uses to distinguish between the part of the cannabis plant that can get you high when smoked – that’s marijuana – and the part that can’t — that’s hemp. 

It all boils down to their THC content, or their psychoactive component.

Any part of the plant containing 0.3% or less THC by dry weight is defined as hemp. That means if you were to smoke a joint of dried hemp, you shouldn’t get high. 

And that’s why in 2018 Congress removed hemp and hemp seeds from the Drug Enforcement Administration’s (DEA) schedule of controlled substances as part of the Farm Bill.

However, there’s a big complicating factor with a definition based on dried weight. Today’s intoxicating edibles, pre-rolled joints and other products – using both marijuana or hemp – often incorporate extracts of highly concentrated THC, or distillates. 

Laboratories can take a large amount of hemp and extract enough THC to make intoxicating edibles and drinks with 5 to 20 mg of THC in them. Up until the governor’s Sept. 1 ban on these products, they were found in regular Missouri gas stations, stores and bars. 

When THC is extracted in this way, there’s no way for regulators to tell whether the THC came from hemp or marijuana. 

Hemp is full of CBD, a nonpyschoactive cannabinoid that helps people relax and often found in massage oils and sleep aids.

Some companies synthetically convert CBD to THC to make their products. CBD can be converted into delta-8 THC, as well as delta-9 THC, using a solvent, acid and heat to produce higher concentrations of THC than those found naturally in the plant.

Leaders of the Cannabis Regulator Association have asked Congress to close “the 0.3% loophole” in the pending Farm Bill to prevent intoxicating hemp products from going unregulated, according to the association’s statement last summer.

While the threshold of 0.3% delta-9 THC by weight is a small amount of THC in a hemp plant, when applied to things like chocolate bars or beverages that can weigh significantly more, 0.3% by weight can amount to hundreds of milligrams of THC, the association said.

For example, a 50-gram chocolate bar at 0.3% THC would have around 150 mg of THC — 30 times the standard 5 mg THC dose established by the National Institute on Drug Abuse. A family sized pack of cookies weighing 20 oz can contain around 1,700 mg of THC using the 0.3% THC threshold.

Hemp industry leaders don’t want to see these intoxicating products banned. Instead, they’ve suggested the Alcohol and Tobacco Tax and Trade Bureau handle their regulation. That’s also been the case locally in Missouri. 

States have passed a patchwork of different laws to attempt to regulate the products until the new Farm Bill is passed. Many of the laws have been challenged by the hemp industry, and federal judges have differing opinions on whether states can legally regulate these hemp products without Congress changing current federal law. 

Parson signed an executive order on Aug. 1 banning intoxicating hemp products and threatening penalties to any establishment with a Missouri liquor license or that sells food products for selling them. It also bans companies from producing hemp-derived THC beverages in Missouri.

The Missouri Hemp Trade Association filed a lawsuit two days before the order took effect, asking for a state judge for a preliminary injunction. 

Missouri is currently shining a light on the THCA loophole. After more than 60,000 cannabis products were recalled last year, a company has revealed that it was importing THCA extracted from the hemp plant and putting it in marijuana products — arguing that THCA is not actually intoxicating until it is heated, so it doesn’t count as total THC. 

CANNRA told Congress that despite some states’ efforts to address this issue, many hemp businesses are selling “THCA hemp” flower that contains less than 0.3% delta-9 THC but has a total THC concentration of 15% to 20%. 

“This so-called ‘hemp’ is indistinguishable from marijuana flower,” the association stated.

Gov. Mike Parson speaks at his Capitol press conference announcing Executive Order 24-10 that bans the sale of intoxicating hemp products in Missouri "until such time approved sources can be regulated by the FDA or State of Missouri through legislative action," he said (photo courtesy of Missouri Governor's Office).

State health regulators walked into the busy Prime Fuel gas station in Sedalia on Tuesday morning and asked the clerk if there were any intoxicating hemp-derived THC edibles in the store — products the governor banned as of Sept. 1.

The two employees of the Missouri Department of Health and Senior Services learned the store had already taken the products off the shelves, according to the regulators’ report on the visit, and they were being stored in a box in the office.

The report says regulators called the owner and he voluntarily agreed to destroy the products. 

But that’s not how the owner describes the incident, said Craig Katz, spokesman for the Missouri Hemp Trade Association. 

“He seemed to be forced into it,” Katz said. 

Katz said the owner had boxed up the products so he could return them to the wholesaler for a refund, and he explained this to the regulators. Instead, they told him his manager had to pour bleach over about $5,000 worth of product, Katz said, a process that took two hours.

Missouri hemp leaders file suit to halt governor’s ban on hemp THC products

On Wednesday, the Missouri Hemp Trade Association’s attorney Chuck Hatfield sent a letter to the department’s general counsel saying the regulators deprived the owner of his right to tell his side of the story to a judge.

“The law is extremely clear that DHSS is not authorized to destroy product, or to demand that others do so, without a court order,” Hatfield wrote. 

State regulators have visited 44 establishments as of 4 p.m. Thursday to inspect for the banned products, said Lisa Cox, spokesperson for the department. 

Of the 44 facilities, regulators found “unregulated psychoactive cannabis products” during inspections at 23 of them, Cox said. 

“Four facilities have refused to embargo or discard products,” she said. “The remaining facilities agreed to embargo and/or discard products. At this time, we have taken no court action.” 

Cox declined comment on Hatfield’s letter.

The association says it has heard of three reports of “raids” by state health regulators on stores selling intoxicating hemp products, mainly edibles. Regulators asked owners or clerks to sign a document stating they agree with the destruction of the products, Katz said.

“I can only describe what is happening to small business owners in Missouri as disturbing,” Katz said.

The association filed a lawsuit on Aug. 30 in Cole County Circuit Court to stop the governor’s ban on all intoxicating hemp food and drinks from taking effect Sunday. The association argues the products are legal and state law prohibits regulators from deeming them as “adulterated.”

On Aug. 1, Gov. Mike Parson signed an executive order to remove all hemp-derived THC edibles and beverages from store shelves and threatening penalties to any establishment that continues selling them.

Because hemp isn’t a controlled substance like marijuana, there’s no state or federal law saying teenagers or children can’t buy products, such as delta-8 drinks, or that stores can’t sell them to minors, Parson said. 

And there’s no requirement to list potential effects on the label or test how much THC is actually in them. Hemp industry leaders themselves have pushed for such regulations, but state lawmakers have failed to pass proposals the last two years.

Parson said the main target of his order are companies that sell intoxicating hemp edibles that mimic popular candy. However, hemp industry leaders argue the order also bans products that aren’t attractive to children, have gone through lab testing and are only sold to customers 21 and up.

The order directs regulators “to identify food that contains unregulated psychoactive cannabis products as deleterious, poisonous and adulterated.” 

The department has the authority to do this, Parson’s order states, because of a state law regarding the process to deem a food product adulterated.

However, Hatfield notes the same law also states that, “a food shall not be considered adulterated solely for containing industrial hemp, or an industrial hemp commodity or product.”

That line was added to Missouri’s law in 2018, after Congress legalized hemp as part of the federal Farm Bill. It was part of a Missouri House bill that brought the state’s definition of hemp in alignment with the federal government’s. 

There has been no movement on the lawsuit since the association filed it last week.

This story was corrected at 2:30 p.m. to identify Craig Katz as spokesman for the Missouri Hemp Trade Association.

No adverse reactions from recalled products have been reported to the Division of Cannabis Regulation, according to the division notice of the action on Friday evening (Rebecca Rivas/Missouri Independent).

Missouri  regulators issued another cannabis recall on Friday, the third this month, this time for about 37,000 marijuana products. 

That brings the total number of marijuana products recalled in August to up nearly 175,000 — almost triple Missouri’s first massive cannabis product recall a year ago.

The focus of the recall is products made by Jonesburg-based manufacturer Blue Sky Health & Wellness LLC, a facility between Columbia and St. Louis. The designated contact for the facility is Ketan Patel, according to state records.

No adverse reactions for this product have been reported to the Division of Cannabis Regulation, according to the division notice of the action on Friday evening. 

 “The recalled marijuana products were not compliantly tracked in the statewide track-and-trace system called Metrc as mandated by state marijuana rules,” the notice states. “Therefore, DCR cannot verify compliance with health and safety requirements.”

The division lists the recalled products in two Excel sheets. One is “product recall list,” which includes the identifiers that the manufacturers use to track products. The division also posted a “consumer recall list” that includes numbers that customers are more likely to see on their products. 

The division advises patients and consumers to stop using the products and return them to the dispensary. 

“Returned products will not count toward a patient’s purchase limit,” it states.  

Also any adverse reactions should be reported to the division of cannabis by email or through an online complaint form.

A St. Louis liquor store hung a sign announcing Gov. Mike Parson's executive order to ban intoxicating hemp beverages (Rebecca Rivas/Missouri Independent).

The Missouri Hemp Trade Association filed a lawsuit Friday in Cole County Circuit Court to stop the governor’s ban on all intoxicating hemp food and drinks from taking effect Sunday.

The action comes in response to a memo the Missouri Department of Health and Senior Services sent to food retailers on Thursday detailing how the ban will play out. 

“This memo really crystallizes the issue and really makes clear what they’re intending to do,” said Chuck Hatfield, the association’s attorney. “And I think what they’re intending to do is illegal.”

On Aug. 1, Gov. Mike Parson signed an executive order to remove all hemp-derived THC edibles and beverages from store shelves and threatening penalties to any establishment that continues selling them.

Because hemp isn’t a controlled substance like marijuana, there’s no state or federal law saying teenagers or children can’t buy products, such as delta-8 drinks, or that stores can’t sell them to minors, Parson said. 

And there’s no requirement to list potential effects on the label or test how much THC is actually in them. State lawmakers have failed to pass such requirements the last two years.

Parson said the main target of his order are companies that sell intoxicating hemp edibles that mimic popular candy. However, hemp industry leaders argue the order also bans products that aren’t attractive to children, have gone through lab testing and are only sold to customers 21 and up.

According to the memo, the order directs regulators “to identify food that contains unregulated psychoactive cannabis products as deleterious, poisonous and adulterated.” 

The department has the authority to do this, Parson’s order states, because of a state law regarding the process to deem a food product adulterated.

However, Hatfield notes the same law also states that, “a food shall not be considered adulterated solely for containing industrial hemp, or an industrial hemp commodity or product.”

That line was added to Missouri’s law in 2018, after Congress legalized hemp as part of the federal Farm Bill. It was part of a Missouri House bill that brought the state’s definition of hemp in alignment with the federal government’s. 

“We’re going to point out that the department lacks the authority to ban psychoactive cannabinoid hemp products across the board, as they’re doing,” Hatfield said. “Hemp products are not adulterated under Missouri law.”

Lisa Cox, spokeswoman for DHSS, addressed the line Hatfield referred to in the state law. 

“We are not talking about simply industrial hemp,” she said. “What we are dealing with are chemically converted hemp-derived cannabinoids which are included in almost every hemp-derived intoxicating product on the market today.”

Embargoed products

Hatfield also argues an executive order cannot trump a state law when there are no administrative rules in place to back it up. 

Last week, Secretary of State Jay Ashcroft rejected the Division of Alcohol and Tobacco Control’s proposed emergency rules that would’ve given the division the authority to enforce DHSS’ embargo at places licensed to sell tobacco or alcohol. 

And now the rules will have to go through the standard process which could take six months, Parson said in a strongly-worded letter to Ashcroft last week.

There will be a public-comment period followed by a debate among the members of the Joint Committee on Administrative Rules, a 10-member body made up of state representatives and senators. 

However, Cox said the rules don’t need to be approved for the ban to go into effect for places that provide food to the public. 

Food is defined as an edible substance, ice, beverage, chewing gum or an ingredient used in these products, the memo states.

“The governor has directed DHSS to use our current authority to enforce these products under the Missouri Food Code, which would not require the emergency rule,” Cox said. 

According to the memo, the department will begin to inspect facilities for compliance after Monday and will heavily rely on complaints received through the department’s online form. 

The highest priority will go to complaints received from health officials, including at poison control centers and local public health agencies. Next will be referrals from law enforcement officials. Complaints about products marketed to children will also be prioritized, the memo states. 

If unregulated psychoactive cannabis products are found during an investigation, the department will “request voluntary compliance, including destruction of the products,” it states.

“If voluntary compliance is not achieved, products will be embargoed and held on the premises until a court order for destruction is obtained,” the memo states. 

Hatfield said the department doesn’t have the authority to “pull things off the shelves.” 

If people don’t take products off the shelves voluntarily, Hatfield said, then regulators will embargo it, “which means putting a sticker on it.”

Under the state law, DHSS regulators would have to go to each retailer individually and put an embargo tag on the products they’ve deemed “adulterated, or so misbranded as to be dangerous or fraudulent.”

Then the department would have to go before a circuit court judge to petition that the products need to be embargoed. If the judge sides with regulators, the products are destroyed. If not, the tag is removed and the product is considered legal to sell.

The order also means no Missouri business can manufacture these products within the state, Cox said. 

The department’s main focus, she said, will be on protecting children “by prohibiting sales of unregulated psychoactive cannabis products.” 

“We believe that will take the majority of our time and resources to enforce,” Cox said. “However, the enforcement authority outlined in state statute allows us to address manufacturing issues as needed. We’ll be working with businesses on a case-by-case basis as they have questions about manufacturing.”

This story was updated at 12 p.m. to reflect that the lawsuit was filed. 

Under Missouri's new cannabis regulations, labels and packages for marijuana-related products must have limited colors and can't appeal to children or resemble candy. (Photo by Rebecca Rivas/The Missouri Independent)

Marijuana companies face a hard deadline to meet Missouri’s new plain packaging requirements on Sept. 1 — more than a year after the rule was initially put in place. 

For decades, there’s been a global movement urging “plain packaging” on tobacco products — or packaging with limited colors and frills — after numerous studies found it makes cigarettes less appealing to young people. 

Missouri is now a testing ground to see if plain packaging has the same impact for recreational marijuana.

When voters passed the constitutional amendment to legalize recreational marijuana in 2022, it included a provision that labels and packaging for marijuana-related products, “shall not be made to be attractive to children.”

Now under new state rules, packaging can only be one primary color, and it can have up to two logos or symbols that can be a different color or several different colors.

“This approach to packaging is familiar to all of us,” said Amy Moore, director of Missouri’s Division of Cannabis Regulation, during a legislative committee hearing last year. “You think about the cereal aisle versus tobacco packaging or over-the-counter medicines.”

The initial deadline for compliance was May 1, but regulators heard from licensees that potential delays in global shipping could impact their ability to receive the packaging in time. 

Now starting on Sept. 1, marijuana manufacturers must package and label all products in division-approved designs before sending them to a dispensary. 

Dispensaries can continue to sell non-compliant products they already have in the store until Nov. 1.

The new rules also require the division to pre-approve the labels, a process that didn’t exist under medical marijuana rules. 

Nick Rinella, CEO of Hippos Cannabis, said companies have seen delays in the state’s approval of their submitted designs.

“The state just doesn’t have the manpower to go through and approve them,” Rinella said. “And until they’re approved, they can’t go onto the shelves in their new packaging.”

Since the approval process opened on Sept. 1, 2023, the division has received nearly 150,000 submissions, said Lisa Cox, spokeswoman for the division.

Half of those were submitted within the last 60 days.

“Licensees have had a year to submit applications for approval,” Cox said, “and five months’ notice that they should not expect another extension.”

Cox said all applications are being processed within 60 days.

The constitution says that no marijuana facility can sell edible marijuana-infused candy in shapes or packages that are attractive to children or that are easily confused with commercially sold candy that does not contain marijuana. Penalties include fines of up to $5,000 and a loss of a business license. 

The packaging requirements are part of Missouri’s new cannabis regulation rules that went into effect on July 30, 2023. 

In the division’s first draft of proposed rules last year, it required companies to have only one color on the label. 

That caused an uproar from the Missouri Cannabis Trade Association, which argued in a letter to lawmakers that marijuana businesses had already invested “many millions” in packaging designs. And companies did so, the trade association contends, because “attractive, interesting, and attention-grabbing packaging is essential to effectively advertise and promote marijuana product sales.”

After the pushback from both MoCann Trade and some legislators, the agency changed the rule to allow “limited colors.” Another compromise, Moore told lawmakers, was allowing for QR codes on the labels to send consumers to their website for more information. 

Missouri becomes one of few states that require plain packaging in the adult-use cannabis market, according to the Network for Public Health Law. The others include Connecticut, Massachusetts and New Jersey. 

Moore said the rules align with what voters asked for in the constitutional amendment. The requirements regarding children’s safety are more stringent than what was included in the constitutional amendment legalizing medical marijuana in 2018.

“We have to notice that,” she said, “and say, ‘Apparently we’re to do more, we’re to do better for children and for health.”

A spokesman for Missouri Secretary of State Jay Ashcroft’s office told The Independent that the rules were rejected because they didn’t meet the state law’s criteria(Rudi Keller/Missouri Independent).

The governor’s ban on intoxicating hemp products hit a delay Wednesday after Missouri Secretary of State Jay Ashcroft rejected the emergency rules detailing how it would have been enforced.

Gov. Mike Parson signed an executive order earlier this month to remove all hemp-derived THC edibles and beverages from store shelves and threatening penalties to any establishment with a Missouri liquor license or that sells food products for selling them.

It was supposed to take effect on Sept. 1, pending Ashcroft’s approval of the emergency rules. And now that will likely be delayed until for at least six months, Parson said in a strongly-worded letter to Ashcroft on Thursday.

“As best I can tell, you denied this emergency rulemaking because you believe hurt feelings are more important than protecting children,” Parson said.

Hemp industry leaders call Missouri governor’s order banning THC products an ‘overreach’

The governor seemed to be implying the decision was inspired by Parson’s support for another candidate besides Ashcroft in the GOP gubernatorial primary.

Ashcroft finished third in the primary, with Parson’s pick — Lt. Gov. Mike Kehoe — winning the nomination.

“This is a personal matter for thousands of parents and grandparents across the state, and denying the rulemaking is your attempt at retribution for my endorsement of another candidate,” Parson said. “Safety of kids is not a political issue. I am disgusted that you are making it one.”

JoDonn Chaney, spokesman for Ashcroft’s office, told The Independent Wednesday that the rules were rejected because they didn’t meet the state law’s criteria. The secretary reached out to the Parson administration to provide an opportunity to explain how the rules met the requirements and got not response, he said.

“Secretary Ashcroft has a discretion to determine what constitutes an emergency rule and there’s guidelines in statute that dictate,” Chaney said.

If Ashcroft would have approved the emergency rules, they would’ve been implemented after 10 business days, since there would be no public-comment period, Chaney said. 

However, now the rules will have to go through the standard rules procedure, which will take several months. 

“It opens it up for a 30- or a 60-day comment period,” Chaney said, “where individuals on both sides can comment on the rule.”

From there, it will be debated among the members of the Joint Committee on Administrative Rules, a 10-member body of both state representatives and senators. 

However, the rules actually don’t need to be approved for the ban to go into effect, said Lisa Cox, spokeswoman for the Missouri Department of Health and Senior Services.

The proposed rules include one sentence: “No retailer shall sell, or deliver, hold or offer for sale any food, drug, device or cosmetic that has been embargoed by the Department of Health and Senior Services pursuant to [state statute.]” 

It refers to the state law that gives DHSS the authority to embargo products without any administrative rule in place. It means that DHSS regulators would have to go to each retailer individually and put an embargo tag on the products they’ve deemed “adulterated, or so misbranded as to be dangerous or fraudulent.”

Then the department would have to go before a circuit court judge to petition that the products need to be embargoed. If the judge sides with the retailer, then the tag is removed. 

“The governor has directed DHSS to use our current authority to enforce these products under the Missouri Food Code, which would not require the emergency rule,” Cox said. “We can begin enforcement (embargo of products) on Sept. 1.”

However, without the approval of emergency rules, Cox said DHSS would be acting “without the enforcement authority and support” of the Division of Alcohol and Tobacco Control.

“It does not appear to me that the government has really thought through this plan very well,” said Chuck Hatfield, an attorney representing the Missouri Hemp Trade Association. “And now the Secretary of State has rejected a rule. And, I hope that they’ll reconsider the whole thing.”

Hatfield said regulation of the hemp industry should be handled through a bill that’s debated and voted on by the legislature. For the last two years, the marijuana-industry — which has been a major political donor to Parson — has led an unsuccessful effort to convince the legislature to ban hemp-derived THC products outright. 

“Trying to do it through executive order and bureaucratic action is just not good government,” Hatfield said. “And I think the Secretary of State today, in part, recognized that.”

At his Aug. 1 press conference, Parson pointed to products that mimic trademarked candy but contain hemp-derived THC as a big reason why he issued his executive order banning all intoxicating hemp products.

These products have been allowed to be sold in Missouri outside of licensed cannabis dispensaries because the 2018 Farm Bill legalized hemp.

Missouri Department of Health and Senior Services Director Paula Nicholson warned families about the fact that these hemp products on the shelves are not regulated by any state or federal authority during the same press conference. So there’s no way to ensure they’re safe, she said.

“We have seen the negative impacts first hand,” she said. “Disturbingly, children in Missouri and across the nation have been hospitalized after ingesting these substances. This is unacceptable.”

However, Parson did not address the fact that thousands of retailers statewide are currently selling hemp-derived beverages in bars and liquor stores and require people to be 21 to purchase them. 

Steven Busch, owner of Krey Distributing, said everyone in the hemp industry agrees that those bad actors that Parson mentioned should be taken off the shelves. 

But the governor failing to address the impact it would have on thousands of bars, liquor stores and grocery stores was “disingenuous” and “bordering unethical,” said Busch, whose company distributes 11 different hemp beverages in eastern Missouri. 

“This executive order singled out any retailers that have a liquor license and said that they cannot sell the products,” Busch said. “So that’s pretty much all of my customers that are currently selling.”

Since March, Busch has led an effort to establish regulations for these beverages and edibles by working with various lawmakers to write legislation. It’s set to be filed in December.

This story was updated at 2:44 p.m.

Missouri's Division of Cannabis Regulation has issued a product recall for marijuana products sold by C&C Manufacturing, LLC and NGWMO LLC (Courtesy of DHSS).

State regulators issued two cannabis recall notices last week involving 135,000 marijuana products — more than double Missouri’s first massive cannabis product recall exactly one year ago.

“I’ve never seen recalls of this magnitude in any other state,” said Nick Rinella, CEO of Hippos Cannabis. “This is kind of unprecedented.”

Since the announcement, Rinella and facility owners around the state have scrambled to quarantine thousands of vapes, edibles and pre-rolled joints in their secure vaults. Now they’ll wait until state regulators tell them what to do with those products.

Problem is, some of them are still holding products from last year’s recall, which centered around Robertsville-based manufacturer Delta Extraction, because that recall is still being challenged. However, others opted to work with the state to destroy those products.

That’s where “the stress comes from,” said Mark Hendren, president of Flora Farms cannabis company. 

If a dispensary or facility has a small vault, he said, “and you have product that you have to quarantine, it makes it difficult space wise for you to bring in other inventory to keep the business moving.”

The first recall notice came on the night of Aug. 6, stating the Division of Cannabis Regulation was working “in partnership” with Marceline-based cultivation facility NGWMO LLC to “alert to patients and consumers about a mandatory product recall.”

The grow facility is run by Nature’s Grace and Wellness, which founded a family-owned farm in Vermont, Ill., in 2014 after the state passed medical marijuana. Tim O’Hern, COO and general counsel of Nature’s Grace, is listed as the designated contact for the facility.

This recall involves 2,650 products and has to do with the products being tested too soon in the process.

“The recalled marijuana products were not compliantly tested prior to being sold to patients and consumers,” the notice states. “The recalled marijuana product was tested at the unprocessed bud/flower stage rather than being tested at the final marijuana product stage…”

The second notice came two days later for the Springfield-based manufacturing facility C&C Manufacturing LLC. Notably, it didn’t include the “in partnership” language. 

It lists about 133,000 products, which regulators said were not properly tracked in the state’s “seed to sale” tracing system called Metrc.

“Therefore,” the notice states, “DCR cannot verify compliance with health and safety requirements.” 

However, the division emphasized that no adverse reactions involving recalled products have been reported.

Matt Cummins, CEO of GOAT Extracts, is listed as the designated contact for the facility and a number of GOAT products are on the list. 

The Independent reached out to both companies for comment and did not receive a response.

Adrienne Scales-Williams, owner of St. Louis dispensary Luxury Leaf, agreed that storage space for the recalled products is challenging. And while there’s uncertainty on how long the products will need to be contained, she said she trusts the state is doing their due diligence to investigate the issue. 

“We’ve been through this before,” Scales-Williams said. “When it’s not your first ride in the rodeo, you just handle it.”

The impact

The recall for the Springfield manufacturer is so widespread because the company specializes in making distillate, or THC concentrate that produces a high in edibles and vape pens.

Other manufacturers statewide bought the distillate and used it to make numerous brands of vapes, edibles or pre-rolled joints, including Rove, Zen and Packarillos. 

The recall time frame is also quite wide. It goes back to last year when companies were trying to ramp up for recreational marijuana sales, Rinella said. 

Rinella bought some of C&C’s distillate in October when Hippos’ own supply was low at its grow and manufacturing facilities, he said.

But he emphasized that this recall is not because of lack of testing. Once Rinella and other manufacturers got the distillate and made products with it, those were “properly tested” before they went on the shelves, he said.

“We can feel confident that those products were safe,” he said. “They passed all the tests, and we have some of the most stringent tests in the country.”

The division lists the recalled products in two Excel sheets. One is “product recall list,” which includes the identifiers that the manufacturers use to track products. The division also posted a “consumer recall list” that includes numbers that customers are more likely to see on their products. 

The division advises patients and consumers to stop using the products and return them to the dispensary. “Returned products will not count toward a patient’s purchase limit,” it states.  

Also any adverse reactions should be reported to the division of cannabis by email  or through an online complaint form. 

Delta Extraction

Just like C&C Manufacturing, the state’s first recall on Aug. 2, 2023 centered around a distillate that was sold to numerous other manufacturers.

Also similarly, Delta Extraction’s products were recalled due to the state’s inability to track the ingredients to make the distillate on Metrc, which starts tracking marijuana plants from the moment they’re planted in Missouri.

In that case, Delta was selling a distillate that was mostly made up of hemp-derived THC, using hemp that wasn’t grown in Missouri and couldn’t be tracked. 

Delta mixed it with a small amount of THC from marijuana grown in Missouri. It’s much less expensive to make distillate from out-state hemp than Missouri-grown marijuana, but Delta’s consumers still paid marijuana prices. 

Hemp isn’t a controlled substance and can legally cross state lines, unlike marijuana.

The company appealed both the recall and the revocation of their cannabis business license before the Administrative Hearing Commission, challenging whether or not the state has the authority to regulate hemp products. 

In March, Commissioner Carol Illes heard three days of testimony and evidence and has yet to release her decision. 

Days before the two recent recalls, Gov. Mike Parson signed an executive order banning intoxicating hemp products and threatening penalties to any establishment with a Missouri liquor license or that sells food products for selling them. 

According to the order, licensed cannabis dispensaries can’t sell these products either because the hemp used to make them has to be grown in Missouri and tracked through Metrc. Nearly all of these products currently on the market — and the ones that Delta used — are made from hemp grown in other states.

Gov. Mike Parson speaks at his Capitol press conference announcing Executive Order 24-10 that bans the sale of intoxicating hemp products in Missouri "until such time approved sources can be regulated by the FDA or State of Missouri through legislative action," he said (photo courtesy of Missouri Governor's Office).

Walking into Total Wine stores in Missouri this summer, it was impossible not to see the display for hemp-derived THC infused beverages. 

Total Wine, the country’s largest liquor retailer, set the tone for the alcohol industry in June when it began carrying the products at its seven Missouri stores. 

“It has been amazing for us,” said Joshua Grigaitis, owner of St. Louis-based Mighty Kind Co., which makes various kinds of hemp seltzers. “When somebody like Total Wine comes on board, it helps the conversation along greatly.”

Hemp naturally has very little THC, the intoxicating component mostly associated with marijuana. But that potency can be increased with some science. 

Now Mighty Kind and other similar products that contain low levels of THC have quickly become new revenue for bars, liquor stores and distributors statewide. These beverages are allowed to be sold in Missouri outside of licensed cannabis dispensaries because the 2018 Farm Bill legalized hemp.

Grigaitis said in some bars, his products make up 40-50% of their sales. 

But that all may come to a halt after Gov. Mike Parson signed an executive order on Aug. 1 banning intoxicating hemp products and threatening penalties to any establishment with a Missouri liquor license or that sells food products for selling them. It also bans companies like Mighty Kind from producing hemp-derived THC beverages in Missouri.

The order takes effect Sept. 1. Details of how it will be enforced will be outlined in the emergency rules that are still being written.

The hemp industry is calling the action an “overreach,” but Parson said at a press conference earlier this month that the main target of his order is companies that produce intoxicating hemp edibles that could be mistaken by children as candy.

Standing alongside Attorney General Andrew Bailey and other officials in his administration at his Capitol press conference, Parson displayed a Lifesavers package that contained THC gummies.

“These companies and these people that are profiting off of this type of material to give it to our children need to stop,” Parson said. “And no excuses. If they want to do it, do it the right way… like everybody else has to do.”

The “everyone else” Parson was referring to was the dispensaries licensed to sell adult-use recreational marijuana. Because hemp isn’t a controlled substance like marijuana, there are currently no federal or state standards to regulate intoxicating hemp-derived compounds, he said.

Parson did not address the fact that about 9,000 retailers statewide are currently selling hemp-derived beverages and edibles, a number that the Missouri Department of Health and Senior Services estimated in a fiscal analysis in April.

“That’s a big hit to just make an executive order without any kind of voting or legislation,” Grigaitis said. 

Steven Busch, owner of Krey Distributing, said everyone in the hemp industry agrees that those bad actors that Parson mentioned should be taken off the shelves. 

But the governor failing to address the impact it would have on thousands of bars, liquor stores and grocery stores was “disingenuous” and “bordering unethical,” said Busch, whose company distributes 11 different hemp beverages in eastern Missouri. 

“This executive order singled out any retailers that have a liquor license and said that they cannot sell the products,” Busch said. “So that’s pretty much all of my customers that are currently selling.”

Since March, Busch has led an effort to establish regulations for beverages and edibles by working with various lawmakers to write legislation. It’s set to be filed in December. 

For the last two years, the marijuana-industry — which has been a major political donor to both Parson and Bailey — has led an unsuccessful effort to convince the legislature to ban hemp-derived THC products outright. 

Grigaitis says he doesn’t believe the order will have the impact the governor is hoping for. 

Under federal law, the governor cannot punish people for consuming the products, and Parson was careful to make that point during his press conference. The order only punishes retailers regulated by the state to sell alcohol or food.

Licensed cannabis dispensaries can’t sell these products either because the hemp used to make them has to be grown in Missouri and processed in licensed cultivation and manufacturing facilities – just as marijuana is. Nearly all of these products currently on the market are made from hemp grown in other states. 

The order does, however, allow for Missourians to buy these products online from out-of-state companies.

“This is literally forcing everything out of the hands of the people that we have determined or given the licenses,” Grigaitis said. “Why would we take it out of that and put it into the dark? There’s no sense there.”

The response

There will be a response from the hemp industry on various fronts, Busch said. Immediately, he said he will begin circulating the proposed legislation in the hopes of gaining support from lawmakers.  

Chuck Hatfield, a longtime Jefferson City attorney who has represented cannabis companies, said it’s “very unusual” for the governor to issue an executive order to do what lawmakers have declined to do for the past two years. 

“There will be lawsuits over this, no doubt about it,” Hatfield said, “because it’s an aggressive regulatory strategy and it’s a little bit unprecedented. There are plenty of lawyers out there who are going to advise the industry that they have legitimate legal arguments to make.”

Hatfield believes the matter will be solved in the courts. But any legal action will have to wait until the emergency rules are released, Hatfield said, which will show the true impact of the law. 

The emergency rules will be available before the Sept. 1 effective date, said Mike O’Connell, spokesman for the Missouri Division of Alcohol and Tobacco Control – the agency tasked with drafting the rules.

“Anything before we see those rules is kind of guessing,” Hatfield said. 

While it is shocking, Grigaitis said he’s not overly concerned about the order. 

“I’m pretty good at thriving in chaos,” he said. “The very weekend that we launched our first CBD seltzer into the world was the same weekend that the shutdown happened and the whole world stopped.” 

Several of his products contain only CBD, which is a non-psychoactive compound of the cannabis plant and isn’t banned under the order. So the order doesn’t wipe out all of his “alcohol alternative” products completely, he said. 

But moreso, he believes Missouri’s industry will garner national support because other states don’t want their governors to take similar actions. 

“Everyone in the industry thinks it’s going to be stopped,” he said. “The rest of the country does not want to see this precedent set, where it could then snowball.”

Is it safe?

DHSS director Paula Nicholson warned families about the fact that these hemp products on the shelves are not regulated by any state or federal authority during the Aug. 1 press conference. So there’s no way to ensure they’re safe, she said.

“We have seen the negative impacts first hand,” she said. “Disturbingly, children in Missouri and across the nation have been hospitalized after ingesting these substances. This is unacceptable.”

Julie Weber, director of the Missouri Poison Center at SSM Health Cardinal Glennon Children’s Hospital, told The Independent last year that more poison cases had been reported for edibles containing marijuana than the hemp-derived compounds, such as Delta-8. 

In 2022, there were 25 cases for Delta-8 edibles for all ages, she said, compared to 125 cases for regulated marijuana edibles for only children 5 years old and under. 

However, in a legislative committee in January, Weber testified that the center’s concern for Delta-8 products was increasing.

“It’s the packaging as well that’s a big concern,” Weber said at the time. “It’s attractive, has bright colors, mimics foods and candy. It also has cartoon figures on there.” 

Products that mimic trademarked products meant for children are highly condemned by the hemp industry, said Justin Journay, CEO of Indianapolis-based 3CHI, which sells products in Missouri. 

“Everybody hates those guys,” Journay said. “Nobody wants to see those guys in business because we get mixed up with them as if we’re the same.”

Busch, who’s company has been a major distributor for Anheuser Busch and other beer brands for decades, said he thoroughly vets the products he distributes – ensuring that they all have gone through third-party testing similar to marijuana products. 

And his customers – more than 200 liquor stores, bars and restaurants – treat these products just like alcohol, incentivizing their employees to “age gate,” he said, to prevent underage consumption. 

Brian Dix started his own distribution company, Craft Republic, in 2017 that specializes in craft beers and is based in St. Louis. He made the leap to start his own business after spending over 20 years in the beer industry. 

One of his fast-growing products is Mighty Kind beverages – and it’s been a big reason why he’s been able to grow his business, he said. 

The governor’s order was shocking, he said

“It’s an immediate stop to a significant revenue stream for our business,” Dix said. “More and more people are bringing this category on. So yes, it’s a significant impact that’s got me scrambling trying to figure out what to do.”

Like Busch, Dix ensures that testing is not only done but that results are easily accessible to consumers for the products he distributes. 

And like his colleagues, Dix has advocated for better regulations in this space. 

“The governor’s office took a very aggressive stance on this,” he said. “And I understand let’s keep the kids safe, but is that really what he’s doing here? Let’s get regulations in place. Let’s get whatever testing requirements. Let’s enable the state to receive taxation and licensing fees and regulate it like alcohol.”

John Payne, managing partner at Amendment 2 Consultants, discusses legislation at an industry summit in downtown St. Louis on March 28 with Amy Moore (middle), director of the Division of Cannabis Regulation, and Mitch Meyers, partner at BeLeaf Medical (Rebecca Rivas/Missouri Independent).

When John Payne was leading the campaign to legalize recreational cannabis in 2022, he faced a major hurdle.

Black business owners were largely excluded from the medical marijuana program when licenses to grow and sell cannabis were doled out by the state in 2019, and many feared history was about to repeat itself. 

So to soothe the concerns and win over skeptics, Payne partnered with Black community leaders to come up with what they hoped was a solution — a social equity program, known as “microbusiness licenses,” that would diversify the industry and ensure communities most impacted by the War on Drugs were not once again left out of the burgeoning industry.

“We do know from data that the people who have been harmed by marijuana prohibition directly, Black Americans are overrepresented,” Payne, who is white, told The Independent last year.

Because marijuana prohibition did the most harm on the Black community — Black Missourians are 2.6 times more likely to be arrested for marijuana possession than white Missourians — “that should carry over into a disproportionate good impact of the microbusiness licenses,” Payne said.

But documents uncovered by The Independent show that in some cases, Payne and his business partners were the ones aiming to benefit most from the social-equity program.

Payne’s name is connected to more than 300 social-equity applications submitted earlier this year for the second round of microbusiness licenses, winning six of the 24 dispensary licenses selected through a lottery in June and officially issued on Wednesday. 

For some of the applications, Payne recruited eligible Missourians and had them sign a 47-page contract that would ultimately give him and his partners 90.1% of profits and majority control of the business. 

Despite only owning a fraction of the business, under state law the applicants would bear the lion’s share of the regulatory scrutiny. If they ever want to walk away from the deal, they would be required to pay a nearly $1 million fee. 

Missouri revokes nine social-equity cannabis business licenses for out-of-state companies

In an interview with The Independent, Payne defended the contract, saying the arrangement was designed for people who wanted to get into the industry but didn’t want to put in their own money. 

Payne insists the six successful applications he’s involved with this year didn’t use the contract. However, one license connected to Payne that was approved last year involved a nearly identical contract, which The Independent obtained through a public records request.

Four legal experts who reviewed the contract from this year for The Independent concluded it was unfair and potentially predatory. All four agreed state cannabis regulators should reject any license application connected to the contract because it violates the constitutional mandate requiring licenses to be “majority owned and operated” by the eligible applicant. 

“If you don’t have the staying power and legal assistance, you’re going to get screwed,” said Michael Goldberg, managing partner of the Chicago-based firm Goldberg Law Group, about the 47-page contract. 

Nimrod Chapel — an attorney, president of the Missouri NAACP and an outspoken critic of the 2022 legalization amendment — believes the contract meets the state’s definition of “predatory practices.”

“I find it incredibly disappointing that this section of licensees is getting monopolized by John Payne,” Chapel said, “the very person who was in the middle of the campaign for cannabis legalization and used this as a way to gain minority buy-in.” 

Joseph von Kaenel, a St. Louis corporate governance attorney, likened the arrangement to companies “abusing” public contracting dollars meant to empower minority businesses by “finding a woman or minority to front the business.” 

The contract states several times that, “the applicant understands that this agreement is not predatory.”

“It doesn’t mean it’s true,” said Michael Wolff, a former chief justice of the Missouri Supreme Court and dean emeritus of the St. Louis University Law School.

But the harshest criticism came from Adolphus Pruitt, president of the St. Louis NAACP who served on the committee that helped write the 2022 legalization amendment. Pruitt said he brought the idea for the social-equity licenses to Payne and spent months working alongside him publicly defending the proposal during the 2022 campaign.

“I’m insulted,” Pruitt said. “This is indentured servitude. That’s what this is.”

There are seven categories where people can qualify for a microbusiness license, ranging from a lower income level or living in an area considered impoverished to having past arrests or incarcerations related to marijuana offenses.

“When you look at the categories and the qualifications, there’s no doubt that overwhelmingly the qualifications are geared up for people who were impacted by the unjust enforcement of marijuana laws,” Pruitt said. “No one would dispute that that population, in most cases, are African Americans.” 

Payne told The Independent his critics have it all wrong. 

The contract The Independent obtained was used in a “relatively small number” of the more than 300 microbusiness applications that his company worked on.

“The applicants in these cases were typically personal contacts of our team members with whom we could envision a mutually beneficial long-term partnership,” Payne said. 

Payne founded the cannabis consultancy group Amendment 2 Consultants and is a leader in the Missouri Cannabis Trade Association, also known as MoCann Trade. He said the trade association’s law firm — Armstrong Teasdale — wrote the contract. 

Even though the firm’s name appears in the contract, Armstrong Teasdale adamantly denies preparing or providing it to Payne. 

“The firm had nothing to do with that agreement,” said Jay Wager, Armstrong Teasdale’s acting chief business development director, adding that Payne is not the firm’s client.

When asked if Payne repurposed an agreement written by Armstrong Teasdale without the firm’s permission, Wager said the firm is “too busy” helping their clients to read the agreement to see if the language was theirs.

Payne did not respond to questions about Armstrong Teasdale’s comments. 

In response to The Independent’s questions, the Division of Cannabis Regulation said it has opened an investigation into three microbusiness licenses awarded last October and connected to Payne in order to verify that the licenses “continue to be majority owned and operated by eligible individuals,” spokeswoman Lisa Cox said.

The Independent obtained the notices of investigation the division sent Tuesday evening to Payne, who is the designated contact for the licenses, giving him seven days to provide documents regulators need to verify ownership. 

The agreement

Garrett Farley said he was approached by Payne this spring to apply for a social-equity dispensary license. 

Payne said he would take care of the $1,500 application fee and do all the work to get the dispensary running — and Farley could sit back and get a paycheck when profits rolled in every quarter. 

“The way he made it seem,” Farley, who is white, told The Independent, “there was like no catch.”

Farley is a cannabis union organizer — something Payne didn’t know at the time. He said he was curious about the social-equity process, but the way Payne described the deal raised red flags for him. When Payne shared the 47-page agreement, it confirmed Farley’s suspicions. 

The moment Farley won a license, his contract states, he’d have to pay nearly $1 million as a “break-up fee” to walk away— even though the only investment the consultant had put in at that point was the $1,500 application fee. 

He’d have to immediately set up an LLC, where he would give up almost all control of the business. So if he ever wanted to sell the license he wouldn’t have the voting power to make that choice.

Instead, he’d only get 9.9% of the profits if the license was ever sold. 

He’d later have to transfer ownership to the person who would eventually loan the company $1 million in startup costs.

If he failed to do any of these steps, he’d be in breach of contract. 

After reviewing the contract, the St. Louis NAACP’s Pruitt compared it to “the slave owner giving me some land to work on. It’s their company, they put up the capital, they’re preparing the applications, they’re paying the fees, they’re managing the business. And if at any time me as the slave fails to do something, I owe them.”

Payne vehemently disagreed with that assessment.

“I see it as a partnership,” Payne told The Independent. “That is an agreement for the long term.”

Payne confirmed that he never told Farley about the break-up fee when they talked about the deal, but he said that was because Armstrong Teasdale had not finished drafting the agreement. 

“I did not actually write the agreement, and did not yet have it at that point,” Payne said. “I will say that if I had known that exact figure was in there, yeah, I would have explained that. But there does have to be some provision on what happens if a contract is voided.”

Von Kaenel, the St. Louis corporate governance attorney, said the amount of the breakup fee is significant. 

He said the amount is “so far in excess of any damages” that are likely to occur that it “could be considered a punitive provision calculated to limit applicant’s business options.” 

While Farley would be entitled to 9.9% of the company’s profits, the LLC must pay Payne a $10,000 monthly consulting fee before the applicant receives any revenue. 

“Frankly, that’s a decent deal for helping to essentially manage a lot of the administrative functions of a dispensary,” Payne said. “It is not as if the applicant is on the hook, that it is the business that is on the hook for that.”

Unconstitutional?

All four of the legal experts who analyzed the agreement said it does not meet the constitutional mandate that the business is to be “majority owned and operated” by the eligible applicant. 

If Farley won the license, he must set up an LLC and ask the state to approve a name change of the license. After that happens, a board with three managers would be established to make all the top-level decisions about the company.

In Farley’s case, the board would have included one of Payne’s business partners, who Payne said would also be eligible for a microbusiness license because he has a marijuana charge on his record. 

The other board manager is fronting the money, Payne said, and is eligible because she lives in a qualifying ZIP code.

Von Kaenel called the board structure the agreement’s “fatal blow,” because it gives Farley only a third of the voting power and a sliver of the company’s equity.  

“We pay the application fee, we are going to pay for everything to get up and running,” Payne told Farley in a meeting together. “And we’re going to basically put in the work to do that. And in exchange, we would take 90% of the equity, you will keep 10% of the equity.”

Goldberg, the Chicago attorney, said the profit distribution and company control are what the state regulators should be looking at.

“This contract should not get past the state,” he said. “Social-equity applicants are supposed to have control. They’re not supposed to have 10% or one third of the voting power. That’s the whole thing.”

Missouri cannabis law says a person or group cannot have significant voting or financial interest in more than one microbusiness license — or the state can revoke the license. 

The contract is between Farley and a consultant group called Comonca LLC, with whom Payne is the registered agent in documents filed with the Missouri Secretary of State’s Office. 

“The minute Mr. Applicant signs that agreement with the consultant, the consultant already has an interest in the business,” said Wolff, the former state Supreme Court judge.  

That’s largely because if the applicant changes his mind and wants to get out of the deal, he owes them $995,750 in liquidated damages, or their expected value of the license, Wolff said.

And if the agreements are the same for all six dispensary licenses connected to Payne in this round, then Payne and his associates indeed have a financial interest in all of these licenses, Wolff said.

Payne told The Independent that none of the applicants with an agreement like Farley’s won a license. He could not elaborate about how many of his applications included agreements that were similar to Farley because either he wasn’t involved in that aspect for all of his clients or he signed a nondisclosure agreement.

Contracts of winning applicants will soon be publicly available now that the latest round of licenses have been issued, and the state has officially begun its post-licensure review. 

Payne said he believes the agreement will win the division’s approval.

“It is going to be something that is compliant with what the department requires because I trust the standard of Armstrong’s work,” Payne said. 

Up for interpretation

These are not the first licenses Payne has orchestrated — and caused a stir. 

The first round of 48 microbusiness licenses – 16 of which were dispensary licenses – were selected through a lottery last August. Payne’s clients won two dispensary licenses and two wholesale licenses.

One dispensary license was under investigation by the Division of Cannabis Regulators for several months, after the division issued a letter in December stating that the application was “misleading.”

In its letter to Payne, the state said the licensee “entered an agreement that transfers ownership and operational control to another entity. This is cause for revocation… in violation of” the regulations requiring all owners to be disclosed in the application. 

The nature of the agreement also did not allow the state to “verify the microbusiness license will be majority owned and operated by individuals who meet qualifications,” state regulators said in the letter. 

The Independent obtained a copy of a redacted contract through a public records request, and the available language is almost identical to the contract offered to Farley.

As with Farley’s contract, last year’s contract states that, “​​Armstrong Teasdale LLP has no conflict of interest in drafting this agreement.” But Wager said the firm could not comment on whether it wrote the contract for this licensee.

Payne was able to submit new documents that satisfied these concerns, according to a March 21 letter from the division. The state allowed the applicant to retain the license, but this week opened a new investigation into the ownership structure – along with the two wholesale licenses where Payne is the designated contact. 

Cox, the spokeswoman for the Division of Cannabis Regulation, confirmed the investigation focused on the ownership of the license holder but could not offer additional details about the inquiry. 

Ownership issues led to the state revoking eight microbusiness licenses in the first round last year, she said.

“We will continue to exercise our authority at each stage of this process to ensure the microbusiness program is benefiting the individuals for whom it was so evidently designed,” Cox said.

The state recently approved this licensee’s request to change the name of the license to “Green Zebra LLC,” Cox confirmed. According to the contract, the next step would be to establish a three-member board, leaving the original applicant with one-third of the voting power. 

Given the timeline, it’s possible the board structure sparked the state’s inquiry.

Payne did not respond to a request for comment on the state’s investigation, but he previously told The Independent all board members would meet the program’s eligibility requirements.

As for Farley, he never ended up signing the contract to jump into the lottery for a Missouri social-equity license, but said Payne submitted his name anyway. 

He didn’t get a license, but on July 3 received a letter from Payne’s group asking him if he would like to submit his name in the Minnesota social equity cannabis license lottery. 

In 2022, state lawmakers passed legislation allowing no-excuse absentee voting during the two weeks prior to each election. For the Aug. 6 primary, that means up until the Monday before the election (Rebecca Rivas/Missouri Independent).

For the next two weeks, Missouri voters can cast an absentee ballot in person at designated locations — and they no longer need an excuse to do it. 

In 2022, state lawmakers passed legislation allowing no-excuse absentee voting during the two weeks prior to each election. For the Aug. 6 primary, that means up until the Monday before the election. 

With traditional absentee voting, residents must apply for a ballot that arrives in the mail. While residents don’t have to apply to vote no-excuse absentee, it’s only available in person and at a few locations. 

To vote no-excuse absentee, you first need to find the jurisdiction you’re registered in if you don’t already know, and you can do that on the secretary of state’s website. 

Then check with your local election authority to find the nearest no-excuse absentee polling location and the times and days they’re open. The secretary of state’s website can also help you find your election authority’s information.

” No Excuse” Absentee voting for the August Primary starts this Tuesday, July 23rd! For more info on where to vote, hours of operation and your ballot, please click on this link: https://t.co/3XQofPe9Ng or check out our pretty picture below pic.twitter.com/vTMATPlkJM

— STL City Board Of Election Commissioners (@stl_board) July 19, 2024

You’ll need to bring a current Missouri driver’s license, a Missouri non-driver’s license, a military photo identification or a passport. 

If you don’t have an acceptable ID, you can still cast a provisional ballot on Election Day, but not during early voting. 

Local election authorities should also have a sample ballot available on their website. 

No-excuse absentee voting looks just like regular voting. You’ll show your identification to a poll worker and then get either a paper or electronic ballot. 

If you vote electronically, you will receive a receipt. No matter what method you use to vote, you can pick up an “I Voted” sticker on your way out.

(Photo courtesy of Missouri Governor's office)

Gov. Mike Parson signed legislation Thursday to make preventing veteran suicide a top priority for the state agency that aids these residents, the Missouri Veterans Commission. 

The suicide rate among Missouri’s veterans is nearly double the state rate and one of the highest in the country.

After three years of trying, Republican state Rep. Dave Griffith of Jefferson City said he was grateful for the governor’s support, along with the unanimous approval of both the House and Senate this spring. 

“I’m hoping that through House Bill 1495 we’re going to be able to take a deeper dive into what some of the causes are and some of the best practices we can learn from other states,” Griffith told the Independent this week.

The bill mandates the commission research procedures, treatment options and any other assistance to reduce the veteran suicide rate.

“The legislation we are signing today continues our commitment to our nation’s heroes that Missouri will remain one of the best places for veterans and service members to live, work, and raise a family,” Parson said in a news release.

In separate budget bills, lawmakers approved $120,000 for the commission to hire one or more people dedicated to the mission. 

Griffith said he spoke with retired Col. Paul Kirchhoff, the commission’s executive director, about next steps this week.

“He said, ‘We’re ready,’” Griffith said of Kirchhoff. “‘As soon as the governor signs the bill, we’ve got applications already on file for people who want to apply for that particular job.’”

Up until now, Griffith said the commission has implemented “as much as they can” to address the issue, while juggling their main duties.

The commission has long had three core missions of managing the veterans’ nursing homes and cemeteries and providing service officers who help veterans with their benefits, Griffith said.

The bill would add a fourth. 

“They really couldn’t devote as much time as they can now,” he said, “so creating that fourth priority for them will allow them to do that. It’s a good day for all veterans in Missouri.”

According to the legislation, the commission must file a report every year on July 1 with the Department of Public Safety and the General Assembly on the recommendations and implementation of its efforts. 

In 2021, Parson established an interagency team to collaborate on suicide prevention, so Griffith said he expected to receive the governor’s full support on the measure.

Kirchhoff told the House Veterans Commission in January that he embraces the new task, particularly because he’s lost several close military friends to suicide.

“This is near and dear to my heart,” Kirchhoff said. “We’re losing veterans every day to this. And whatever we can do to curb that, we’re all in.”

Many people can guess, he said, the reason Missouri has a higher rate than the national average. 

“But I’d like to know through facts,” he said. “And without having an emphasis on this, we just won’t know.”

(Rebecca Rivas/Missouri Independent)

Delta Extraction, the Robertsville-based marijuana manufacturer at the center of Missouri’s massive product recall last year, is being sued for nearly $20 million in unpaid invoices and loss of revenue by a former contractor.

SND Equipment Leasing is a Missouri company that created the THC concentrate oil that led to regulators’ decision to pull more than 60,000 marijuana products off the shelves in August and revoke Delta Extraction’s manufacturing license in December.

SND claims Delta Extraction owes the company more than $13 million for producing about 1,100 liters of THC concentrate oil, or distillate, and other products, according to the company’s lawsuit filed in Franklin County last month.  

A liter of 80% concentrated THC can make more than 70,000 individual gummies at 10mg THC a piece, industry experts say. That’s almost 80 million doses — or twice that amount if they’re 5mg THC gummies.

The company is also asking for $5 million in loss of revenue, after the state confiscated its extraction equipment that was inside Delta Extraction’s facility for five months. 

SND’s attorney Joy Primoli told The Independent Tuesday that Delta Extraction contracted SND to do a job, and it was Delta’s responsibility as the licensee to make sure the work was in compliance with marijuana regulations. SND had no authority to communicate directly with regulators, she said. 

Three-day hearing reveals behind-the-scenes details of Missouri marijuana recall

Primoli likened the situation to a homeowner contracting a business to paint the house green, and then the homeowners’ association saying the color doesn’t meet regulations. The contractor should still get paid for the work, she said.

“It doesn’t matter what the state says or if it was within compliance or not,” Primoli said, “they still contracted with SND to produce a product.” 

In March, Delta Extraction argued against the recall and its license revocation before the Administrative Hearing Commission. A decision in the appeal is still pending.

Hundreds of documents were filed in this case, including eight-hours of testimony by SND owner Jason Sparks, who primarily works in Oklahoma’s cannabis market.

However, the lawsuit is the first glimpse at the estimated damages Sparks’ company incurred over his business agreement with Delta Extraction.  

A spokesperson for Delta declined comment as the company awaits a decision on its appeal by the Administrative Hearing Commission. 

When Sparks first began working with Delta in early 2022, he was making the distillate only for the marijuana brand Conte, a Oklahoma-based company. 

Sparks’ wife, Tania Conte, owns Conte. As an out-of-state company, Conte can only make its products at a Missouri licensed manufacturing facility that can legally obtain marijuana. 

But in the spring of 2023, the supply for marijuana distillate was low across the state and Delta contracted with Sparks to make large amounts of distillate that Delta sold to about 100 other Missouri manufacturers. Those manufacturers went on to produce gummies and vapes for their brands, which is why the product recall was so widespread.

Despite Delta calling it the “Conte distillate,” Conte wasn’t involved in that business deal or receiving profits from it, the lawsuit states. 

At issue is what’s in the distillate. 

Sparks extracted a small amount of THC from Missouri-grown marijuana, which the state heavily regulates. Then he added a large amount THC oil that was extracted from hemp, a product that is completely unregulated.

It’s much less expensive to make distillate from hemp than Missouri-grown marijuana, but Delta’s consumers still paid marijuana prices.

The state argues that any kind of THC must be regulated by the Division of Cannabis Regulation, so any products made from Delta’s distillate were pulled off the shelves because they posed a health risk. Still today, 45,000 products are pending the commission’s decision in Delta’s appeal. 

But Delta argues hemp is not a federally controlled substance and the state has no authority to regulate hemp-derived THC products.

Even further, testimony and evidence revealed during the March appeal hearing showed for the first time that the state was aware of the process SND and Delta were using long before the recall was issued.

The state said Sparks’ testimony validated its concerns of health and safety because he couldn’t recall where he bought the hemp-derived THC oil that he used to make his early distillates in 2022. 

However, the distillate that led to the recall was actually made from a different hemp product that Delta and SND began using in May 2023, according to testimony and exhibits in the case. And certified lab results are available for those ingredients, Primoli said. 

“…the distillate was tested by Missouri licensed laboratories, as required, at all steps in the distillate creation process,” according to a statement from SND’s attorneys. “To date, there have been zero complaints of health or safety concerns with any products.”

The primary in August, where Crystal Quade and Mike Hamra will appear on the ballot, will be the first significant Democratic nomination contest for governor since 2004 (photos submitted).

When Crystal Quade and Mike Hamra traveled to the Democratic Governors Association Conference in Minneapolis last month, they came with their stump speeches ready. 

Yet before they could push their own platforms as gubernatorial candidates, they had to convince people that a Democrat from Missouri was worth paying attention to. 

“Folks are excited about Missouri being back on the map,” said Quade, a Springfield Democrat and state House minority leader, about the conference attendees. “As we all know, we used to be considered quite a swing state, but in the last couple cycles, Missouri has definitely gone more to the right in the election results.”

Missouri hasn’t elected a Democrat statewide since 2018, and the 2020 race for governor saw Republican Mike Parson cruise to victory by 17 percentage points. 

The game changer this year, both Hamra and Quade agreed, could be a ballot measure to enshrine abortion rights in Missouri’s constitution that will likely come before voters in November. Since June 2022, nearly every abortion has been illegal in the state with the exception of medical emergencies. 

For evidence, Hamra pointed to the bordering deep-red states of Kentucky and Kansas. 

“Both have had challenging races, but they ended up with Democratic governors,” said Hamra, president and CEO of Hamra Enterprises and another Springfield Democrat. “This could be one of the years that we flip the state to blue… and people outside the state also see it.”

The primary in August will be the first significant Democratic nomination contest for governor since 2004, when then-State Auditor Claire McCaskill defeated incumbent Gov. Bob Holden. 

On the Republican side, three candidates are running full-scale campaigns for the GOP nomination – Lt. Gov. Mike Kehoe, Secretary of State Jay Ashcroft and state Sen. Bill Eigel.

Incumbent Republican Gov. Mike Parson is barred from running for another term.

Quade entered the race last July and Hamra followed in October. While not much separates the candidates in terms of where they stand on issues, there’s a glaring difference in their political experience.

Quade has been the House minority leader for the past five years, and she started climbing the political ladder right out of college by working in McCaskill’s office as a legislative aide. With eight years as state representative under her belt, she’s not eligible to run for another term in the House.

Hamra has never held an elected office. He’s worked for his family’s business since 2001, after leaving his law practice, and became president and CEO in 2011. The business that started with a single Wendy’s Hamburgers restaurant in the 1970s now has 200 restaurants – Wendy’s, Panera and Noodles & Company franchises – in five states. 

His family consistently donated to Democratic candidates.

The primary will be Aug. 6. 

Crystal Quade

Quade grew up off a gravel road in Fordland, a small town in Southwest Missouri with only a Dollar General and gas station at the time. If her family wanted to go to a grocery store, she said they had to drive an hour west to Springfield. 

“That’s important to this discussion because the way folks grow up and their way of life absolutely influences their political perspectives,” Quade said, the area that leans heavily Republican.

Quade is the only Democrat in her family, she said, where her mother was a waitress and her father worked in a factory. 

“I’m actually the first in my family to graduate high school,” she said. “We didn’t get the paper and talk about politics at all. It wasn’t until I was studying to become a social worker at Missouri State University that I realized how much government impacted the day-to-day lives of people.”

A story she tells often on the campaign trail is going to Jefferson City as a college student for an internship. 

“I was very frustrated with a lack of understanding of what regular working class folks go through,” she said. “It was then that I decided that I wanted to get involved, and I wanted to run for office one day.”

Her upbringing, along with her many years of experience, have allowed her to have conversations in all corners of the state about the impacts of political “extremism” in Missouri. 

For the past two years in the legislature, passing significant legislation has become vastly more difficult, due in large part to Republican factionalism in the state Senate. A filibuster nearly derailed the only must-pass legislation – a state budget.

“When I’m having discussions with people — because of where I’m from and where my family leans politically, it allows me to break through the partisan noise that we often see in the media,” she said. 

Quade touts a “proven track record” as the Democratic leader in the House advocating for issues that matter to Missourians, including raising the minimum wage, expanding accessibility to health care and fighting for abortion rights. 

“I was there when the abortion ban was passed and stood on the House floor and shared my own personal story of abuse,” she said, “and so many stories and other women have shared and how these bills deeply impact our ability to plan our lives.”

Mike Hamra

Hamra said he grew up in a family that was deeply engaged in the political system, though not elected leaders themselves.

“It’s always been a priority to understand the value and the importance of the role of government and what our politicians do,” he said. 

After graduating from the University of Missouri-Columbia School of Law in 1994, he spent eight years in Washington, D.C., where served as an attorney with the U.S. Commerce Department and Federal Communication Commission.

“Being a public servant has very always been a priority for our family,” he said. “Growing a business is something that we’ve done, but it’s been inside of supporting people and making a difference in people’s lives.”     

Hamra has donated to campaigns for the party’s highest profile races – he gave money to Democratic nominees for governor in 2016 and 2020, and to Trudy Bush Valentine’s campaign for Senate in 2022 – but he has not contributed significantly to down-ballot races. 

In the past 10 years, Hamra donated once to a legislative candidate, giving $1,000 to a Springfield Democrat who lost a House race in 2016.

Hamra’s company employs 7,400 people nationwide, with 2,000 of those living in Missouri. Even before getting into the “political fray,” he said he supported raising the minimum wage because he’s seen how it’s impacted his employees in other states where he does business. 

“The truth of the matter is,” he said, “when our employees are making more money to support themselves, it also helps them support their families.”

As governor, he said he would fight to not only protect access to abortion, but also in vitro fertilization (IVF) and birth control — something his “far-right opponents” are fighting to ban as well. 

“This is personal for me,” he said in a fundraising email. “Thanks to IVF, Eileen and I were blessed to have our fourth child six years ago. Politicians in Jefferson City have no right to dictate how we choose to build our families or the health decisions women make about their own bodies.”

Hamra couldn’t point to a moment or person that pushed him to get into the race – it was just a general frustration with the current leadership, he said.  

“I could not continue to sit and watch the dysfunction that was happening in Jefferson City,” he said. “I couldn’t tolerate it, and I knew that there needed to be… an outsider who’s not part of that system to get in there and start to affect change.”

Iron County Circuit Clerk Sammye White balances on a stepladder as she searches for an old marijuana case in the office storage room in Ironton (Rebecca Rivas/Missouri Independent).

IRONTON — Sammye White balanced carefully on a stepladder as she pulled a hefty box marked “1993” off the top shelf.

White, the elected circuit clerk for Iron County in southeast Missouri, was searching for an old marijuana case. 

The small storage room near her office is packed with faded ledgers indexing criminal cases by year, along with the cardboard boxes containing the case files. 

When White learned in November 2022 that her team had one year to review every marijuana case in the county — going back to at least the 1970s — to determine it needed to be expunged under a new state cannabis law, she slightly panicked. 

Aside from the work, her only two clerks were both about to retire. 

“I thought, ‘How in the world are we going to accomplish this?’” White remembers.

Thankfully one of the clerks, Denise Anderson, agreed “out of the goodness of her heart,” White said, to continue on part-time to help get through the list of potential eligible cases. 

Money isn’t enough to speed up Missouri’s marijuana expungements

It’s a tedious process, she said, that took Anderson more than a year to review about 500 cases, leading to about 100 expungements.

Circuit clerks across the state are going through the same balancing act and hurricane of work as White. 

Under the 2022 constitution amendment that legalized marijuana, courts were required to complete misdemeanors by last June and felonies by last December. Those deadlines came and went, and many counties are still months or more away from completing the task. 

While clerks were given lists from the Office of State Administrator and Highway Patrol for digital records that might qualify, it was just a starting point. 

The real tedious work is still ahead for many of them — going through the paper records. For these records, court clerks have to read summaries for every single criminal record. There’s no way to run a report to search certain criminal codes.

Paper files largely end in the early 2000s, and the first marijuana-related drug statutes are from 1971, according to information the state administrator provided to court clerks. 

In Iron County, White is on the 1993 files. 

As courts statewide rushed to meet the constitutional deadlines, establishing a systematic method to track their work fell by the wayside for many of them. 

Now it’s hard to say how many cases have been reviewed — and impossible to say how many more are left to go, court officials said.

The Independent requested data for every county on how many cases they reviewed and how many were expunged. According to numbers compiled by the Missouri Supreme Court, about 123,000 marijuana cases have been expunged as of mid-May. 

That number is the easiest to count because expungement orders are approved by a judge and processed the same way statewide. 

The mystery is how many cases clerks have looked through. The Supreme Court estimates that about 273,000 cases have been reviewed, which would mean courts are expunging 45% of the cases they reviewed. 

But this estimate does not include the paper records. 

Aside from this, spokeswoman Beth Riggert for the Missouri Supreme Court said the clerks’ daily work continues with more than 1.38 million new case filings. 

“As the chief justice has said consistently, the front-line workers are the heroes of our courts,” Riggert said. “They deserve our ongoing gratitude for everything they do to serve their local communities.”

Counting the paper records

Like White, Nodaway County Circuit Clerk Elaine Wilson had no idea how her team of three clerks was going to complete all the marijuana expungements in general — but particularly in a rush. 

Wilson said she was fortunate that one of her clerks, Melissa Kohlleppel, volunteered to take on the project.  

“She just dived right in it,” Wilson said. “I didn’t have to ask. She just took it all on herself and just did it.”

For Wilson, each step of the process is important, she said, and she’d only trust an experienced clerk to do it. 

Kohlleppel said she’s gone through the three different lists of potential digital files, and now she’s looking through all the paper records. She hopes to be done by the end of the year.

“It’s been awful,” she said. “I just don’t think they realized what was going into this whenever they passed it,” referring to the tight deadline.

According to the state numbers, Nodaway County has expunged 100% of the 535 cases reviewed. 

But that’s not accurate, Kohlleppel said. She didn’t realize there’s a special code for the cases she reviewed but didn’t expunge.

After the constitutional amendment was approved by voters in November 2022, a state court committee quickly came up with a code for “reviewed but deemed ineligible” for clerks to input in the system. 

Problem is, some circuit courts didn’t know the code existed — and still don’t. The only way the Supreme Court can track how many cases have been reviewed is by running a report on this code. 

The code was a small piece in a mountain of information clerks had to quickly digest in webinars and onlines resources that court officials rushed to get out in December 2022. 

White kept a binder of all that information, and it’s at least 200 pages.

“It was an incredible undertaking for court staff to implement in a short amount of time,” Riggert said, “all while ensuring the ordinary business of the courts continued.”

And even with the code, that report won’t include the number of paper records courts have reviewed. Clerks must create a digital “shell case” to mark that a paper case is expunged, but state officials are not requiring this for cases that are reviewed but not expunged. 

Riggert said state officials appreciate how hard the courts are working on the expungements and did not want to give clerks additional “unnecessary duties.”

 “The number of cases expunged is likely to be only a fraction of the total cases reviewed,” Riggert said. “…we have no centralized mechanism for tracking the thousands of non-electronic cases our local courts are reviewing.”

The state clerk told lawmakers in January that she estimated about 10% of the cases the clerks review are eligible for expungement. 

Yet according to the data, the average is about 45%. 

In 26 out or 115 counties, nearly every record — 80% or more — that clerks reviewed resulted in an expungement, according to the state’s numbers. Only five counties were 15% or less.

'Many unknowns'

In St. Louis city, archived cases are stored in the old Globe Democrat building on Tucker Boulevard several blocks north of the court. 

“For the ones at the Globe, our staffers have been retrieving them by van, bringing them back to the courthouse where clerks go through them by hand,” said Joel Currier, spokesman for the 22nd Circuit Court. 

The court has relied on state “special assistance funding” to hire part-time clerks, many of them former retired court clerks with experience, to work on these expungements, he said. 

These funds come from the revenues of recreational marijuana sales. 

To expunge a case, court clerks write an order for a judge. After approval, clerks email all law enforcement agencies to instruct them to clear the case from their records. Then, they mail the person whose case was expunged. 

The most challenging ones are where it’s not the only charge in the case — clerks have to redact only the marijuana charge information from the records.

Christian County Circuit Clerk Barb Stillings has a leg up compared to other courts who are going through paper records. About 12 years ago, Stillings applied for special assistance funding from the state to digitize their paper files. 

On the plus side, it means her team doesn’t have to move around heavy boxes. Sadly, Stillings didn’t have enough money to make the records searchable by criminal charge. So her team still has to go through every single record to check for marijuana offenses. 

Her team printed the case indexes on 25,000 cases going back to the 1970s, and like St. Louis, she has a team of part-time workers looking through those summaries the special funds are paying for. 

When the funds became available in the fall of 2023, Christian County asked for one of the higher amounts, about $380,000, to pay for overtime and part time employees to work on the expungements. Stillings ended up only using $23,000 of that.

“Just because I’ve asked for all this money, do I have enough people to work on it?” Stillings told The Independent in February. “It’s so many unknowns.”

She understands why some other counties used very little of the funds or didn’t ask for any at all.

“Some counties didn’t have anybody who could come work part time, or staff that wanted to work overtime,” she said. 

Iron County requested $22,500 but spent less than $4,000. That number will definitely increase in the coming months, White said.

When Iron County made it through all the digital records this spring, White had a short-lived moment of relief. Recently, White found another substantial report of digital cases she didn’t know was available to her. 

“I almost feel like we’re starting over again,” she said. “But it is what it is, and we will work on it as hard as we can.”

Fifth-three percent of Missouri voters signed off on a constitutional amendment legalizing recreational marijuana on Nov. 8, 2022 (Carol Yepes/Getty Images).

Out of the $7 million Missouri lawmakers approved last year to help courts expunge decades of marijuana cases, state records show less than 10% of it was spent as of mid-May.

Across the state, nearly 123,000 marijuana cases have been expunged, according to numbers compiled by the Missouri Supreme Court. But court officials have said it’s impossible to estimate how many more expungements the courts have to go.

Missouri county courts had a tight one-year deadline to clear all eligible marijuana offenses from people’s criminal records — a mandate set forth in the 2022 constitutional amendment that legalized recreational cannabis.

In a push to meet it, court leaders urged legislators last year to approve $4.5 million for state courts to pay their employees overtime or to hire temp workers, along with an additional $2.5 million in a supplemental budget. 

Yet, court clerks statewide soon discovered that it’s not a process more money can speed up. 

Slow process of Missouri marijuana expungement drags on months after constitutional deadlines

That’s why Nodaway County Circuit Clerk Elaine Wilson says she never ended up asking for any funds.

“Nobody wants to work overtime because we all have families,” said Wilson, who has a team of five people. “And if you hire somebody off the street, you have to train them for what they’re looking for. And I just don’t want to take that chance of them missing something.”

Wilson is far from the only clerk who felt that way. 

“With something this important,” said Cass County Circuit Clerk Kim York, “I think we all feel better having experienced clerks working on it. That’s really the only way to know with 100% certainty.”

And it shows in the numbers. 

When the money became available last fall, about half of the state’s 115 counties applied for money from the Circuit Court Budget Committee, which oversees the special assistance program. The counties asked for $4.1 million for labor costs, along with $100,000 in postage.  

As of May 15, those 62 counties had spent a total of $658,728 on paychecks and $18,290 on postage.

About half of the counties that requested money spent less than $1,000 each. 

Crawford County spent the most on regular and overtime pay with about $91,000 — half the amount the county originally requested. Next was Jasper County with $63,000. 

Looking at expungement numbers statewide, more money didn’t necessarily mean more cases reviewed or expunged. However, several clerks said they found it difficult to track the number of cases reviewed, so the state numbers likely don’t reflect the accurate totals. 

Greene County Circuit Clerk Bryan Feemster estimates his team has reviewed more than 80,000 cases so far, though the state numbers show about 15,000. 

Greene County has a smaller team than some of the other larger counties, Feemster said, but he was able to hire retired clerks to come back and help with the task. 

That allowed the county to expunge the most cases in the state, with 5,800 — spending $57,500 to pay the part-time retired clerks as well as overtime for full-time employees.

St. Louis County is close behind with 5,055 expunged cases, spending about $9,000 on labor costs. 

During the 2022 campaign in support of the recreational marijuana ballot measure, supporters touted “automatic expungements” — meaning people who have already served their sentences for past charges don’t have to petition the court and go through a hearing to expunge those charges from their records. 

That means courts must locate these records on their own and make it as if past marijuana charges never existed. 

“Let me be the first to tell you there is nothing automatic about that,” said Betsy AuBuchon, clerk of the Missouri Supreme Court, during a House appropriations committee meeting in January. 

It’s a labor-intensive process, AuBuchon said, that requires someone with legal experience to look through court files. That’s why most courts are relying on existing staff or retired clerks, if they’re available. 

“It’s heavily frontloaded and probably not worth bringing in brand new full-time employees on the state dollar,” she said. “We really need people who know how to do that work. We are getting through those as quickly as we can.”

And that’s particularly the case with paper records, Feemster said, because it’s all manual.

“From 1989 back, we’re going through every single criminal record to find out whether there’s something in there that might qualify,” he said. “And it is, as you might imagine, very slow and tedious.”

By law, the special court funding for expungements must come from adult-use marijuana revenue, which includes sales tax and business fees. This revenue goes into the “Veterans, Health, and Community Reinvestment Fund,” and lawmakers appropriated the $4.2 million for the courts out of this fund. 

If it’s unspent by June 30 when the fiscal year ends, it will stay in the fund.

State lawmakers approved $3.7 million for the upcoming fiscal year that begins July 1. 

CBD Kratom employees in St. Louis voted in favor to unionize in the election held the first week of June. (Rebecca Rivas/Missouri Independent).

CBD Kratom employees have become the first Missouri workers in the industry to unionize, following a Friday election.

The election spanned across 17 stores in eastern Missouri and Illinois operated by the St. Louis-based CBD Kratom, which sells largely kratom and hemp-derived THC products. Employees voted 23 to 6 to unionize, with 75% of the eligible employees participating.

“I’m so excited and so proud of everyone,” said Taylor Moore, sales associate. “I’m encouraged to know that our voices as workers are and will be heard.”

Sales associate Nina Sykes said, “This opens the doors for CBD Kratom employees to be more successful in their role.”

The employees join more than 15,000 cannabis industry workers nationwide as members of the United Food and Commercial Workers International Union. Of the 17 locations that voted to organize, 14 are located in St. Louis and will be represented by UFCW Local 655. The remaining 3 in Illinois will be represented by UFCW Local 881.

The win was expected because the company signed a “neutrality agreement” with the union in April.

Union drive at St. Louis cannabis company could have major impact on national labor law

Following the vote, Chief Operating Officer Jason Brandi issued this statement: “CBD Kratom cares about its workers and respects their legal rights to organize a union in their workplace. We look forward to working with the UFCW to negotiate a union contract that meets the needs of our employees and our business.”

When the employees from two stores first filed the petition in December, CBD Kratom leaders responded by essentially saying that the process “doesn’t have to be so contentious, we can work together,” said Garrett Farley, an organizer for Union Local 655.

The agreement states the company will remain neutral as best it can, he said. It was even the company leaders’ idea to hold the election for 17 stores instead of just two. 

“So, that’s how it’s been,” Farley said. “None of my workers have been harassed. They haven’t been fired. They haven’t been saying things like, ‘Oh, the union is the worst thing.’ It’s been really nice.”

It’s been a stark difference from other companies, he said. In December,  Local 655 held a massive campaign to unionize cannabis workers across eastern Missouri, which is the area the local represents. A dozen organizers visited every one of the approximate 100 marijuana dispensaries — twice. 

A unionization attempt by “post-harvest workers” at BeLeaf Medical’s Sinse cultivation facility in St. Louis has been blocked by their employer’s continuous legal challenges this year.  In April, BeLeaf filed an appeal, asking the five-member National Labor Relations Board. If the company wins the case, it could have national ramifications on labor law.

CBD Kratom sales associate Ariel Nielson hasn’t seen any harassment related to the election at her location in St. Louis, but she’s heard of some tension at a few other stores. It’s more related to the personalities of some supervisors, she said, and not a united pushback from company leaders. 

For her, she hopes unionizing will improve everyday working conditions. The stores lack security, she said, and she can’t afford the health insurance. 

“They just told us, ‘Guys, we’re offering you pet insurance now,’ Nielson said. “Okay? But like, I can’t afford my insurance.”

Alex Taykowski-Schmitt, a sales associate, said she and her colleagues are treated like they’re “disposable,” and that’s why she wanted to unionize. Since the election was announced, she’s noticed that she’s been given a little more respect at work. 

She said her supervisors’ seem to understand employees are organizing, “whereas beforehand, the respect for me as a person was kind of like the bare minimum.”

The bill mandates the commission take a deep dive into procedures, treatment options and any other necessary assistance to reduce the veteran suicide rate (Anna Moneymaker/Getty Images)

State lawmakers tasked the Missouri Veterans Commission with a new mission. 

They’ve mandated the commission to make it a top priority to understand why the suicide rate among Missouri’s veterans is nearly double the state rate and one of the highest in the country.

After three years of trying, Republican state Rep. Dave Griffith of Jefferson City said he was grateful to finally get the bill passed earlier this month, receiving unanimous approval from both the House and Senate. 

It awaits the governor’s signature.

“We’ve accomplished a first step,” Griffith told The Independent, “and that is to try and get to the core of why veterans are committing suicide at such an alarming rate, especially in Missouri.” 

The bill mandates the commission take a deep dive into procedures, treatment options and any other necessary assistance to reduce the veteran suicide rate.

In separate budget bills, lawmakers approved $120,000 for the commission to hire one or more people dedicated to the mission. 

Retired Col. Paul Kirchhoff, the commission’s executive director, told the House Veterans Commission in January that he embraces the new task, particularly because he’s lost several close military friends to suicide.

“This is near and dear to my heart,” Kirchhoff said. “We’re losing veterans every day to this. And whatever we can do to curb that, we’re all in.”

The Missouri Veterans Commission has long had three core missions of managing the veterans’ homes, cemeteries and service officers who help veterans with their benefits, Kirchhoff said.

The bill would add a fourth. 

Many people can guess, he said, the reason Missouri has a higher rate than the national average. 

“But I’d like to know through facts,” he said. “And without having an emphasis on this, we just won’t know.”

According to the legislation, the commission must file a report every year on July 1 with the Department of Public Safety and the General Assembly on the recommendations and implementation of its efforts. 

In 2021, Gov. Mike Parson established an interagency team to collaborate on suicide prevention, so Griffith expects to receive the governor’s full support on the measure, he said. 

‘Magic mushroom’ stalled out

But Griffith didn’t see all of his legislative wish list make it over the finish line this session.

He strongly supported a bill to conduct a clinical study on using psilocybin, more commonly referred to  as “magic mushrooms,” to treat PTSD and depression among veterans. 

Last year, the House overwhelmingly approved the measure. But it never made it to a final House vote during the session that ended earlier this month.

“Many of our veterans experience high amounts of PTSD due to serving their country – due to protecting us,” Republican state Sen. Holly Thompson Rehder, who carried the Senate bill, said in January. “There should be no limits for them when it comes to access to mental health treatment, including non-pharmacological treatments.” 

The legislation would have required the Missouri Department of Health and Senior Services to provide grants totaling $2 million for the research, subject to lawmakers approving the appropriation. 

The state would collaborate on the study with a Missouri university hospital or medical center operated by the U.S. Department of Veterans Affairs in Missouri. The focus of the treatment is on patients suffering from post-traumatic stress disorder, depression, substance use disorders or for those who require end-of-life care. 

Psychiatry researchers at Washington University School of Medicine in St. Louis were the first in Missouri to give a legal dose of psilocybin in 2019. 

They have been using a brain-imaging technique to learn how psilocybin affects certain networks in the brain. Psilocybin helps people break harmful habits and ways of thinking, which applies to PTSD and psychosis as well, said researcher Joshua Siegel, an instructor of psychiatry at Washington University. 

All antidepressants make the brain’s emotion circuits more “plastic and adaptable,” he said, which makes them more open to change.

“Psilocybin just happens to do that very rapidly,” he said in January. 

Combined with preparation and help from therapists processing the experience afterwards, he said psilocybin successfully helps people choose new patterns of behavior and thinking.

“At this point, there’s a critical mass of studies of clinical trials that have shown positive responses,” Siegel said. “So I think that’s hard to deny.”

Griffith said the House Veterans Committee, which he chairs, has been closely following the research on how psilocybin can be “a useful tool” to deal with veterans’ PTSD and depression. But he’s not sure the rest of his colleagues in the General Assembly “get the full picture.” 

“I think when they hear ‘magic mushrooms,’ they think back to the 60s and 70s to what the hippies were taking to go on a trip,” he said. “They don’t fully realize how a lot of these medicines, under controlled circumstances, can be used to treat some serious mental health issues.”

Fifth-three percent of Missouri voters signed off on a constitutional amendment legalizing recreational marijuana on Nov. 8, 2022 (Carol Yepes/Getty Images).

Since recreational weed was legalized in 2022, it has led to more than $19 million going towards three causes — supporting veterans, expanding substance use treatment programs and adding to the Missouri Public Defenders System’s budget.

“It is so rewarding to see the impact of this voter-approved program on organizations that provide vital services to Missourians,” said Amy Moore, director of the Division of Cannabis Regulation, which is within the Missouri Department of Health and Senior Services.

The constitutional amendment Missouri voters approved in November 2022 to legalize recreational marijuana also established funds for the three causes.

Last fall, each of these three programs received $1.3 million. Then earlier this month, DHSS transferred an additional $5.1 million for each. 

The funds going to the Missouri Veterans Commission are specifically meant to pay for health care and other services for military veterans and their dependent families, according to the division. 

The public defender system’s funds will pay for legal assistance for low-income Missourians. 

And, DHSS will use its fund to operate a grant program to increase access to drug addiction treatment with an emphasis on reintegrating recipients into their local communities by supporting job placement, housing and counseling.

In January, Moore told state lawmakers that recreational cannabis sales had generated $58 million in revenue, which includes sales tax and annual fees marijuana businesses pay the state. 

So far, $8.2 million has gone to pay for the state’s operation costs of regulating the recreational marijuana industry — for things like salaries or professional services.

After operational costs, the next draw on the fund is expenses incurred by the court system for expunging certain marijuana offenses from people’s criminal records. 

After that, revenues are split between veterans, substance use treatment programs and public defenders.

“We look forward to watching this impact grow,” Moore said, “and are grateful to be a part of it.”

Flora Farms Stateline dispensary opened on Jan. 5 and is a third of a mile from the Arkansas border near Jane, Mo. (Photo by Rebecca Rivas/The Missouri Independent)

JANE — Nestled along a bubbling creek at the base of a rolling hill is the Flora Farms Stateline Dispensary — just a third of a mile from the Arkansas border. 

On a Sunday afternoon, cars in the drive-thru line wrap around the building and about 20 cars are parked out front. Inside, budtenders at 14 registers never stop moving to keep up with the rush. 

“This is actually not that busy,” said Valerie Mattingly, the store’s inventory manager. “We stay busy from the time we’re open till the time we’re closed.”

Since the store opened on Jan. 5, it’s already become one of the highest revenue-generating dispensaries in the state, said company president Mark Hendren. 

On the Missouri side, there’s not much near the dispensary. The closest city is Jane, Mo., a town of about 400 people less than a mile away. The closest major Missouri city is Joplin — an hour north. 

However, Arkansas offers a web of rapidly-growing cities within a 20 to 30 minute drive.

Across the Missouri border is the city of Bella Vista, Ark., a wealthy community with blue-green creeks, several golf courses and fishing lakes. A little further south down the road is Bentonville, the fifth fastest-growing city in the country and where Walmart is expanding its headquarters. 

Rogers, Fayetteville and Springdale are also nearby.

At a glance, the dispensary appears to be part of Jane. But Jane isn’t benefiting from the sales tax revenue of the marijuana gold rush because the dispensary is located in an unincorporated area — along with Walmart.

About a decade ago, Walmart’s attorneys were able to squash the town’s efforts to annex that area to allow them to benefit from the tax revenue. 

However, at a recent meeting, the village’s board of trustees discussed the possibility of revisiting the effort. 

“That would be huge for us,” said Trustee Vic Underwood.

Biggest dispensary ‘by far’

Just after Missouri voters approved medical marijuana in 2018, Hendren spoke with some friends in Oklahoma who had gotten involved in the marijuana industry there and urged him to submit applications. His team was awarded three cultivation and three dispensary licenses.

Hendren, an attorney and accountant, started out with five employees.

“This is a ground-up operation, started from scratch,” he said. “And now we have about 320 employees — half of that staff is at our farm and the other half that of that count is throughout our retail outlets across Missouri.”

Flora Farms now operates three cultivation licenses in Humansville, an hour north of Springfield, and the group is one of the biggest cultivators in the state. The group also has a manufacturing facility in Springfield. 

Aside from the Stateline location, Flora Farms has dispensaries in Humansville, Springfield, Ozark, Lee’s Summit, and soon a location in Hollister. 

Hendren said Stateline is his biggest dispensary “by far.” 

Flora Farms closed its Neosho dispensary to open Stateline. At the Neosho location, there were four registers and 15 employees. In comparison, Stateline has 14 registers and 50 employees. 

Mattingly got her start as a budtender three years ago at the Neosho dispensary, when she was 20. Since then, she’s quickly moved up to a keyholder, an assistant manager and now inventory manager. 

“I got lucky,” she said. “And then I clung on to it, and I’m never letting this go.”

Every month, the state reports how much marijuana revenue Missouri marijuana businesses bring in, and that’s how Hendren gauges how well Stateline is doing.

“We kind of know what our percentage of that is…and we know what our other dispensaries do,” Hendren said, “There’s only about 350 licenses, and most of those 350 licenses are probably owned by less than 40 groups. So it’s a pretty small community.” 

The community of Jane

On a Monday night last month, the Jane Board of Trustees arrived at their office, which is in the same lot as the town’s lumber yard. After they discussed Fourth of July celebration plans with a handful of firefighters, they moved on to “new business” — the new dispensary. 

Board Chair Dustin Allwood said the dispensary hasn’t negatively impacted the town at all, and they don’t mind it being there. 

“That stuff’s been around here since Jesus was of age,” Allwood said. “There’s more problems with alcohol than there is with that stuff. Arkansas is going to have more trouble with it than we are.”

The trustees agreed that 90% of the license plates they’ve seen in the parking lot are from Arkansas. 

The question they raised was: Can their community potentially benefit from a local sales tax on marijuana?
The trustees said the only way it would likely happen was if the dispensary owners agreed to be voluntarily annexed. 

Bill Martin, who the locals call “the Grandfather of Jane,” launched into the town’s history of annexation, which he called “excruciating.”

In 2006, the Village of Jane voted to expand southward within a mile of the Arkansas border. Martin said the plan was to go all the way to the border, but the residents of the unincorporated town Caverna did not approve it. 

When all those residents left, the town passed another ordinance in 2012 to annex the business district that included Walmart. By Missouri annexation law, Jane residents can vote to annex an area, especially since there are no residents now to vote otherwise.

But Walmart and other businesses challenged the ordinance and won. A Missouri judge ruled that the annexation was not “reasonable and necessary.”

“I was the person called up to defend Jane,” Martin said. “And I’m talking to those million-dollar-a-month lawyers, and I lost.” 

Hendren grew up in Gravette, Ark., just on the other side of the border. His father — former state sen. Kim Hendren – once owned the car dealership across the street from where his dispensary now sits for about 20 years. 

Hendren said local leaders have not yet approached him about voluntary annexation.

“We’d have to look at the whole proposal,” he said. “What would be involved and what services would they extend? So I really couldn’t give you an opinion either way without seeing it.”

Hendren said he’s seen the process in other municipalities, where the towns have faced challenges in being able to offer necessary services such as police and fire. 

“If you don’t offer to extend services, which is very expensive for them of course,” he said, “sometimes it becomes difficult.”

A Robust Cannabis employee showcases the company's Black Hole Sun strain at their warehouse in Cuba, Missouri (Rebecca Rivas/Missouri Independent).

A judge in St. Louis ruled Thursday that local municipalities can stack sales taxes on marijuana dispensaries, the first court ruling on a much-debated issue playing out around the state. 

The lawsuit was filed by Robust Missouri 3 LLC. The company saw its Florissant dispensary’s tax rate on cannabis products rise to 14.988% after both the city and St. Louis County approved 3% sales taxes on adult-use marijuana in April 2023.

The constitutional amendment that legalized recreational cannabis sales included a 6% statewide excise tax — but it also authorized “any local government” to charge a sales tax of up to 3%. 

At the heart of Robust’s lawsuit is whether the law intended for local governments to be able to impose a maximum of 3% sales combined, or if they can each impose a 3% sales tax. 

St. Louis County Circuit Judge Brian May ruled that both governments’ taxes are valid. 

In his Thursday order, May stated there is no court precedent on this issue, so he interpreted the intent of the law “as a whole and not in isolated parts.”

Pair of lawsuits challenge whether Missouri counties can ‘stack’ tax on marijuana sales

While the law allows for recreational marijuana to be legal, he stated it also intended for local governments to be able to “protect public health.” 

“If [Robust’s] interpretation were accepted, then a municipality or city would essentially be given carte blanche to ignore any county ordinance or regulation, including those related to public health and safety wholly unrelated to the taxing issue,” May wrote in the ruling. 

May pointed to the provision that allows the city to approve placing a dispensary within less than 1,000 feet of any then-existing school. 

“…and the county, and other cities in the Ferguson-Florissant School District, would have no say in that decision,” May wrote. “This absurd outcome would directly contradict the stated purpose of the [amendment].”

The ruling is a win for the Missouri Association of Counties, said Steve Hobbs, the association’s executive director. The association has strongly advocated that counties have the ability to do this, he said.

“The bulk of the counties around the state had gone to the voters and asked them to implement this tax,” Hobbs told The Independent on Friday. “And I think every one of them approved of it. I think [the ruling] removes some uncertainty from those counties.” 

On the other side, leaders of the marijuana industry have called the effort to collect both taxes an “unconstitutional money grab” that violates the terms of the amendment.

“We know from other states that when legal marijuana is taxed unnecessarily high, it only helps the illicit market,” said Andrew Mullins, executive director Missouri Cannabis Trade Association, in a statement to The Independent Friday, “which deprives Missouri veterans and substance abuse programs of needed revenue.” 

Robust Missouri has submitted an appeal on the circuit court’s decision. Another similar case is pending in Buchanan County.

St. Joseph dispensary Vertical Enterprises sued Buchanan County Collector Peggy Campbell, arguing that it, too, would be “irreparably harmed” if both taxes were imposed.

A hearing is scheduled in that case for May 16 in the Circuit Court of Buchanan County.

(Rebecca Rivas/Missouri Independent)

Two Missouri social-equity licensees connected to a Michigan company that used Craigslist to recruit applicants have appealed the state’s decision to revoke their dispensary licenses. 

The Michigan company, Canna Zoned, was behind two of the 16 microbusiness dispensary licenses issued by lottery in October — Frankenstein Enemy LLC in Columbia and Seashore Rhythm LLC in Arnold. Both licenses were revoked on March 27.

Their appeals will be argued before the Administrative Hearing Commission on Sept. 26. 

Missouri’s microbusiness license program is meant to boost opportunities in the industry for businesses in disadvantaged communities, and it was part of the constitutional amendment to legalize recreational marijuana that voters passed in 2022. 

The program is designed to provide a path to larger facility ownership for individuals who might not otherwise easily access that opportunity, such as having a net worth of less than $250,000 or veterans with a service-connected disability. 

The microbusiness license must always be majority owned and operated by individuals who meet these eligibility criteria. 

According to the revocation notices for the Canna Zoned-backed licensees, cannabis regulators were unable to verify the licenses would be owned and operated by eligible individuals. 

Canna Zoned’s owner, Jeffrey Yatooma, was listed as the “designated contact” for the two licenses, and the purported owners of the licenses told the state they did not know who Yatooma was, according to the notices. 

“While owning and operating a license may include contracting for management services or consulting services, the lack of knowledge, control, agency or decision-making demonstrated by the individual used to meet eligibility does not meet even the most liberal understanding of owning and operating a business,” the letter from Missouri regulators states.  

Applicants recruited on Craigslist competed for Missouri social equity cannabis licenses

Illinois resident Aric Rybacki is listed as the owner of Seashore Rhythm, and he told The Independent he had no comment in a phone conversation Monday. Curtis Floyd, owner of Frankenstein Enemy, did not respond to a request for comment. 

State records show Yatooma was listed as the designated contact on 104 out of the 1,048 applications that were entered into a lottery selection for the dispensary licenses. An investigation by The Independent in October found applicants said that they thought they were partnering with the Michigan investor but had signed agreements requiring them to relinquish all control and profits of the business.

The Independent obtained an agreement between a Missouri social-equity applicant who did not win a license and Canna Zoned. It stated that he must appear to have 100% ownership interest on the application but wouldn’t get revenue or profits from the business. 

After the business passed through all the state and municipal approvals, the contract stated the applicant would be required to sell his share of the business for $1 to the group or be held in breach of contract. 

Frankenstein Enemy’s attorney, Nadeem Harfouch, did not deny that the agreement described in The Independent article existed, in a Jan. 12 letter sent to the Division of Cannabis Regulation that was included as part of the appeal documents.

And Harfouch acknowledged that such an agreement wouldn’t be legally enforceable. 

“Even if the ‘agreement’ described in the news articles exists between licensee and the eligible owners, such an ‘agreement’ would not meet the requirements for transfer of ownership stated in the regulations and would be of no effect,” the January letter states. 

Harfouch states that The Independent’s Oct. 26 article quoted people who weren’t the license winners and their comments “have no bearing on the application that was submitted.” 

The letter also accused state regulators of “cowering” to the press. 

“The department is bowing to public pressure to revoke licensee’s license for arbitrary reasons completely disconnected from the statutory requirements,” it states.

Another company that used the strategy of flooding Missouri’s lottery with applications was an Arizona-based consulting firm called Cannabis Business Advisors. It was connected to more than 400 dispensary applicants, including six winners. All six of the group’s licenses were revoked. 

According to the Division of Cannabis Regulation, the “purported majority owners” of the eight revoked licenses lacked knowledge of agreements or operations of the license — and in some cases did not know the person who applied for the license on their behalf.

The Arizona group has submitted appeals for all six licenses, said Sara Gullickson, founder and CEO of the consulting firm. The cases are not yet available on the Administrative Hearing Commission portal. 

Gullickson told The Independent last month that the state decision was “severely unjust.”

The revocations, she said, “irreparably penalized the qualified social equity applicants who were awarded the life-changing opportunity to become successful cannabis entrepreneurs and provide generational wealth for their families.”

Flora Farms Stateline dispensary at the Arkansas border has 50 employees and 14 registers. (Rebecca Rivas/Missouri Independent).

April 20 is a day recognized globally for celebrating cannabis culture, but it’s also like the cannabis industry’s Black Friday. 

Dispensaries offer deals designed to inspire people to flood their stores to stock up. 

However on Saturday, dispensaries across the state using an inventory platform called Dutchie were hamstrung for hours by technical challenges, which caused many of their registers to go down or move at snail pace. 

It was the second year in a row that a 4/20 sales surge caused the system to crash.

“Imagine running a restaurant where you have one burner working and you normally have 20 stoves operating,” said Nick Rinella, CEO of Hippos Cannabis dispensaries. “We had one burner going.” 

Each Hippos location went from selling around 500 items per hour to less than 100 because of the issues the outages were causing, he said.

Dutchie is similar to the platforms major stores, such as Home Depot and Walmart, use to scan items at check out. However, Dutchie also has the special function of communicating with the state’s seed-to-sale tracking system called Metrc. 

It keeps the stores compliant with the state’s stringent tracking requirements of marijuana products. 

With recreational marijuana now legal, 4/20 looked much different in Missouri

Rinella said all three Hippos dispensaries in Springfield, Chesterfield and Columbia faced delays all day — causing them to lose an estimated $200,000. 

Mark Hendren, president of Flora Farms, also said his six stores across the state faced delays up to five hours. He’s not sure what kind of loss Flora Farms experienced, he said, because the company extended their deals through Monday to make it up to their customers.

“It seems to be working,” he said.

John Mueller, CEO of Greenlight cannabis company, said his 15 stores were not impacted, nor were any of the company’s 32 stores across the country. Greenlight stores experienced some outages last year, he said, so they were expecting the same this year. 

“We prepared and trained for the outage that never came,” Mueller said. “But I’ve heard from a number of my peers that they had outages and somehow we did not.”

Dispensaries that are on certain servers faced more difficulties, Rinella said, but it’s the luck of the draw which servers companies are put on. Companies can’t pay more to get on the “good server,” he said.

Missouri was not alone. Dispensaries across the country experienced delays on Dutchie.

“This year’s 4/20 was a record setting day for the majority of Dutchie powered dispensaries,” Chris Ostrowski, chief technology officer of Dutchie, said in a statement emailed to The Independent. 

Ostowski said the systems powered more than two million transactions, representing $165 Million dollars in retail commerce — which was a 50% increase from last year’s 4/20. 

“While Dutchie and our partners prepared extensively for this year’s 4/20, a group of customers local to a specific instance of our POS system experienced serious issues that impacted their ability to transact,” Ostrowski said. 

The difficulties impacted less than 20% of Dutchie customers, he said.

Rinella said Dutchie’s statement just made the incident sting even more. 

“Hearing that is just painful to me,” Rinella said. “So they had a 50% increase. That means I probably would have had a 50% increase had they not jacked my entire system for the day.”

It’s unclear if Missouri’s cannabis industry had record-breaking sales this past weekend. April’s sales numbers won’t be available on the state’s website until early May.

However, Rinella said the sales were likely record-breaking, which is why the bandwidth on Dutchie’s server couldn’t handle the volume that was coming through. 

Lisa Cox, spokeswoman for the Division of Cannabis Regulation, said the Dutchie malfunctions did not interfere with the division’s tracking operations. 

“While licensees are permitted to use these [point of sale] systems, it is their responsibility to ensure each day’s transactions and inventory are recorded accurately in the statewide track and trace system,” Cox said, “no matter what happens with the POS system.”  

Rinella said the staff and customers were very understanding, and hopes any new customers that came to the stores on 4/20 aren’t discouraged to come back. 

“We kind of want to do more of an apology,” he said. “Obviously, this wasn’t something that we could control, but we do want to be able to make sure that customers get the greatest experience they can possibly get when coming to a dispensary.”

Attorney General Andrew Bailey speaks at a press conference in the Missouri House Lounge, flanked by House Speaker Dean Plocher, left, and state Rep. Justin Sparks (Tim Bommel/Missouri House Communications).

Missouri Attorney General Andrew Bailey launched an investigation into four companies Wednesday as part of an effort to crack down on intoxicating hemp products.

The problem, according to Bailey, is the products in question — such Delta-8 edibles and vape pens — are not clearly labeled to indicate that they’ll get you high.

“When purchasing products, Missourians have a right to know if they will be subject to serious and potentially dangerous side effects,” Bailey stated in his press release, “like psychotic episodes, severe confusion, hallucinations and other life-threatening problems.” 

Intoxicating hemp products are completely unregulated but can still be sold in places like bars and gas stations — because hemp is federally legal. 

However, everyone from the companies making these products to stores selling them to elected officials want to see age restrictions put in place by the state, along with label and testing requirements.

Two Republican lawmakers have proposed legislation to do that, but the bills would also likely ban a majority of the intoxicating hemp products currently on the market — putting hundreds of companies out of business. 

The large divide in how regulations should happen has essentially tanked the bills’ chances of making it to the governor’s desk.  

Bailey seems to be joining the push to regulate the products. However, it’s unclear exactly who he’s targeting.

Bailey issued a “civil investigative demand,” which are essentially subpoenas, to CBD Kratom Connect LLC of St. Louis, a company that several leaders in the hemp industry say they’ve never heard of and which has virtually no online presence indicating it is operating in Missouri. 

Some wonder if Bailey meant to target CBD Kratom, which is one of the largest intoxicating hemp companies in the state and country. 

When asked for clarification, Madeline Sieren, spokeswoman for the Attorney General’s office, said: “Unfortunately because the investigations are ongoing, I cannot comment beyond what is written in the CIDs.”

Also based in St. Louis, CBD Kratom has over 60 retail locations throughout Chicago, Dallas, Houston, New York, Philadelphia and St. Louis. And it has no connection to CBD Kratom Connect, the company’s owner David Palatnik told The Independent Thursday. 

During hearings regarding the proposed legislation, Palatnik testified in support of banning products that look like candy and are attractive to children — the exact issue Bailey is hoping to address by the investigations. 

“It’s an issue in the industry that some people sell child-looking packaging that is also fraudulent and is also a violation of federal laws,” Palatnik said. “So we’d agree with the attorney general on that front.”

His company ensures all its products have transparent labeling, he said. Palatnik says he opposed the legislation proposed in the Missouri General Assembly because of the harmful impact it would have on hemp businesses.

On Wednesday, Bailey also ordered an investigation into American Shaman, one of the largest intoxicating hemp companies in the state and country. 

Vince Sanders, owner of American Shaman, told The Independent Thursday that his company makes gummies and chocolates made with hemp-derived THC, but they’re sold in child-proof containers, similar to what is required by state law for marijuana products.

“They all say ‘21-plus,’” Sanders said. “If you’re in one of our stores, you actually have to sign a document that says you understand that these are psychoactive.”

Sanders has also been a vocal and influential opponent to the proposed legislation.

Two individuals also received investigation notices from Bailey: Cara Buchanan with Smoke Smart LLC in St. Louis and Tariq Zeiadeh with Vape Society Supplies in Columbia. 

An employee at the Smoke Smart location in St. Peters said Buchanan no longer owns the business or lives in Missouri, and the current owners do not operate as Smoke Smart LLC. Zeidadeh has not responded to a request for comment.

In his press release, Bailey states that he’s received reports that businesses were “potentially violating the Missouri Merchandising Practices Act, which grants Missourians the right to a marketplace free from fraudulent or deceptive business practices.”

Bailey also pointed to the six elementary-age children in St. Louis County who became sick and intoxicated at school after reportedly ingesting Delta-8 products that were packaged as “Nerds Rope Bites and Mad Monkey Sour Strawberry Premium Gummies.”

The attorney general’s office didn’t respond to The Independent’s question on whether any of the four companies under investigation made the products in the St. Louis County incident.

The great divide

Among the biggest supporters of the proposed legislation are leaders of the marijuana industry. The intoxicating hemp industry poses a major threat to marijuana businesses. 

Hemp is often known for being the part of the cannabis plant that doesn’t get people high. It’s full of CBD, a nonpyschoactive cannabinoid that helps people relax and often found in massage oils and sleep aids.

However, hemp was taken off the controlled substance list in 2018 by the last U.S. Agriculture Improvement Act, more commonly known as the farm bill. Since then, people have found numerous ways to make intoxicating products from hemp — largely through a chemical process of converting CBD to THC. The market for things like Delta-8 drinks and edibles is one of the fastest growing markets in the country.

Because of the farm bill, there’s no state or federal law saying teenagers or children can’t buy them or stores can’t sell them to minors — though some stores and vendors, including American Shaman and CBD Kratom, have taken it upon themselves to impose age restrictions of 21 and up. 

Mitch Meyers, partner at BeLeaf Medical, said at a recent industry summit that the intent of the bill was to put the hemp-derived products under the strict packaging and other requirements that marijuana companies must go through. 

“So that’s why we’re just in complete amazement that this stuff just can be out there without any of these checks and balances,” Meyers said.

The Missouri Hemp Trade Association has continuously advocated for measures such as prohibiting sales to minors and mandating clear user instructions and rigorous product testing.

The big problem the hemp industry has with the legislation is that it would place these products under the same constitutional framework and rules that the marijuana industry must abide by — including the mandate that products are only sold at licensed marijuana dispensaries regulated by the cannabis division within the Missouri Department of Health and Senior Services. 

There are no new marijuana facility licenses available currently, so there would be no way for the current hemp storefronts to sell these products.

Last week, Republican state Rep. Barry Hovis of Whitewater offered a different draft of the House legislation — backed by the hemp industry — that would allow the Division of Cannabis Regulation to issue licenses to companies that sell intoxicating hemp products, as well as oversee age restrictions and labeling requirements. 

Under Hovis’ proposal, the licensees would not come under other marijuana rules, which includes a ban on the “chemical conversion” process used to create the majority of hemp-derived THC products. The state rules also require that THC may only come from cannabis cultivated by a Missouri-licensed cultivation facility. Most hemp-derived THC is currently brought in from other states.

Few products currently on the market would meet these requirements. 

Hovis’ proposal failed, largely because the division said the licensing fee he proposed wouldn’t produce enough revenue to cover the division’s costs. 

“There’s something we need to do because of the unregulated market that we have right now,” Hovis said. “I do feel that for the safety of children… this would be a good move.”

State Sen. Karla May, a Democrat from St. Louis, said she plans on offering an amendment to Republican Sen. Nick Schroer’s bill to regulate these products, which will likely be similar to Hovis’ proposal. May said the license fees in her proposal will be higher.

Schroer’s bill could be brought up on the Senate floor for debate any time, May said, and that’s when she’d offer her proposal. 

“My only concern is that we get an independent structure for these businesses,” May said, “and that they don’t have to come up under marijuana. Because the only license they will be given is a microbusiness license and that is not fair to them.”

Amy Moore, (right) director of the Missouri Division of Cannabis Regulation, speaks at the National Cannabis Industry Association's summit on March 28, 2024 in St. Louis. At left is Mitch Meyers, partner at BeLeaf Medical marijuana company. (Rebecca Rivas/Missouri Independent).

Veterans John and Kara Grady received a Facebook message last week from a man who was, “looking for a female veteran to be part of our dispensary license.” 

Being a veteran is one of the seven categories that makes people eligible to win one of the state’s social-equity marijuana licenses, called “microbusiness licenses.” The other categories range from having a lower income or living in an area considered impoverished to having past arrests or incarcerations related to marijuana offenses. 

When the Gradys — who run Slaphappy Beverage Co. that sells hemp-derived THC drinks — turned him down, the man began attacking them on their social media pages.

“I was like, ‘What kind of tactics are these?’” John Grady said in an interview with The Independent. “You have to ask yourself — if it’s that competitive on the microbusiness licenses, then really what’s going on?” 

Just hours before Grady received that message, the Missouri Division of Cannabis Regulation issued a warning about “predatory practices” in social-equity marijuana licensing throughout the country.

And those tactics are likely escalating, with the next round of applications running April 15 to 29. 

“(The Division of Cannabis Regulation) has become aware of solicitation efforts by companies to apply for microbusiness licenses on behalf of qualified individuals with promises of future ownership in the license,” the agency said in a press release last week. 

The division warned that some groups are scamming eligible people by giving them, “no agreements in place that would actually result in the eligible individuals being the owners of the license.”

The division recently revoked nine of the 48 social-equity cannabis licenses issued in October — following an investigation by The Independent that found some applicants thought they were partnering with the Michigan investor but in reality signed agreements requiring them to relinquish all control and profits of the business. 

The revocations came just as the division was gearing up for the second round of microbusiness applications, and now the state is urging applicants to be extra careful regarding who they partner with.

“Eligible individuals should exercise caution in accepting such arrangements as some of the solicitations may be predatory in nature,” the division’s Thursday press release states. 

Because only 39 of the 48 microbusiness licenses were ultimately issued from the first round, the division will award one additional wholesale license and eight additional dispensary licenses in the upcoming round.

The owners of the revoked licenses have vowed to appeal, though nothing has been filed as of yet. 

Guidance from state regulators

The microbusiness program is meant to boost opportunities in the industry for businesses in disadvantaged communities, and it was part of the constitutional amendment to legalize recreational marijuana that voters passed in November 2022. 

The program was designed for these licensees to hopefully develop their businesses, so it will put them in a good position to obtain regular licenses, or what the state calls comprehensive licenses.

By law, the state cannot issue any new comprehensive licenses until June 2024. If the state decides to allow for more regular licenses at that point, then 50% of them must go to microbusiness license holders. 

“The clear intent [of the constitution] is that a microbusiness license should provide a path to facility ownership for individuals who might not otherwise easily access that opportunity,” the division’s press release states.

The microlicenses must always be majority owned and operated by people who meet the eligibility criteria.

 The division gave examples of behaviors that may indicate predatory arrangements:

• Applicants are promised a 51% ownership stake of the license and a fair market value buyout for that 51%.
• Applicants are promised a payment when the license is initially issued, then receive a salary for 3-5 years that is equal to the remaining 51% of the license value or some other payment arrangement.
• Solicitor does not ask for any payment and offers to pay for upfront application and business costs.
• Solicitor informs the potential applicant that if they want to actually own and operate an awarded license, they should apply on their own.
• Solicitor promises they will provide their own money, resources, and time to run the day-to-day business operations so that the applicant owner does not need to invest their own money, resources or time.

 “A purported owner with little to no knowledge, control, agency or decision-making authority in an application or license does not meet the intent or meaning of the requirement,” in the constitution, the guidance states. 

John Grady said he hasn’t heard of any other veterans who were targeted as he and his wife were. However, he said the commander of their Veterans of Foreign Wars post is aware of the issue now. 

“So we can tell any of our guys who are looking at that industry,” Grady said. “Or if somebody sends them a note saying ‘Hey, we need a veteran,’ they can be aware that they’re probably going to get taken advantage of.”

Marilyn Gleason, the director of human resources for BeLeaf Medical marijuana company, signs a sealed envelope containing 11 BeLeaf employees' votes that the company is contesting as not being eligible to unionize on Feb. 6, 2024 (Rebecca Rivas/Missouri Independent).

A push by workers in a St. Louis marijuana facility to form a union could have national ramifications on labor law, with the company hoping to block their effort by asking the federal government to intervene. 

At issue is a group of “post-harvest workers” at BeLeaf Medical’s Sinse cultivation facility in St. Louis. They have been trying to form a union since September but have thus far been blocked by their employer’s continuous legal challenges. 

The company argues the employees at its Sinse facility don’t have the right to unionize because they’re considered agricultural workers.

Agricultural workers aren’t protected under the 1935 National Labor Relations Act, which ensures employees have the right to unionize without fear of retaliation.

Twice so far this year, National Labor Relations Board Regional Director Andrea Wilkes – who oversees a swath of six states in the Midwest —  has ruled against BeLeaf’s argument. 

Last week, BeLeaf filed a request for the national five-member board appointed by the president to review Wilkes’ decisions. 

Legal experts, union officials and industry insiders interviewed by The Independent agree that whichever way the NLRB ultimately rules would have sweeping ramifications for the burgeoning industry across the nation. 

“I know for a fact that people in these facilities are told ‘You’re ag workers. You don’t have any rights,’ no matter what position they are,” said Sean Shannon, lead organizer with United Food and Commercial Workers International Union Local 655. “People won’t have to be in this gray area of doubt anymore about whether or not they can organize.”

Wilkes’ decision followed a similar ruling in September by another regional NLRB director in a case regarding some New Jersey post-harvest workers.

However, this would be the first time that the national board weighs in on the issue, setting a national legal precedent.

And that’s what BeLeaf is hoping for, the company said in its request to the NLRB. 

“The legal cannabis cultivation industry is relatively new in the United States, and it is different from all previously analyzed agricultural industries,” the company argues.  

“Accordingly, there is no officially reported board precedent and no reported judicial decisions to help establish where the line between agricultural and non-agricultural activities may be drawn in a particular situation.” 

BeLeaf did not return The Independent’s repeated requests for comment.

Shannon said BeLeaf employees were not surprised to see the company’s appeal.  

“We were expecting it,” he said. “The company made it very clear that they were going to fight us with every avenue they could. And they’re doing just that.”

‘An industrialized process’

The company’s appeal comes after Wilkes ordered a unionization election be held on Feb. 6, where 16 employees at BeLeaf’s cultivation facility on Cherokee Street in St. Louis cast votes. 

Employees are hoping to learn the results of the contested election any day now.

Wilkes found that none of these post-harvest employees are “engaged in primary agricultural activities.” They work separately from the cultivation and harvest departments, she wrote, and don’t overlap in duties. 

However, BeLeaf says the employees work with their hands and they are still working with “raw flower.” 

BeLeaf operates three cannabis cultivation facilities and five Swade dispensaries, according to case documents. The Cherokee Street location is the largest of their cultivation facilities in Missouri, where 29 cultivation employees care for the plants and five people harvest the marijuana plants and hang them to dry. 

In a completely separate department, Wilkes said there are 13 post-harvest employees who take down the dried plants and begin the de-stemming process. Some weigh the product and input that information into state’s tracking system Metrc.

After de-stemming and separating, the marijuana is packaged or processed into pre-rolled joints. The facility produces anywhere from 900 to 1,200 pre-rolls a day.

She compared the Sinse post-harvest employees’ work to that of employees in a tobacco processing plant. 

“Removing the veins from tobacco leaves and fermenting the leaves has been held to be outside the definition of agriculture,” under federal labor law, she wrote.

To determine whether or not an employee is performing agricultural work, Wilkes wrote the federal courts looked at whether the product has undergone a change from its ‘raw and natural state,’ and is more like manufacturing than to agriculture.

“In sum, the employer’s post-harvest production process is not a mere preparation for market but a process that utilizes industrialized processes to transform the marijuana from its natural state into finished products prepared for sale,” Wilkes wrote. “I therefore find that the post-harvest employees are statutory employees under the Act and are not exempted as agricultural laborers.”

BeLeaf’s challenge

BeLeaf argues that the regional director’s comparison to the tobacco industry is “misplaced.”

“The regional director’s analysis is flawed,” the company’s appeal states. “The post-harvest de-stemming and other processes bear no resemblance to de-stemming tobacco leaves.” 

BeLeaf argues that tobacco leaves are first dried and then fermented over a period of four to eight months. However, BeLeaf workers de-stem, buck, and trim the cannabis plant, and then the buds are “cured to preserve the product in its raw state by preventing the terpenes and terpenoids from breaking down.” 

The regional director found the task of creating pre-rolls is a mechanized process that adds value and could be an independent business.

But the company argues the marijuana in pre-rolls is still in a raw state.

“The raw cannabis plant remains in the same, natural state throughout the entire post-harvest process,” it states. “Accordingly, the post-harvest employees are agricultural workers exempt from coverage of the Act and must be excluded from the proposed bargaining unit.”

In the New Jersey NLRB case, a company called Columbia Care New Jersey made this exact same argument.

NLRB Regional Director Kimberly Andrews dismissed it, concluding: “The transformation of the harvested cannabis plants to the ultimate packaged products ready for market in this case is far more substantial than processes that the courts have found not to be secondary agriculture.” 

Jeff Toppel, a labor law attorney with the Bianchi Brandt firm in Arizona, said the regional directors’ decisions give a strong indication on how the national board will rule. 

“It is a significant decision,” Toppel said, “and could have a wide-ranging impact.”

Amy Moore, (right) director of the Missouri Division of Cannabis Regulation, talks with attendees at the National Cannabis Industry Association's summit on March 28, 2024 in St. Louis (Rebecca Rivas/Missouri Independent).

Proposed legislation to regulate intoxicating hemp products could potentially ban the majority of the Delta-8 drinks and edibles on the market in Missouri today, the state’s top marijuana regulator told an industry meeting late last week in St. Louis. 

“This is really an unanswered question,” said Amy Moore, director of the Missouri Division of Cannabis Regulation.

Moore was among a panel of speakers at the National Cannabis Industry Association’s Missouri Stakeholder Summit who discussed legislation in the state House and Senate that would create the “Intoxicating Cannabinoid Control Act.”

Currently, Delta-8 THC products — including a large variety of drinks that are popular at bars and available at gas stations throughout the state — can be sold in Missouri stores because the intoxicating ingredient is derived from hemp, not marijuana.

Hemp is federally legal.

There’s no state or federal law saying teenagers or children can’t buy them or stores can’t sell them to minors — though some stores and vendors have taken it upon themselves to impose age restrictions of 21 and up. 

The legislation would place these products under the same constitutional framework and rules that the marijuana industry must abide by — including an age restriction, labeling and testing requirements and a mandate that products are only sold at licensed dispensaries regulated by the cannabis division within the Missouri Department of Health and Senior Services. 

However, the state’s rules also currently ban the “chemical conversion” process used to create the majority of hemp-derived THC products. 

When asked how many hemp-derived THC products would still be left on Missouri shelves if the legislation passed and this rule was enforced, Moore said the department would have to take a hard look at the “intent” of the law.

“Everyone knows the rules are part of our regulatory framework,” Moore said in an interview with The Independent after the summit. “Does that indicate intent that chemical conversion, at least, remain prohibited?”

Or, she said, it could also be the law’s intent to simply put these products under the same guidelines marijuana products follow, and the state would need to adapt its rules to be able to keep them on the market.  

“We don’t really have a position right now about what that would mean in the future,” she said.

Three weeks ago, Krey Distributing Company, the wholesale company for Anheuser Busch, released hemp-derived Delta-9 THC drinks, and it’s already selling them to nearly 120 bars, liquor stores and convenience across the state. 

The products aren’t made using a chemical conversion process, so they wouldn’t be banned if the legislation goes into effect. But sales would definitely plummet if they could only be sold in dispensaries, said Steven Busch, the company’s president. 

“This legislation would really hurt our business,” Busch said. “It would also limit the business our customers are doing already, and it would also limit consumer choice by forcing consumers to go into a dispensary to buy these products.”

Pushback from both sides

Hemp is often known for being the part of the cannabis plant that doesn’t get people high. 

It’s full of CBD, a nonpyschoactive cannabinoid that helps people relax and often found in massage oils and sleep aids.

But much has changed since hemp was taken off the controlled substance list in 2018 by the last U.S. Agriculture Improvement Act, more commonly known as the farm bill. 

Now state regulators can barely keep up with the constantly evolving ways that people have found to make intoxicating products from hemp — largely through a chemical process of converting CBD to THC. The market for things like Delta-8 drinks and edibles is one of the fastest growing markets in the country. 

The fact that it is legal federally was the basis for St. Louis Democratic Sen. Karla May’s opposition to a bill sponsored by state Sen. Nick Schroer, a Republican from Defiance. 

“The feds are not stopping the sale of this product,” May said, during a Senate floor debate last week. “What you’re saying is we need to shut down all the businesses that are currently selling this product and making revenue from this product, and then transfer them to all of the people that have gotten marijuana licenses.” 

While May was the most vocal critic in the Senate last week, both Republican and Democratic lawmakers have pushed back on the idea of forcing the hemp industry under the umbrella of DHSS, saying that would allow the “marijuana monopoly” to take over this market given the limited number of licenses for dispensaries available.

After voters passed a constitutional amendment allowing medical marijuana in 2018, competition for licenses became fierce when the state capped the number of applications it would approve — initially issuing 338 licenses to sell, grow and process marijuana.

Widespread reports of irregularities in how applications were scored fueled criticism of the industry and accusations that insiders were building a monopoly. That criticism spilled into the campaign to legalize recreational marijuana in 2022, though the proposal still won voter approval.

Some applicants who didn’t land medical marijuana licenses turned to producing hemp-derived THC products.

May and others have expressed concern that because hemp is federally legal, lumping it in with the regulations of a controlled substance could result in lawsuits.

Schroer told The Independent in December that he’s closely watching the ongoing legal case of Robertsville-based marijuana manufacturer Delta Extraction.

Delta Extraction had its license to manufacture cannabis products revoked in November, months after a massive recall pulled more than 60,000 products off the shelves — which the state says were illegally made with a hemp-derived THC concentrate imported from out of state.

While hemp is federally legal, state regulators argue that once hemp-derived THC comes into the marijuana realm, they can regulate it. 

The question currently before the Administrative Hearing Commission is whether or not Missouri regulators have the authority to prohibit licensed companies from infusing Missouri-grown marijuana products with hemp-derived THC. 

If the company loses its appeal before the commission, then Delta will continue to fight in court, the company’s attorneys have said.

And Delta will be arguing the state has no authority to regulate hemp products at all. 

“The Division of Cannabis Regulation’s authority to regulate is limited to non-hemp marijuana and does not depend on whether it is used to make THC,” Delta’s attorney, Chuck Hatfield, wrote in a recent letter to the state. 

Interestingly, one of the processes the state cracked down on Delta for wouldn’t be banned under the Schroer’s bill. Delta was importing THC-A, a cannabinoid that’s extracted from the hemp plant the same way it is with marijuana. It did not go through the banned chemical conversion process, and Moore said the THC-A process would likely be allowed.

However, state rules also require that THC in marijuana products can only be derived from marijuana cultivated by a Missouri-licensed cultivation facility. Most hemp-derived THC is currently brought in from other states.

Cannabis summit

The panelists at the summit Thursday were overwhelmingly in support of Schroer’s bill and the companion bill sponsored by state Rep. Chad Perkins, a Bowling Green Republican. 

Mitch Meyers, partner at BeLeaf Medical and another panelist at the summit, said the intent of the bill was to put the hemp-derived products under the strict packaging and other requirements that marijuana companies must go through.

“So that’s why we’re just in complete amazement that this stuff just can be out there without any of these checks and balances,” Meyers said.

The Missouri Hemp Trade Association has continuously advocated for measures such as prohibiting sales to minors and mandating clear user instructions and rigorous product testing.

However, the association opposes requiring the products to be made and sold by marijuana licensed facilities. A number of hemp businesses testified during committee hearings in February about the harmful impact the bill would have on them.

Several legislators said they were sympathetic to these businesses’ concerns and that they’d only agree to advance the bill if Schroer negotiated with the hemp industry and found a way to protect hemp businesses.

At the summit Thursday, Jamey Murphy, Schroer’s chief of staff and another of the panelists, said negotiations can only go so far. 

“We have to make sure that when we do negotiate, that we’re doing what we set out to do,” Murphy said, “which is make sure that these things are sold in the correct way in the correct setting, and that they’re not harmful to the consumer.” 

The hemp association has demanded the products don’t come under the Division of Cannabis Regulation’s framework, but instead be regulated by the same rules that tobacco and alcohol products abide by under the Department of Public Safety’s Division of Alcohol and Tobacco.

Murphy said he’s not sure they have a “perfect solution” to solve these differences.  

“There’s some other bills in other states that we’re definitely going to look at to see if we could solve some of those,” he said. “I wouldn’t say that the bill we have now is potentially the bill that we can get across the finish line.”

Abigail Vivas, the state's new chief equity officer for the cannabis program, (left) answered a question from attorney Marialle Bell about the eligibility requirements for the microbusiness program at an educational outreach event at St. Louis University on June 22, 2023. (Photo by Rebecca Rivas/The Missouri Independent)

Missouri cannabis regulators have revoked nine of the 48 social-equity cannabis licenses issued in October, after finding the companies that obtained them didn’t meet eligibility requirements. 

Eight were dispensaries linked to out-of-state groups and one was a wholesale facility.

Among them is Canna Zoned, a Michigan company that secured two of the 16 dispensary cannabis licenses — in Columbia and Arnold. Both licenses were revoked.

State records show Canna Zoned was connected to 104 out of the 1,048 applications that were entered into a lottery selection for the dispensary licenses. An investigation by The Independent in October found applicants thought they were partnering with the Michigan investor but in reality signed agreements requiring them to relinquish all control and profits of the business. 

Some Canna Zoned applicants were recruited through Craigslist ads from around the country. 

In a statement to The Independent Wednesday night, representatives of the Columbia dispensary, Frankenstein Enemy LLC, called the state’s action a “drastic and unjustified penalty” that “lacked a clear basis or rationale.”

“We have not been provided with specific reasons or justifications for the revocation, leaving us in a position where we must take appropriate action,” according to the statement. 

Another company that used the strategy of flooding Missouri’s lottery with applications was an Arizona-based consulting firm called Cannabis Business Advisors. It was connected to more than 400 dispensary applicants, including six winners. All six of the group’s licenses were revoked. 

According to the Division of Cannabis Regulation, the “purported majority owners” of the eight revoked licenses lacked knowledge of agreements or operations of the license — and in some cases did not know the person who applied for the license on their behalf.

“…the lack of knowledge, control, agency or decision-making demonstrated by the individuals whose information was used to meet eligibility does not meet even the most generous interpretation of owning and operating a business,” said Amy Moore, director of the Division of Cannabis Regulation, in a press release. The revocations took effect on Wednesday.

A wholesale license in Kansas City was revoked on March 11 because the owner had a disqualifying felony offense. 

A Missouri firm, Amendment 2 Consultants, was listed as the designated contact to more than 80 dispensary applicants and two winners. A dispensary license connected to the group was initially deemed ineligible as well on Dec. 15, but the applicant was able to provide evidence that satisfied the eligibility requirements.

 “The department had questions about this licensee’s ownership and management,” said John Payne, managing member for the firm, “and we demonstrated that the license is and will be owned and operated by qualifying individuals.”

Payne said the licensee made “some minor revisions in the operating documents to make these points more explicit.”

The microbusiness program is meant to boost opportunities in the industry for businesses in disadvantaged communities, and it was part of the constitutional amendment to legalize recreational marijuana that voters passed in November. 

The program is designed to provide a path to larger facility ownership for individuals who might not otherwise easily access that opportunity, such as having a net worth of less than $250,000 or veterans with a service-connected disability. 

The microbusiness license must always be majority owned and operated by individuals who meet these eligibility criteria. 

Following The Independent’s October report, Democratic state Sen. Karla May of St. Louis demanded the state investigate what she called an “egregious exploitation” of social-equity marijuana licenses.

Moore responded to May in a letter, saying the division shares the senator’s desire that the program be “implemented exactly as designed and that no unscrupulous actors be allowed to subvert the law.” 

On Wednesday, May told The Independent regarding the revocations: “I’m proud to stand up for constituents who have been taken advantage of, and I appreciate the hard work of the department to help these individuals.”

On March 5, the division announced that the state will accept the second round of microbusiness license applications through the online registry portal from April 15 to 29. 

In light of the revocations, the state will add nine more licenses to this round, which means there will be 57 licenses — 24 being dispensary licenses — available instead of 48.

The licenses are expected to be issued in July.

Post-harvest employees at BeLeaf Medical's Sinse facility await union election results on Feb. 6, 2024 at the St. Louis Public Library Barr branch (Rebecca Rivas/Missouri Independent).

Employees at BeLeaf Medical’s Sinse Cannabis site in St. Louis moved a step closer to unionizing last week, when their employer’s efforts to block union election votes from being counted were rebuffed by a federal labor official.

Since September, BeLeaf leaders have argued before the National Labor Relations Board that the employees weren’t eligible to unionize because they were agricultural workers – who are not protected under federal labor law.

On Jan. 25, National Labor Relations Board Regional Director Andrea Wilkes issued a 13-page decision detailing why the employees are not agricultural workers and allowing them to cast votes in the unionization election. 

She ordered an election be held on Feb. 6, where 16 employees cast votes. Just before the votes were counted, BeLeaf leaders issued another challenge to 11 of the employees’ votes, delaying the official count from taking place. 

Wilkes issued a second decision last week, stating the evidence BeLeaf provided still “does not raise substantial and material factual issues” in proving they are agricultural employees.

Wilkes ordered for 10 of the uncounted ballots to be opened, though the date has not yet been set. 

Company continues to argue Missouri cannabis workers can’t unionize

One ballot may be opened at a later date, pending the outcome of a separate NLRB complaint, Wilkes said. Todd Rick, a former post-harvest specialist who was fired just before the election, said he believes he was targeted for his leadership in organizing the union, and he filed a complaint soon after. 

“I’m very happy to see the board uphold its original decision,” said Sean Shannon, lead organizer with United Food and Commercial Workers International Union Local 655. “Hopefully this continues to show cannabis workers in Missouri and the rest of the nation that no matter how hard their bosses want to fight them, they’ll still win when they have a union behind them.”

Beleaf Medical did not respond to The Independent’s request for comment.

Agricultural laborers aren’t protected under the 1935 National Labor Relations Act, which ensures employees have the “fundamental right to seek better working conditions and designation of representation without fear of retaliation.”

Labor attorneys, companies and union representatives across the country have grappled with the lack of clarity around whether post-harvest workers should be considered agricultural laborers.

In her Jan. 25 decision, Wilkes described these employees’ duties as the people who take down the dried marijuana plants and begin the de-stemming process. 

After de-stemming and separating, the marijuana is packaged or processed into pre-rolled joints. The facility produces anywhere from 900 to 1,200 pre-rolls a day.

She compared BeLeaf’s Sinse post-harvest employees’ work to that of employees in a tobacco processing plant. 

“Removing the veins from tobacco leaves and fermenting the leaves has been held to be outside the definition of agriculture,” under federal labor law, she wrote in her Jan. 25 decision.

Jeff Toppel, a labor law attorney with the Bianchi Brandt firm in Arizona, has been keeping his eye on the BeLeaf case, just as other labor attorneys and unions have throughout the country, he told The Independent in February. 

Up until now, it wasn’t clear if the post-harvest workers would be excluded as agricultural workers, he said, which has pushed unions to focus more on dispensary workers.

While the regional director’s decisions in this case haven’t set a national precedent, it could lead to one.

The company has 10 business days after the votes are counted and the election result is certified to file an appeal, asking the national five-member board appointed by the president to review the election results and the regional director’s decisions. 

A decision from the board in the BeLeaf case would set a national precedent and have a wide-ranging impact, Toppel said.

Wilkes’ stance in the case, he said, gives a strong indication of how the board will rule.

“A decision from the board…” Toppel said, “will provide much needed clarity on an issue that will have a significant impact on the future of organizing in the cannabis industry.”

Emmalyn Pratt tends to a patient as part of her studies at the Sonoran University of Health Sciences in Arizona to become a naturopathic doctor (photo submitted).

A bill that would allow naturopathic doctors to become licensed in Missouri passed its first hurdle Wednesday. 

The House Professional Registration and Licensing Committee voted 7-2 to advance the bill, sponsored by Republican Rep. Doug Richey of Excelsior Springs. 

Unlike Kansas and 22 other states, Missouri does not have licensing or registration laws for naturopathic doctors, or primary care physicians with a focus on holistic care.

“As we continue to talk about the need for more access to healthcare in both rural as well as metro contexts, this is an area of medicine that is known to be effective,” Richey told The Independent in February. “There are other states that have formally recognized it as such.”

In states where the practice of naturopathic medicine is regulated, doctors are required to graduate from accredited four-year residential naturopathic medical programs and pass a postdoctoral board examination in order to receive a license or registration. 

Richey’s bill was amended Wednesday to clarify that naturopathic doctors would only perform minor office procedures, similar to a primary care physician. And they would not be allowed to perform surgeries or prescribe opioids. 

A Senate bill, sponsored by Republican Sen. Nick Schroer of Defiance, has not yet received a public hearing.

The veterans service organization, AMVETS, sent a letter to Gov. Michael Parson on March 8 urging his support for the bill. Diana Johnson, director of AMVETS in Missouri, said licensed naturopathic doctors are a “vital addition” to the U.S. Department of Veteran Affairs’ Whole Health program to provide veterans more holistic care. 

“Until we are able to license these doctors within Missouri, the veterans of our great state will continue to suffer from chronic pain and other ailments,” Johnson said, “without the full benefits of naturopathic care and the opportunity to be included in the ‘Whole Health’ program established by the V.A.”

Dr. Emily Hudson, president of the Missouri Society of Naturopathic Physicians, estimates there are currently a dozen or more naturopathic doctors working in Missouri who could be licensed under the proposed legislation’s prerequisites. And many more would return to Missouri if the bill passes. 

Hudson called the committee’s approval a “significant milestone” towards offering Missouri residents access to licensed naturopathic doctors and being able to “incorporate safe, effective and naturally focused treatments” into veterans’ healthcare. 

“This victory marks a collective effort towards providing comprehensive care,” Hudson said, “and honoring the well-being of those who have served our nation.”

The Supreme Court of Missouri in Jefferson City, as photographed on May 24, 2023 (Annelise Hanshaw/Missouri Independent).

The Missouri Supreme Court heard arguments Thursday in a case marijuana regulators say could force them to issue “dozens” of new licenses to grow, sell and distribute cannabis products above the state’s self-imposed caps. 

Mo Cann Do Inc. applied for a cultivation license to grow marijuana in 2019. The company was denied when the state said it didn’t include a certification of good standing from the Missouri Secretary of State’s office in its application.

However, the company argues that state rules require the Division of Cannabis Regulation to specify what information is lacking in an application in a letter — which the state didn’t do before it denied Mo Cann Do’s license. 

So the company appealed its denied license — one of more than 800 appeals filed after the state imposed caps on the number of marijuana business licenses it would award.  After losing at the Administrative Hearing Commission and circuit court levels, Mo Cann Do won in the Missouri Court of Appeals Eastern District in February 2023.

The court ordered Missouri to award the company a marijuana cultivation facility license. 

The state asked the Missouri Supreme Court to hear the case, in part, because there are dozens of pending cases before the commission and courts “where the particular document deficiency may not have been itemized” in the state’s rejection notice, according to court documents. 

Missouri appeals court orders state to issue medical marijuana growing license

If the Court of Appeals ruling stands, the state argues it would be forced to award marijuana licenses that aren’t currently available under the current rules — and to applicants who might not have even gotten the necessary scores in 2019.

“…The license cap in [the state rules] should foreclose the remedy of awarding a license,” the state argued in its transfer application to the Supreme Court. “Otherwise, license caps in a regulated industry may mean nothing at all.” 

The state said the medical marijuana industry “is not the only one where this issue matters.”

Regulators believe it could impact gambling boat licenses as well. 

At the hearing Thursday, Mo Cann’s attorney, Eric Walter, noted that the state imposed the license cap on itself. 

“The department also put in its rules, a rule that says we will also add additional licenses… if so ordered to do so by a court,” Walter said, “or if they choose to enter into a settlement of one of these types of appeals just like this.” 

In the Sept. 24, 2019 letter that’s at the center of the case, regulators outlined more than 15 areas in detail where Mo Cann Do’s application was incomplete, including all the names of the owners and their voting interests. 

However, the two-page list did not specify the certificate of good standing.

In the circuit court’s 2021 ruling, the judge noted that Mo Cann Do submitted six other applications where the certificate was also missing. And in those six applications, the division specifically informed the company in writing that it was missing — but the company still didn’t submit the certificate of good standing in those cases. 

St. Louis Circuit Court Judge Thomas Albus stated in his decision, “It is reasonable to conclude, at least in this case, that a more specific notice would have been of no effect.” 

Jason Lewis, chief counsel with the Missouri Attorney General’s Office, said Thursday that the Administrative Hearing Commission carefully considered the issue and decided the state’s notice “met a sufficient level of specificity.”

The marijuana industry is highly regulated, he said, making its application process “unique.”

“Appellants did not complete all the application requirements,” Lewis said, “and the state government should not be in the business of hand holding sophisticated entities — giving them third bites at the apple in a highly competitive and structured environment.”

Walter said Mo Cann Do did submit a certificate of incorporation to show the company’s good standing.

Lewis gave an analogy of a law-school application that requires an LSAT score for admission, but a student submits scores from a different test’s results. The student may have scored high on the LSAT, but the score wasn’t submitted, so is the university at fault for denying her application? 

Missouri Supreme Court Judge W. Brent Powell asked Lewis: “But the obvious argument is that: Does the university create fault for itself when it states in regulations that if you fail to submit an LSAT, we will tell you and notify you so you can fix that deficiency?”

Certificates of incorporation that were once commonly used to show good standing, Walter said, and the state law passed in 1990 establishing the certificate of good standing process did not ban that practice.

“That language could have been in there,” he said. “The general assembly didn’t choose to put it in there, and the courts haven’t made that finding.”

Lewis said the court’s decision could be “generalizable” to many other areas.

“Let’s say there’s small business loans,” he said. “Let’s say there’s agribusiness loans from the U.S. Department of Agriculture. I think that is the fundamental issue here and why our arguments as respondents don’t rise and fall on a check list. They don’t rise and fall on extra-record materials.”

(Rebecca Rivas/Missouri Independent)

Jack Maritz was working at Delta Extraction, a marijuana manufacturing facility in Robertsville, in February 2023 when the company’s regular state compliance officer stopped by unannounced. 

The officer, Heather Bilyeu, wanted to make sure Delta had “accurate counts” in the state’s tracking database of how much THC distillate, or concentrated THC oil, they had in the building.

“We weighed every jar of distillate that we had together,” Maritz, the manager of the facility and part owner, said in a hearing Wednesday. “She watched me weigh it.”

Then she asked Maritz “a lot” of questions, he said, about how the company made the distillate, which is the ingredient that produces a high in edibles and vape pens.

Delta’s distillate was different from other licensed manufacturers’ products in the state because it was mostly made up of what some call a “synthetic” THC — or THC that had been converted from hemp’s CBD using a heavy chemical process. Delta mixed the hemp-derived THC with a small amount of THC from marijuana grown in Missouri. 

It’s much less expensive to make distillate from hemp than Missouri-grown marijuana, but Delta’s consumers still paid marijuana prices.

Bilyeu’s visit came the day before the new state marijuana rules went into effect on Feb. 3, 2023 — which banned the converted hemp THC practice. Maritz said Bilyeu wanted to make sure Delta had stopped making it, but she didn’t stop the company from selling about 400 liters they had weighed together.

Over the next few months, that hemp-based distillate became among the top selling in the state and was added to millions of edibles and vape cartridges. 

“She was completely aware that we’re going to keep selling it and that it was converted material,” Maritz said. “And there was obviously no recall for health and safety after that.”

For the last five months, Missouri’s cannabis industry has largely been kept in the dark about why the state suddenly issued a massive recall in August of marijuana products that contained Delta’s hemp-based distillate.

In August, the state told the Administrative Hearing Commission that a July investigation uncovered Delta’s practice of using hemp-derived THC — citing several examples of distillate made as early as March 2022 when the company began operations.

However, testimony and evidence revealed during this week’s appeal hearing challenging Delta’s license revocation and the product recall show for the first time that the state was aware of those examples long before the recall was issued.

Throughout the three-day hearing before the commission, the state remained firm that Delta had committed “inversion,” which is where a Missouri cannabis company adds illegal marijuana products brought in from other states to their own products in order to keep their production numbers up.

Brittany Kirkweg, facility compliance manager for the Division of Cannabis Regulation, said the “unregulated THC” product posed a public health threat.

“We would not be doing our job as regulators if we allowed a licensee and product that is unregulated THC to be available to patients and consumers,” Kirkweg said. “Our job is to regulate licensees, but the main thing is to protect public health and safety.”

The loophole 

The hearing, which began Monday, largely focused on what Delta produced between May and July 2023.

An emergency rule put in place on Feb. 3, following voters legalizing recreational marijuana, stated that any THC in marijuana products could only be derived from marijuana cultivated by a Missouri-licensed facility.

However, Rachael Herndon Dunn, Delta’s chief operating office, thought she’d found a few-month loophole, she testified Tuesday — at least until the final rules went into effect on July 30. 

The company’s leaders believed the emergency rule didn’t prevent them from bringing in THC-A oil that had been extracted from out-of-state hemp plants — because it’s a cannabinoid that isn’t intoxicating until heated. 

The final rules outlawed this practice.

So the company manufactured 1,100 liters of distillate of this new product, Maritz testified.

During a hearing, state officials testified that THC-A is a type of THC, and there was never a loophole. Hemp-derived THC – whether chemically converted from CBD or from THC-A — is federally legal and unregulated. 

Bilyeu previously testified that: “We did not stop them from selling,” the distillate made prior to Feb. 3. However, the state did not give Delta permission to make new distillate from THC-A. 

“[Maritz] understood and stated that they were changing their process,” Bilyeu wrote in a report produced about the case. “Fast forward to now, that change involved using THC-A, as they feel, along with another facility I have, they have found a loophole.”

Much of the hearing was focused on whether or not Delta had found a loophole by switching their process and using hemp-derived THC-A.

Chuck Hatfield, Delta’s attorney, presented several emails showing supervisors at the Division of Cannabis Regulation stating they were unclear whether or not THC-A was actually a loophole, given that it was only specified in the final rules. 

Carole Iles of the Administrative Hearing Commission previously sided with the state in an Aug. 29 order. The only thing the cannabis regulating agency added to this line in the final rules, she wrote, was the clause “such as THC-A …” 

“We agree with the department that language added to the permanent rule … did not change the requirement of the emergency rule that THC in marijuana products could only be derived from marijuana cultivated by a Missouri-licensed cultivation facility,” the order denying a stay on Delta’s suspension states.

Regarding examples the state cited in 2022, Hatfield presented emails to the commissioner showing company leaders asking regulators if the process the company was using was acceptable. 

A June 2022 email from Bilyeu states: “You are able to extract [hemp and marijuana] separately, and then mix.” 

“This was an extreme overreaction by the Division of Cannabis Regulation,” Hatfield, told The Independent Tuesday. 

Anonymous tip

During the hearing, Maritz testified that Delta was “never trying to hide” what they were doing. 

“We’re happy that we did it,” he said.

However, The Independent spoke to several business owners who had no idea they were buying distillate with “synthetic” THC that Delta sold during the spring of 2023.

Richard Batenburg Jr., owner of the Colorado-based cannabis brand The Clear, said last year that he was infuriated that he was both overpaying for hemp and unknowingly deceiving his own customers who thought they were getting a pure marijuana product.

Batenburg was among business owners who only learned about the practice during Delta’s appeal proceedings.

Documents filed by the state show that cannabis regulators received an anonymous tip on July 26, alleging that a licensed manufacturer was bringing in illegal marijuana from Oklahoma. 

An investigation report states that the tip cited a “suspected inversion of cannabis from Oklahoma to Noah’s Arc Foundation.” Noah’s Arc has three marijuana manufacturing licenses. 

That allegation was never proven to be true, Kirkweg said during her testimony on Monday. 

However in the course of investigating the tip, Bilyeu’s investigation report states that regulators’ attention turned to Delta Extraction for adding hemp-derived THC to its marijuana products — which the state has deemed the illegal process of inversion.

“During that investigation, it was determined that [Delta Extraction], was possibly involved, due to [Delta] also receiving distillate from the same source,” according to Bilyeu’s review. 

In her testimony Tuesday, Bilyeu said she had a conversation with Dunn the same day the tip came in. 

Dunn had called her to tell Bilyeu that her team was going to make a large batch of distillate using hemp-derived THC-A, Bilyeu said. Dunn had heard Delta was under investigation so she called Bilyeu to ask if their process was under compliance.

“She’s like, ‘No, we know what you’re doing. It’s fine. Others are doing it,’” Dunn said Tuesday. “It was a normal conversation. We had a pretty healthy, open, transparent relationship.”

Later that day, they spoke again and Bilyeu couldn’t say if what Delta was doing was legal, both testified Tuesday.

Hatfield asked Bilyeu Tuesday, “You told her as her chief compliance officer, who was there to ensure she was in compliance and to provide technical assistance, that you didn’t know what was going to happen if they ran all this product that weekend.” 

“I told her I didn’t know,” Bilyeu said. 

That weekend, the man running Delta’s distillate process, Jason Sparks, made 490 liters of distillate using the THC-A process. Dunn said the company “had no reason to think” that it couldn’t sell it after the rule changed. 

What is THC-A?

Unlike marijuana, hemp has very little psychoactive properties naturally — which is why it was taken off the federal controlled substance list in the 2018 farm bill. But since then, businesses like Delta have been in a race to create ways to produce the most predominant psychoactive active element in marijuana, delta-9 THC, using the hemp plant. 

The most common way to get delta-9 THC from hemp has been a chemical conversion process from CBD, which is the more common cannabinoid in hemp.  

Raw marijuana flower contains a lot of THC-A, but eating raw flower won’t produce a high because it doesn’t change into delta-9 THC until a person heats it. Hemp has very little THC-A, so it takes about 90 pounds of hemp to make 1 kilo of THC-A isolate, or powder, a Florida lab expert who made the THC-A Delta used told The Independent.

THC-A is extracted the same way it is from the marijuana plant as it is from the hemp plant, experts testified Wednesday.

For Missouri’s marijuana industry, including hemp-derived THC — which is much cheaper — poses a threat to their livelihoods. That’s especially true because Missouri cannabis licensees must go through a rigorous and costly regulatory process — one that hemp companies don’t.

However, for the Missouri hemp industry, the Delta Extraction case makes their argument for them: That hemp-derived THC is legal under federal law and it’s a safe, viable business for Missouri farmers. 

The hearing concluded on Wednesday afternoon. 

Now, both sides will have an opportunity to submit their final arguments to the commission through briefs. The commissioner must read through hundreds of pages of testimony and exhibits, so it’s unclear when a decision will be reached.

(Rebecca Rivas/Missouri Independent)

Jason Sparks is an Oklahoma man who almost single-handedly created the distillate that led to Missouri regulators’ decision to pull more than 60,000 marijuana products off the shelves in August and revoke the license of Robertsville-based Delta Extraction.

Now, he’s the star witness in a hearing scheduled to begin Monday morning, where Delta will try to convince the Administrative Hearing Commission to reverse its license revocation and allow it to sell its product in Missouri.

In the days leading up to Monday’s much-anticipated hearing, the state and Delta Extractions filed hundreds of documents detailing the investigation into marijuana products the state has deemed illegal and the company is aggressively arguing against.

Among them is the eight-hour testimony Sparks, who the state’s attorney called one of its “most important witnesses.”

Delta Extraction contracted Sparks’ company, SND Equipment Leasing, to make the distillate — or a THC concentrate that goes into the vape cartridges and edibles.

When he first began in March 2022, Sparks was making the distillate only for the marijuana brand Conte, a Oklahoma-based company. 

Sparks’ wife, Tania Conte, owns Conte. As an out-of-state company, Conte can only make its products at a Missouri licensed manufacturing facility that can legally obtain marijuana. 

But in the spring of 2023, the supply for marijuana distillate was low across the state and Sparks began making large amounts that Delta sold to about 100 other Missouri manufacturers. 

The heart of the case is what’s in the distillate. 

Sparks extracted a small amount of THC from Missouri-grown marijuana, which the state heavily regulates. Then he added a THC oil that was extracted from hemp, a product that is completely unregulated.

The state says Sparks’ testimony is important because it speaks to one of their biggest concerns — health and safety. Sparks testified that he can’t recall where he bought his hemp-derived THC oil or if it was tested before he added it to the Missouri marijuana oil. 

“It’s such an unregulated market that it’s not even a second thought,” Sparks said, of the hemp product. “I know that’s frustrating for, you know, the state…that’s truly how it’s been running for years.”

However, the company will argue that it’s not illegal to add intoxicating hemp products to marijuana because hemp is legal. 

Sparks’ testimony and those of Delta’s leaders also clearly show that the company had been making the product since 2022. 

It’s unclear how much the state knew about the production of one of the top-selling distillates in the state. Delta’s attorney, Chuck Hatfield, said several documents show that state compliance officers knew what the company was doing long before the recall in August. 

He said Missouri didn’t specifically ban adding hemp-derived THC-A to marijuana products until the state’s final rules went into effect on July 30.

“Internal emails show that Compliance Officer Heather Bilyeau believed Delta’s use of THCa was lawful, prior to the July 30 rule change,” Hatfield told The Independent on Friday. 

Jason Sparks

Sparks testified that during the week he worked as a manager for Conte Oklahoma, where he oversaw the production of the products and customer relations.

In January 2021, Sparks started his own company in Missouri to rent cannabis extraction machinery to companies and produce distillate on the weekends, according to state business registration records. 

For a brief time, he said in his testimony, Sparks contracted with another manufacturer, Heya, to make the same hemp-marijuana distillate at the center of the Delta recall. 

Heya, which currently has four marijuana manufacturing licenses, was also producing Conte products. 

After Conte and Heya parted ways, the leaders of Delta Extraction saw an opportunity and asked Sparks and Conte to enter a partnership, which began in March 2022, according to testimony from a Delta owner, Jack Maritz.

Ever since that time, the distillate used in Conte products was made exclusively by Sparks on weekends, as was Delta’s top-selling bulk distillate the company later sold to other manufacturers. 

And according to records state investigators obtained, the majority of the THC in the distillate came from the hemp-derived THC-A oil — which the state doesn’t regulate — and a very small amount of Missouri-grown marijuana. 

Missouri requires that marijuana is tracked from the time the seed is planted all the way until it goes into a final product. No one from Delta monitored the distillate production, Maritz testified. 

Sparks purchased all of the oil made of THC-A, which is a cannabinoid that has to be heated to produce a high. Delta had no knowledge of where he bought it, Maritz said, and Sparks said he didn’t keep records of that. 

Oftentimes, Sparks testified that he paid with cash or traded his extracting services for the THC-A oil and relied on verbal agreements. That’s common practice in the industry, he said.

“You build up a network of relationships that you know are solid people,” Sparks said, “that you know care about the product.” 

Sparks said he has no record that his suppliers tested the oil before he got it. But Delta’s team would test the final products and input them into the state’s tracking system called Metrc. 

When sold on its own, the distillate was not required to be tested, Maritz said, but they did test it to ensure the quality.

The cost to make the hemp-marijuana mix was much less expensive compared to 100% Missouri-grown marijuana, both Maritz and Sparks testified.

Sparks said this practice is not an anomoly. 

“People are switching farms to grow THC-A hemp,” he said. “Nobody wants to deal with the marijuana. First of all, it’s too uptight and it’s not federally legal, so nobody wants to mess with it anymore. So everything literally is going to hemp.”

Maritz said Delta leaders believed the state understood what they were doing and had given them permission when they approved their “standards of procedures,” or details of the processes they used. 

Inversion 

The state’s Division of Cannabis Regulation is accusing the company of inversion, or illegally importing marijuana product from out-of-state and adding it to Missouri-grown marijuana products.

Hatfield said the division never communicated that adding the hemp product was against the rules until the company’s license was suspended on Aug. 2. 

In an interview with The Independent, Hatfield pointed to an email that Adam Whearty, a compliance team supervisor with the division, sent two days before Delta’s suspension, which was uncovered during the appeals process. 

Hatfield said it shows that Whearty and compliance officer Heather Bilyeu — who was Delta’s main contact in the compliance office — were confused about whether what the company was doing was allowed.  

“Heather thinks they found a loophole in the [emergency] rules, prior to 7/30, as does not think THC-A fell into the category of not being able to be used,” until the final cannabis rules took effect on July 30, Whearty wrote. “Heather and I are concerned about what we were to tell [Delta] about modified product in their inventory…”

However, during the appeals process, the state has argued that the emergency rules filed on Jan. 20 prohibited the practice.

Carole Iles of the Administrative Hearing Commission sided with the state in an Aug. 29 order. The only thing the cannabis regulating agency added to this line in the final rules, she wrote, was the clause “such as THC-A …” 

“We agree with the department that language added to the permanent rule … did not change the requirement of the emergency rule that THC in marijuana products could only be derived from marijuana cultivated by a Missouri-licensed cultivation facility,” the order denying a stay on Delta’s suspension states.

Delta’s use of the hemp THC-A was not the only reason for revocation, Amy Moore, the director of the Division of Cannabis Regulation, has previously said.

“While Delta Extraction’s use of out-of-state cannabis in our regulated system has been well-publicized and is a critical issue, [the Division of Cannabis Regulation] also found numerous other violations of rules at this facility,” Moore said in a press release in November. 

The division also said Delta did not properly maintain video surveillance footage or have necessary safeguards to prevent intrusion at the facility. The division argues that Delta falsified product tracking records and that regulators could not ensure the product was properly tested. 

In a November letter to the state’s attorney, Hatfield countered that the company did test the product in compliance with the law.

Delta also agreed to pay for retesting of any Delta product, Hatfield wrote in the letter, as well as to destroy all the product in its facility in order to reach a settlement with the state. 

“Should the parties not reach an agreement, Delta intends to challenge the Department’s authority to regulate hemp-derived products,” Hatfield’s letter states.

The courts will not entertain a legal challenge against the state until Delta Extraction’s appeal process is completed, a judge has already ruled.

Missouri would then be among several states where companies are challenging the state cannabis regulators’ authority to regulate hemp. Unlike marijuana, hemp has very little psychoactive properties naturally — which is why it was taken off the federal controlled substance list in the 2018 farm bill. 

But since then, businesses have been in a race to create ways to produce the most predominant psychoactive active element in marijuana, delta-9 THC, using the hemp plant. 

On Sept. 8, a federal judge in Arkansas granted a preliminary injunction in a lawsuit against the state, saying that hemp-derived cannabinoids, like THC-A, are protected under the 2018 farm bill. 

“Should Delta succeed in that challenge,” Hatfield wrote, “the industry would be free to engage in bringing in industrial hemp products from out of state for use in marijuana products.”

The company released a statement to The Independent that Delta “is eager to defend its reputation” during the hearing.  

“We are confident that the facts presented will show the revocation of our license was unwarranted,” it states, “and reveal the inconsistencies and overreach that have characterized [the division’s] process.”

Ahmad Haynes, a post-harvest technician at BeLeaf Medical's Sinse facility, reacts to the company's representative announcing the company wants to continue contesting the eligibility of 11 employees to vote in a Feb. 6 election to unionize. The election was held at the St. Louis Public Library Barr branch (Rebecca Rivas/Missouri Independent.)

Ahmad Haynes and a handful of employees at BeLeaf Medical’s Sinse Cannabis site in St. Louis anxiously waited for the clock to hit 5 p.m.

He and his co-workers had gathered outside the St. Louis Public Library’s Barr branch, where they had cast their votes to unionize earlier that afternoon on Feb. 6. The election came after a hard-fought legal battle that began in September with their employer contesting their eligibility to unionize. 

Minutes before 5 p.m., they all shuffled into a library conference room to hear the results.

“We all love our jobs, which is why we want the security behind having something like this in place,” Haynes, a post-harvest technician at Sinse, told The Independent. 

However, just as the representative from the National Labor Relations Board was gathering up the votes to tally them, BeLeaf’s director of human resources, Marilyn Gleason, told him to wait. 

She had spoken with the company’s attorney, she said, and BeLeaf wanted to continue to challenge 11 of employees’ eligibility to vote — out of the total 16 who voted.

Haynes’ jaw dropped, and the employees looked around in disbelief.

Cannabis workers across Missouri begin push to unionize dispensaries 

“I just could not believe they were doing it,” said Todd Rick, a former post-harvest specialist for Sinse Cannabis who says he was fired earlier this month. “But at the same time, I wasn’t surprised at all.”

Not long after he and other employees filed their petition to unionize in September, the company argued before the board that the employees aren’t manufacturer workers — they’re agricultural workers. 

Agricultural laborers aren’t protected under the 1935 National Labor Relations Act, which ensures employees have the “fundamental right to seek better working conditions and designation of representation without fear of retaliation.”

On Jan. 25, Board Regional Director Andrea Wilkes issued a 13-page decision detailing why the employees are not agricultural workers and could cast votes in the unionization election. 

The company’s challenge on Tuesday essentially asked Wilkes to rethink her decision.

The board representative asked Gleason why she wanted to challenge the votes after Wilkes had already deemed them eligible, and she said that’s what her attorney was advising her to do. 

Beleaf Medical did not respond to The Independent’s multiple requests for comment. 

The 11 challenged ballots were sealed in an envelope, and the regional director will decide whether or not to open them after further investigation, according to a letter Wilkes sent the attorneys representing the union and company on Wednesday.

Wilkes’ decision in the case will likely impact many cannabis employees across the state who’ve been told they weren’t eligible to unionize because they were agricultural workers, said Sean Shannon lead organizer with United Food and Commercial Workers International Union Local 655.

“This is going to show that not only could they try but they’re going to be able to succeed,” Shannon said, “because the BeLeaf union is going to succeed.”

The company could still file an appeal, asking the national five-member board appointed by the president to review the election results and the regional director’s Jan. 25 decision. That ruling would set a precedent for labor law nationwide. 

Not agricultural workers

Earlier this month, near the end of Rick’s shift, he said Gleason called him into an office and alleged that he had turned off a dehumidifier on several occasions. He was suspended with pay, he said. 

Yet, by the time he got to his car, Gleason had called him and told him he was fired. Because he had never received a warning about the action or potential discipline, Rick said it felt like he was being targeted for his leadership in organizing the union. He filed a complaint with the NLRB soon after.

“They knew that I had a pretty heavy hand in getting the union kind of off the ground,” he said. 

Rick had testified before the board this fall, regarding what type of work he performed. 

During the Oct. 27 hearing, company representatives described the employees’ job descriptions to the board, which included “a whole bunch of the cultivation side’s job description,” Will Braddum, a post-harvest technician for Sinse Cannabis, told The Independent in November. It was surprising for the employees who testified and had to refute that description, he said. 

“I’ve never watered anything and never touched any soil,” he said. “I’ve never touched a living plant at work.”

Wilkes found that none of the post-harvest employees are “engaged in primary agricultural activities.” They work separately from the cultivation and harvest departments, she wrote, and don’t overlap in duties. 

According to Wilkes’ decision, BeLeaf operates three cannabis cultivation facilities and five Swade dispensaries. The largest of their cultivation facilities is on Cherokee Street in St. Louis, where 29 cultivation employees care for the plants and five people harvest the marijuana plants and hang them to dry. 

In a completely separate department, Wilkes said there are 13 post-harvest employees who take down the dried plants and begin the de-stemming process. Some weigh the product and input that information into state’s tracking system Metrc.

After de-stemming and separating, the marijuana is packaged or processed into pre-rolled joints. The facility produces anywhere from 900 to 1,200 pre-rolls a day.

She compared the Sinse post-harvest employees’ work to that of employees in a tobacco processing plant. 

“Removing the veins from tobacco leaves and fermenting the leaves has been held to be outside the definition of agriculture,” under federal labor law, she wrote.

To determine whether or not an employee is performing agricultural work, Wilkes wrote the federal courts looked at whether the product has undergone a change from its ‘raw and natural state,’ and is more like manufacturing than to agriculture.

“In sum, the employer’s post-harvest production process is not a mere preparation for market but a process that utilizes industrialized processes to transform the marijuana from its natural state into finished products prepared for sale,” Wilkes wrote. “I therefore find that the post-harvest employees are statutory employees under the Act and are not exempted as agricultural laborers.”

What does the decision mean?

Jeff Toppel, a labor law attorney with the Bianchi Brandt firm in Arizona, has been keeping his eye on the BeLeaf case, just as other labor attorneys and unions have throughout the country, he said. 

Up until now, it wasn’t clear if the post-harvest workers would be excluded as agricultural workers, he said, which has pushed unions to focus more on dispensary workers.

“In large part, that was because of that uncertainty,” Toppel said. “This decision will definitely open the doors to unions to reshift that focus towards [post-harvest] workers.”

The regional director’s decision on Jan. 25 didn’t set a national precedent.

“But I think it’s certainly an indication of how the board will rule,” he said. “It is a significant decision and could have a wide-ranging impact.” 

The company is asking the director to review the evidence again that led to her decision — and Wilkes is complying. 

On Wednesday evening, Wilkes sent a letter to the attorneys representing the company and union stating they have until Feb. 13 to provide a statement explaining why each of the challenged individuals is or is not eligible to vote in the election, and provide evidence to support that position.

“If I determine that the challenged ballots raise substantial and material factual issues, I will schedule a hearing for as soon as practicable,” Wilkes wrote.

Toppel said the fact that Wilkes is allowing this evidence to be reviewed twice is “unusual.”

No matter what Wilkes decides, he said the company will likely file an appeal with the national board.

“A decision from the board…” Toppel said, “will provide much needed clarity on an issue that will have a significant impact on the future of organizing in the cannabis industry.”

Sen. Nick Schroer, a Republican from Defiance, sponsored a bill to regulate intoxicating cannabinoids (Annelise Hanshaw/Missouri Independent).

Missouri lawmakers have heard hours of heated testimony at two hearings in the last week over bills aiming to regulate intoxicating hemp products that get people high the same as marijuana.

Currently there’s no state or federal law saying teenagers or children can’t buy products, such as delta-8 drinks, or that stores can’t sell them to minors — though some stores and vendors have taken it upon themselves to impose age restrictions of 21 and up. 

And there’s no requirement to list potential effects on the label or test how much THC is actually in them.

“There’s zero reason why these THC products should not be treated like any other THC product in our state,” said state Sen. Nick Schroer, a Republican from Defiance, during a Monday Senate committee hearing. 

The legislation’s proponents and opponents both agree the state should regulate the existing “Wild West” market for intoxicating hemp products.

The debate, however, is over whether the agency that oversees the state’s marijuana program, the Missouri Department of Health and Senior Services, should regulate these hemp products. 

If DHSS is put in charge, the products would have to be sold at DHSS-licensed dispensaries. 

That’s what is proposed in legislation sponsored by Schroer and in the House filed by state Rep. Chad Perkins, a Bowling Green Republican. 

Missouri lawmakers take aim at unregulated ‘delta-8 THC’ hemp products

“Similar to alcohol, one regulatory body covers all intoxicating liquors and alcohol, such as beer, bourbon, wine, moonshine, brandy and even hooch,” said Schroer, who chairs the legislative committee that oversees Missouri’s marijuana rules. 

Opponents contend restricting hemp-derived THC products to be sold at the dispensaries would allow the “marijuana monopoly” to take over the market, given the limited number of licenses for dispensaries available. 

They argue there should be a separate regulating system in place for intoxicating hemp products that would allow them to continue to be sold in gas stations and liquor stores. 

“The nub of the issue you’re going to find is… where do you sell these products?” said Ronald Leone, executive director of Missouri Petroleum Marketers and Convenience Store Association. “Everybody agrees with the reasonable regulation and the reasonable taxation. The question is: Who do you allow to take advantage of this new and burgeoning market?”

Proponents said it’s “duplicative” to have a separate state agency regulating the hemp products, which are chemically identical to marijuana.

“What this bill does is it just clearly says: If it walks like a duck and talks like a duck, we’re gonna regulate it like a duck,” said Chris Lindsey, a lobbyist with the American Trade Association of Cannabis and Hemp.

Why aren’t they regulated now?

Hemp is often known for being the part of the cannabis plant that doesn’t get people high.  It’s full of CBD, a non-psychoactive cannabinoid that helps people relax and is often found in massage oils and sleep aids.

But much has changed since hemp was taken off the controlled substance list in 2018 by the last U.S. Agriculture Improvement Act, more commonly known as the farm bill. 

Now state regulators can barely keep up with the constantly evolving ways that people have found to make intoxicating products from hemp. Probably the most common way is to synthetically convert CBD into an intoxicating cannabinoid, such as delta-8 THC or delta-9 THC, using a solvent, acid, and heat.

The market for things like delta-8 drinks and edibles is one of the fastest growing markets in the country, and it’s completely unregulated on a federal and state level.

The FDA has said the regulation needs to happen, and the agency is “prepared to work with Congress on this matter.” 

Missouri does not have a regulating agency for hemp. The state punted that regulation to the U.S. Department of Agriculture in 2022. A USDA spokesperson previously told The Independent the 2018 Farm Bill did not specifically address delta-8 and the USDA has no jurisdiction or enforcement capabilities over those products.

During the hearing of Schroer’s bill Monday, opponents and proponents both agreed that Congress did not intend to legalize intoxicating hemp products by taking hemp off the controlled substance list through the farm bill. 

Vince Sanders, founder and president of CBD American Shaman, testified he was in the conversations for the 2018 farm bill.

“It was definitely unintended, including myself,” Sanders said. “But just because it was accidental, if you will, doesn’t mean that it necessarily ended up bad.”

Sean Hackmann, president of the Missouri Hemp Trade Association, testified Monday that Schroer’s bill would destroy many hemp businesses.

“We’re in favor of legislation that will assure product and consumer safety and allow it to be sold as it is successfully now in hundreds of retail locations,” he said. 

However, health officials said Monday the number of cases of children being poisoned from the intoxicating hemp products is alarming.

Julie Weber, director of the Missouri Poison Center at SSM Health Cardinal Glennon Children’s Hospital, said the number of children under 5 years old who have been exposed to the products has more than doubled every year, with 205 exposures last year. 

“It’s the packaging as well that’s a big concern,” Weber said “It’s attractive, has bright colors, mimics foods and candy. It also has cartoon figures on there.” 

During a House hearing last week, Perkins brought in a photo of a bag of delta-8 edibles that looked like a bag of Skittles.

“Trust me when I tell you, I’m a professional Skittles eater from way back,” Perkins said. “I cannot tell the difference, and that’s problematic.”

The constitutional amendment that legalized adult-use marijuana in November 2022 requires that labels and packaging for marijuana-related products, “shall not be made to be attractive to children… to protect public health.”

As a result, strict restrictions on what marijuana companies can include on a label were put in place this year. Those restrictions don’t exist for the intoxicating hemp products. 

“We’re talking about improving health and safety,” Perkins said. “And we’re talking about offering businesses a way in which they can participate in a legalized framework.”

Emmalyn Pratt tends to a patient as part of her studies at the Sonoran University of Health Sciences in Arizona to become a naturopathic doctor (photo submitted).

Emmalyn Pratt has been surrounded by firefighters her whole life, growing up in Kearney, 30 miles northeast of Kansas City. 

Her father is the local fire chief, and he’s part of a long line of firefighters in the family. 

“I’ve lived the sacrifices that they make to be away from their families and put their lives on the line,” Pratt said. “But they’re also putting their health on the line.”

That’s part of the reason she decided to study at the Sonoran University of Health Sciences in Arizona to become a naturopathic doctor — or a primary care physician with a focus on holistic care. Pratt’s dream is to open her own practice in her hometown to, in part, help optimize the health of first responders. 

But under current state law, Pratt couldn’t establish that practice in Missouri. Unlike Kansas and 22 other states, Missouri does not have licensing or registration laws for naturopathic doctors.

In states where the practice of naturopathic medicine is regulated, doctors are required to graduate from accredited four-year residential naturopathic medical programs and pass a postdoctoral board examination in order to receive a license or registration. 

Because Missouri doesn’t have a licensing program, Pratt could consult with patients, but she couldn’t write prescriptions, order lab tests or many of the other things she’s trained to do.

Two Republican lawmakers have proposed legislation to establish that licensing structure in Missouri — state Sen. Nick Schroer of Defiance and Rep. Doug Richey of Excelsior Springs.

Richey said Emmalyn and her father, Kevin Pratt, brought the issue to his attention a couple years ago. He believes the legislation will provide Missourians with more opportunities for quality health care.

“As we continue to talk about the need for more access to healthcare in both rural as well as metro contexts, this is an area of medicine that is known to be effective,” Richey said. “There are other states that have formally recognized it as such.”

So far, he said Schroer’s bill has gotten more traction than his bill, as it’s been referred to a committee and is closer to getting a public hearing.

Dr. Emily Hudson, president of The Missouri Society of Naturopathic Physicians, estimates there are currently a dozen or more naturopathic doctors working in Missouri who could be licensed under the proposed legislation’s prerequisites.

“There’s also doctors practicing in other states that would very much like to come back to their hometown in Missouri,” she said.

And because of the country’s growing physician shortage that the American Medical Association announced in October, Hudson said passing the bill is urgent. The association estimates more than 83 million people nationwide currently live in areas without sufficient access to a primary care physician.

“With this physician shortage, we’re so poised to be able to step in and help,” she said. “Even further, providing safe, ethical and effective options for people.”

What is a naturopathic doctor?

Firefighters are exposed to harmful chemicals when they fight fires, Pratt said, and it puts them at risk for developing diseases.

“Those exposures are just so high, even in that short period of time,” she said. 

Every year, Pratt’s father and first responders undergo blood work and stress tests to make sure they’re physically fit for duty. 

“It’s supposed to be a form of prevention…so that they can get a handle on it early,” she said, if a condition is detected. 

But where Pratt sees a gap is in someone guiding them through implementing the suggestions. 

That’s where her practice would come in, she said, “to provide that naturopathic side of things for them so that they can make long-term changes.”

Beyond prescription medications, Pratt said she would focus on helping them maintain a healthy lifestyle and assisting them in natural ways to help their bodies detox. 

At the core of naturopathic medicine is the idea of “treating the person first,” said Dr. Jamila Owens-Todd, a naturopathic doctor based in St. Louis. 

“You don’t treat the illness,” she said. “You look at the person for who they are, and you see what the imbalances are.”

Owens-Todd is currently working with the Bullet Related Injury Clinic, a community-based clinic in St. Louis that helps people heal after they have been injured by a bullet.

There, she works alongside Dr. L.J. Punch, the clinic’s director who previously served as a trauma surgeon at Barnes Jewish Hospital while on faculty at Washington University School of Medicine. 

“We work from inward outward, so to speak, and Dr. Punch gets that,” Owens-Todd said. “And not only gets that, but made a facility based on that.”

Naturopathic medicine lends to healing, she said, despite the demographic or socioeconomic boundaries or the severity of the illness.

And it requires extensive training, she said.

Currently, Hudson said there are numerous people using the title “naturopathic doctor” in Missouri who have not gone through the training that would be required under the licensing framework outlined in the bill. 

If the bill passes, those who don’t have the required education will no longer be able to use the title. 

“That title protection, that’s the utmost importance for the safety of Missouri,” Hudson said, “so that people don’t have to dig or feel confused about what type of practitioner they’re seeing.”

(Photo credit: iStock / Getty Images Plus)

The Missouri Veterans Commission will likely receive about $19 million from marijuana sales revenue before the current fiscal year is over on July 1, Amy Moore, director of the Division of Cannabis Regulation, told a House committee this week. 

Next year it will be $22 million, she said, if the governor’s budget recommendations are approved. 

“The governor’s recommendation is quite a bit more than expected,” Moore told members of the House Veterans Committee, “and that is tied to the unexpectedly robust sales, mostly on the adult-use side.” 

Since Missouri’s marijuana sales began in 2019, the state has collected more than $150 million in revenue from taxes and program fees, according to a presentation Moore shared with the committee.

Etched in the state’s constitution is a road map for where the revenue can go.

The first stop is operational costs. By law, any expense it takes to run both medical and recreational marijuana programs — like salaries or professional services — all must be paid for through marijuana revenues. 

The division has received nearly $50 million to cover its operating expenses, the presentation shows.

After expenses, the constitutional amendment that legalized medical marijuana in 2018 mandated that revenues from medical sales go towards the Missouri Veterans Commission. To date, nearly $40 million in medical marijuana sales revenue has gone to the commission — including $13 million this year.

The revenue road map is a bit different for the adult-use marijuana program, and it’s defined in Amendment 3 that was approved by voters in November 2022.

After paying operational costs, the next draw on the fund is expenses incurred by the court system for expunging certain marijuana offenses from people’s criminal records. 

After that, revenues are split in three ways: supporting veterans, funding drug addiction treatment programs and adding to the Missouri Public Defenders System’s budget.

So far, each of these funds has received $1.3 million, Moore said, but the governor is proposing an additional $5 million to each in his supplemental budget recommendation for this year.

All together that would be $19.3 million going to support veterans this year: $13 million from medical marijuana sales and $6.3 million from adult-use. 

Moore said the governor’s budget recommendations for next fiscal year includes an additional $7.8 million — putting the total at $22 million. 

State Rep. Dave Griffith, a Republican from Jefferson City and the veterans committee chairman, said the numbers are encouraging.

“The amount of sales that they’ve had with commercial marijuana has been just record-breaking and exceeded all expectations and projections,” he said. “Because of that, there’s going to be even more money into that pool than what they projected right after [Amendment 3] passed.”

The Missouri Veterans Commission has three core responsibilities, Griffith said: maintaining the state’s veterans homes and cemeteries and providing service officers to assist veterans with their benefits.

Griffith said his goal is to get the commission’s annual allocation up to $50 million that wouldn’t be reliant on marijuana revenue.

Before Moore’s presentation, the committee was discussing challenges that some veterans face obtaining their benefits. The state needs more service officers to assist them, he said, and that’s why the funding is so important.

“Many of them, they’re so overburdened with their caseloads that it’s hard to get in with them,” Griffith said. “If we can increase the number we have, we can start trying to cut down on that wait time many veterans have.”

State Rep. Aaron McMullen, R-Independence, presents a bill in committee on Jan. 16, 2024 (Tim Bommel/Missouri House Communications).

Republican lawmakers are once again pushing legislation that would require Missouri to conduct a clinical study on using psilocybin, more commonly referred to  as “magic mushrooms,” to treat depression, substance use or as part end-of-life care. 

Last year, the House overwhelmingly approved the measure. But it never made it to a final House vote.

Hearings on versions of the bill will take place in both the House and Senate this week.

In the House Veterans Committee on Tuesday, Republican Rep. Aaron McMullen of Independence plans to present an amended version of the bill that would limit its scope to only veterans.

The suicide rate among veterans in Missouri is nearly double the state rate and one of the highest in the country.

“Substance abuse and suicide are escalating in the veterans community,” McMullen, a veteran who served in a combat unit in Afghanistan, told The Independent. “While psilocybin is not a panacea for every issue, it represents a first true scientifically-validated hope that we have to address this crisis.”

A day later, Republican Sen. Holly Thompson Rehder will present an identically amended bill to that chamber’s Judiciary and Civil and Criminal Jurisprudence Committee.

“Many of our veterans experience high amounts of ptsd due to serving their country – due to protecting us,” she said. “There should be no limits for them when it comes to access to mental health treatment, including non-pharmacological treatments.” 

Missouri Republican pushes to legalize ‘magic mushrooms’ to treat depression, PTSD

Both bills would require the Missouri Department of Health and Senior Services to provide grants totaling $2 million for the research, subject to lawmakers approving the appropriation. The state would collaborate on the study with a Missouri university hospital or medical center operated by the U.S. Department of Veterans Affairs in Missouri. The focus of the treatment is on patients suffering from post-traumatic stress disorder, depression, substance use disorders or for those who require end-of-life care. 

Veterans have already had much success recovering from struggles that some of them have dealt with for decades, said veteran William Wisner, executive director of the Grunt Style Foundation, a nonprofit organization that assists veterans.

Some veterans, he said, have experienced “dreadful” side effects to prescription antidepressants that they haven’t with psilocybin.

“My experience with these types of modalities has been that the side effects make you more empathetic,” he said. “They make you kinder. They make you more open to kindness. It gives you a psychological and spiritual component to which you can engage in your own recovery.”

If he hadn’t seen the great strides his fellow veterans had experienced, Wisner said he probably would have never tried it, especially as someone who grew up during the 80s watching the “This is your brain on drugs” commercials.

Committee Chairman Dave Griffith, a Republican from Jefferson City, said he understands the measure may be outside some legislators’ “comfort zones.” 

“If you would have told me 10 years ago that I would be chairing a committee and listening to psychedelics, I would have told you, ‘You’re crazy,’” he told The Independent on Friday. “But I really have a passion for the struggles that my veteran brothers and sisters are going through, and I think we’ve got to look at the big picture.”

The committee members who will hear the bill Tuesday are the same members who voted unanimously to pass the bill out of committee last year, he said, “so they’re up to speed.” 

Griffith encourages people to look at the “extensive” research coming out of the Johns Hopkins Center for Psychedelic and Consciousness Research.

“I’ve probably spent, I don’t know, 20 hours reading materials that came out of Johns Hopkins,” he said. “The data that comes out of these studies that they’ve done is remarkable.”

In a 2022 study, Johns Hopkins Medicine researchers showed that psychedelic treatment with psilocybin relieved major depressive disorder symptoms in some adults for up to a year. 

Psychiatry researchers at Washington University School of Medicine in St. Louis were the first in Missouri to give a legal dose of psilocybin in 2019. 

They have been using a brain-imaging technique to learn how psilocybin affects certain networks in the brain. And their initial findings will be published in a couple months. 

Psilocybin helps people break harmful habits and ways of thinking, which applies to PTSD and psychosis as well, said researcher Joshua Siegel, an instructor of psychiatry at Washington University. 

“Habits are extremely hard to break,” Siegel said. “The reason that people who have one depressive disorder are prone to have more is because their brain is more likely to fall into these self-perpetuating kinds of states, that I think of like habits.”

All antidepressants make the brain’s emotion circuits more “plastic and adaptable,” he said, which makes them more open to change.

“Psilocybin just happens to do that very rapidly,” he said. 

Combined with preparation and help from therapists processing the experience afterwards, he said psilocybin successfully helps people choose new patterns of behavior and thinking.

“At this point, there’s a critical mass of studies of clinical trials that have shown positive responses,” Siegel said. “So I think that’s hard to deny.”

Two bills would add marijuana to Missouri’s workers’ compensation law, which outlines a drug-free workplace rule (Rebecca Rivas/Missouri Independent).

If Missouri employees ask for workers’ compensation after an on-the-job injury, employers can require them to take a drug test for marijuana. 

If they test positive — even if they hadn’t consumed marijuana for days — their compensation and death benefit may be reduced by 50%. 

That didn’t change when Missouri legalized recreational marijuana because it’s still a controlled substance on a federal level, two Republican state lawmakers told a House committee Wednesday. 

But if the federal government legalizes marijuana, “then people could literally smoke pot on the job in Missouri and there would be no prohibition against that,” attorney Bradley Young, a workers’ compensation attorney from Chesterfield, told The Independent Thursday morning. 

Republican Reps. John Voss of Cape Girardeau and Sherri Gallick of Belton are trying to etch the current policy into state statute so it can remain in place if federal law changes. 

They both said their legislation, drafted by Young, is meant to address intoxication on the job.

“I have some people that live close to me who are in this business,” Gallick said, referring to owners of a marijuana facility. “And as a business owner, they want to make sure that everything is done correctly. They want to make sure their businesses are protected.”

Both of the bills add marijuana to Missouri’s workers’ compensation law, which outlines a drug-free workplace rule. Currently the law states employees will lose 50% of compensation “if the injury was sustained in conjunction with the use of alcohol or non-prescribed controlled drugs.”

Under the state constitution, marijuana is no longer a “non-prescribed controlled drug,” Young said, but it’s still a federally controlled substance. 

Gallick’s bill makes an exemption for medical marijuana patients who are following a doctor’s prescription, but Voss’ bill does not. Sen. Mike Bernskoetter, a Republican from Jefferson City, has also introduced a bill that mirrors the language in Voss’ legislation.

Both bills faced pushback from Republicans and Democrats on the House Insurance Policy Committee Wednesday.

Rep. Richard West, a Republican from Wentzville, said he understands the need to test everyone involved in an accident, as a former police officer for 20 years.

“My biggest problem with this bill, though, is the non-impairment part of it, meaning we really don’t have the science to say at what point you are impaired,” West said, when it comes to marijuana.

West gave the scenario of taking a marijuana-infused gummy on Saturday night to help him sleep. He doesn’t take it Sunday night, and then goes into work on Monday completely unimpaired. 

“The ceiling falls in on me, and I get tested as a result of it,” West said. “Now I have it in my system, and they’re going to cut my benefits by 50%. That is possible under this bill, correct?” 

Ray McCarty, president and CEO of the Associated Industries of Missouri who was speaking in favor of the bill, said that’s the current policy and marijuana would continue to be treated the same as alcohol. 

Currently, if employees test below the intoxication level of alcohol of .08%, they still could have their benefits reduced.

West countered that it’s different because a person wouldn’t test positive on Monday if they consumed alcohol on Saturday, but they would with marijuana.

McCarty replied: “There’s no medical evidence that if you have it in your bloodstream that you are not somehow affected.”

Rep. Jeff Coleman, a Republican from Grain Valley, said he didn’t realize the current law reduced workers’ benefits, even if they were not at fault in an accident.

“This is new to me,” he said. “I have a little issue with that part of it…. If it’s determined to be no fault, I don’t think that there should be a reduction in their benefit.” 

In his 30 years as a workers’ compensation defense attorney, Young said he’s never once seen a situation where a judge reduced benefits because someone smoked pot days or weeks ahead.

“There is no example of that,” Young said. “We know that people are using drugs in conjunction with their work activities. That is a far greater problem than the hypothetical problem that exists regarding the person who smokes pot a week before he is injured on the job.”

Several legislators criticized the current testing methods for determining marijuana impairment.

“I just know it tests positive in your system for infinitely longer than alcohol,” said Rep. Steve Butz, a Democrat from St. Louis. “There’s a big difference. It could be three weeks ago that anybody did anything.”

West agreed.

“If we don’t have a threshold set at what impairment actually is, are we going to tell people they can’t partake in a totally legal entity within our state in their private time?” West said. 

Committee members asked when more efficient testing will be available. 

Young told The Independent he represents a construction company in St. Louis that purchased expensive technology to determine if THC is active in a person’s body, as opposed to testing a person’s metabolites. 

“The technology is there,” he said. “I’ve seen it. Next year it will be half the size and half the cost.”

Dyllan Davault, a harvester at Robust Cannabis facility in Cuba, Mo., tends to greenhouse plants on May 2, 2023 (Rebecca Rivas/Missouri Independent).

Missouri circuit courts have cleared more than 100,000 marijuana charges from people’s criminal records so far — a mandate that was a big selling point for those who voted to pass the constitutional amendment that legalized recreational marijuana in 2022.

However, court officials said it’s hard to determine how many more charges are left because many court records are not digitized. 

The state initially identified digital cases that could potentially be eligible for expungement and gave that information to the circuit courts.

“We’ve had about 100,000 cases expunged,” said Betsy AuBuchon, clerk of the Missouri Supreme Court, during a House appropriations committee meeting Wednesday, “but I can’t tell you of that how many more there are to go.”

She said the current rate of cases reviewed and deemed eligible is about 10%.

AuBuchon requested another $3.7 million in the coming budget year for Missouri courts to complete marijuana expungements.

By law, any revenue the state collects from taxes on recreational marijuana sales, along with fees the businesses pay, must first go towards the state’s costs of regulating the program. Then it goes to expenses incurred by the court system for expunging certain marijuana offenses from people’s criminal records.

Last year lawmakers signed off on $4.5 million for state courts to pay their employees overtime or to hire temp workers to complete the massive number of expungements required by law. They approved an additional $2.5 million in a supplemental budget on May 5. 

Circuit courts must request funds to reimburse their expenses for completing expungements from the Circuit Court Budget Committee, which oversees the special assistance program. 

So far, the committee has given $4.2 million to the county courts, said Beth Riggert, communications counsel of the Missouri Supreme Court. And the committee has allocated the funds to any circuit court that has requested it, she said. 

“Some circuit courts have advised they have not requested special assistance funds because they did not have current court clerks willing or able to work overtime,” Riggert said, “and/or have been unable to find qualified individuals to provide special assistance because the analysis required is complicated and better done by experienced personnel, such as retired clerks.”

As of Jan. 2, Missouri courts have granted 103,558 expungements. Out of all the counties, Greene County has received the most funding, nearly $940,000, and has completed the most expungements at 4,306. 

After Greene, the counties that have completed the most expungements are not necessarily the largest counties or the ones that have received the most money. 

The second highest number is 3,515 from Laclede County, which has a population of 36,000. The county has received a little more than $35,000 from the special assistance program.

In third place is St. Louis County, the state’s largest county with more than a million people, where court officials have processed 3,479 expungements. The county has received just over $135,000. The court has reviewed 11,300 files, a spokesman for the 21st Circuit Court said. 

Franklin County, which has a population of 104,000, is fourth, completing 3,200 expungements and receiving about $53,000. Franklin is just ahead of Jackson County, which has a population of 717,000. Jackson has completed 2,900 and received nearly $195,000.

The constitution mandates the courts to expunge all marijuana-related misdemeanors by June 8 and felonies by Dec. 8. State Rep. Maggie Nurrenbern, a Democrat from Kansas City, asked AuBuchon how long it will take the courts to work through the backlog. AuBuchon, like circuit clerks statewide, couldn’t give an estimate.

“We are doing our best,” AuBuchon said. 

How far along are the courts?

Greene County Circuit Clerk Bryan Feemster told The Independent last week that he brought on four experienced retired clerks in February to work part-time on expungements and, “they hit the ground running.” Their work has been guided by a list of pre-screened cases, compiled by the Office of State Court Administrator. 

The office searched for several criminal charge codes that potentially could involve marijuana and provided that list to the courts. The clerks must read through each case on the list thoroughly, he said.

“You have to look at every count in the case and see whether it actually had to do with marijuana or not,” he said.

Feemster submits timesheets and supporting documentation to the office, which then provides payment to employees on their paychecks for the expungement work. 

He’s hired additional two people to embark on the heavy lifting of paper boxes and going through thousands of paper files that can’t be pre-screened by the state. Those six clerks are dedicated to expungements. 

“They don’t do anything else,” he said.

During the 2022 campaign in support of the recreational marijuana ballot measure, supporters touted “automatic expungements” — meaning people who have already served their sentences for past charges don’t have to petition the court and go through a hearing to expunge those charges from their records. 

The courts must locate their records and make it as if their past marijuana charges never existed. 

“Let me be the first to tell you there is nothing automatic about that,” AuBuchon told legislators Wednesday. 

It’s a labor-intensive process, she said, that requires someone with legal experience to look through court files. That’s why most courts are relying on retired clerks. 

“It’s heavily frontloaded and probably not worth bringing in brand new full-time employees on the state dollar,” she said. “We really need people who know how to do that work. We are getting through those as quickly as we can.”

And that’s particularly the case with paper records, Feemster said, because it’s all manual.

“From 1989 back, we’re going through every single criminal record to find out whether there’s something in there that might qualify,” he said. “And it is, as you might imagine, very slow and tedious.”

While Greene County has a team of retired clerks who Feemster was able to recruit, other county clerks say they have one or two extra people helping complete the task. 

Marcy Anderson was appointed to serve as Johnson County’s circuit clerk in July, and she inherited the expungement task. She said she has a judge and a retired clerk who come to help out as often as they can, in addition to what her regular team can accomplish. 

“I have not done any kind of research to see how far along we are,” Anderson said. “We just continue to do it every day.”

Johnson County has a population of 54,000, and her team has completed 529 expungements, as of Jan. 2, receiving nearly $18,000 from the special assistance program. 

However her office, like every other county statewide, is simultaneously working on a large redacting project that’s required now that people can access court records on CaseNet. 

Both the redacting and expungement processes require extra help that she currently doesn’t have, but “more funds and more people” would be helpful.

In Jackson County, court clerks have reviewed more than 20,000 files that include both felony and misdemeanor drug charges, said Valerie Hartman, spokeswoman for the 16th Judicial Circuit Court. The court has expunged nearly 3,000 charges.

Some of those cases reviewed were related to marijuana, but many were not, she said. 

The court reviewed cases from 1989 through 2022 using data provided by the Office of State Courts Administrator, the Missouri Corrections Department and the Missouri State Highway Patrol, she said. All files that contained drug charges were included in the review.

Now the court is researching how to access old criminal databases, in order to identify and review additional paper case files, Hartman said. 

“We have no information,” she said, “nor an estimate on how many additional drug cases await our review.”

This story has been updated to reflect the discussion during Wednesday’s hearing.

Curio Wellness' new 130,000-square-foot marijuana facility in St. Louis (Rebecca Rivas/Missouri Independent).

MARYLAND HEIGHTS — Covered in white protective clothing, Wendy Bronfein stepped into a long, sterile hallway of closed doors.

She calls it the “Willy Wonka-esque” corridor. 

“This is the Mike Teavee part of the tour,” said Bronfein, co-founder of the Maryland-based marijuana company Curio Wellness, referencing the character from “Charlie and the Chocolate Factory.” 

Everything down to the wheels on the carts at the new marijuana manufacturing facility in St. Louis County gets scrubbed regularly. And that’s not just because Bronfein had been expecting inspectors from the Missouri Division of Cannabis Regulation to complete a final audit of the site so the company could begin operations. 

It’s also because Curio Wellness is aiming to be among the few marijuana facilities in Missouri to obtain a Good Manufacturing Practice certification, a standard the U.S. Food and Drug Administration requires pharmaceutical companies to obtain. 

“GMP is a standard that goes above and beyond anything that the state requires,” she said. “We’ve had that certification in Maryland since 2019.”

The entire facility is 130,000 square feet, with the manufacturing portion taking up 55,000 square feet. The rest is under construction to build out the cultivation side, where the plants will grow, which Bronfein said, should be completed in April. 

The division gave its final OK for the manufacturing facility to begin operations on Jan. 2.

While Curio Wellness is in charge of operations, the facility’s license is actually in the hands of the ownership group, VMO-Ops Inc. It’s a collaboration between Viola and Village brands, which is owned by former NBA player Al Harrington and Dan Pettigrew, along with St. Louis entrepreneurs Larry Hughes and Abe Givins.

Since the cannabis industry began in 2019, VMO-Ops has been the only Black-owned vertically integrated cannabis company in Missouri, having two dispensary licenses and one manufacturing and one cultivation license.  

But Pettigrew said the pandemic made finding investors difficult to get the manufacturing and cultivation sites off the ground after securing licenses in December 2019. 

Now, the group will be asking the state to approve a request to transfer the manufacturing and cultivation licenses to Curio Wellness. That process could take up to a year, though it may take longer depending on how prepared the applicants are, the division’s spokeswoman Lisa Cox told The Independent. 

Until the application is approved, VMO-Ops is still responsible for everything that happens at the facility, “regardless if a licensee has a management agreement in place with the proposed transferee,” Cox said.

Though the licenses will eventually change hands, Pettigrew said his group will remain involved. 

“Without getting into the details, we have a significant ownership stake potentially in Curio, so we’re not all the way removed,” he said. “Curio has gone out of their way to make sure that not only are we contributing, but they’re making products specifically for us to our specs.”

Givins called the partnership with Curio “unique.” Though VMO won’t be the license holders ultimately, he said, “It doesn’t change the partnership and the influence that we’ll have on the market as a whole.”

As a consumer himself, Pettigrew called the Curio quality “unbelievable.”

“We look at this as kind of an upgrade,” he said. “We don’t look at it as selling out.”

‘Rigorous training’ and workforce diversity

Daniel Virag is among Curio’s first nine employees who have spent weeks training on the company’s process and certification requirements. 

When The Independent took a tour of the facility on Dec. 4, Virag was stationed in a room where the pills “Good Night” and “Good Day” are produced.

“This process is where Curio kind of separates itself from the rest,” Virag said. “As my own experience, because I haven’t been involved with any sort of tablet, or anything like that. It’s really cool and innovative.”

The pills include Delta-9 THC, which is the most well-known cannabinoid for getting people high, as well as other properties of the cannabis plant that aren’t that don’t have intoxicating properties, such as CBN and CBD.

“In our initial conversations with dispensaries here,” Brofein said, “this is the kind of stuff that they were really excited about.”

The company also makes topical balms with THC and CBD to ease muscle aches and pains. And it has a range of chews and chocolates, as well as pre-rolled joints — along with a product line exclusively made for Viola.

“We’re just excited about the ability to carry their products,” Pettigrew said. “They’ve really taken a strong medical-based approach, which we like because obviously our company started as a medical company. We believe that cannabis is medicine.”

Pettigrew also appreciates Curio’s “rigorous training” and educational programs, which VMO has incorporated into their retail locations. 

And Curio is looking to uphold VMO’s strong focus on workforce diversity, as the company brings on more employees when the company begins operations.

“They understood from the beginning how important that is to us,” Pettigrew said. “If you look at our retail stores, I think we’re probably 95% minority-and woman led. Obviously we can’t hold to those standards, but they have heard us and are taking those considerations to heart.”

Bronfein pointed to the careers page on the company’s website that has a breakdown of the diversity among the company’s 350 employees in Maryland — 46% of their employees are minorities, 38% of management positions are women and 22% of employees are veterans. 

“We are highly diverse from top to bottom as a company as it exists in Maryland,” she said, “and bring that same accountability to here in Missouri.” 

A family business

In 2014, Bronfein was working in television in Maryland when the state passed a law legalizing medical marijuana. 

Her father, Michael, had always been in pharmaceutical distribution. 

“I saw the news item, and I forwarded to him kind of like, ‘This is interesting,’” she said, “not really thinking the pursuit of this would come to fruition.”

Dreaming up the company slowly became “a nights and weekends project,” Bronfein said, and they worked towards applying for a license. 

They found the blend of her background in branding and marketing and her father’s in healthcare administration gave them a strong foundation in addressing the most challenging part of the cannabis industry — the regulations. 

Later, her sister and brother also joined the team.

“The four of us all work together,” she said. “Our mom does not. She just keeps us sane on the sidelines, and we call her the chief babysitting officer.”

The strong focus on family is one of the reasons Curio seemed to meld well with VMO, both groups said.

“It’s a father-daughter team, and I really liked it that the company is family orientated,” Givins said. “And I just think an experienced cultivator putting quality product into the Missouri market is good as a whole.”

When Harrington and Pettigrew founded Viola Brands in 2011, they named it after Harrington’s grandmother, Viola, who inspired the company’s mission. And that’s to “increase minority participation and ownership in the cannabis industry while positively impacting and reinvesting into communities most affected by the war on drugs.”

Pettigrew said mutual investors introduced him to Michael Brofein, and the companies are proving to be a great pairing.

“One of the benefits we have is our relationships within the space,” he said. “We’re proud to be a part of what I consider the best cultivation and processing facility in the state.”

CORRECTION: This story has been updated to accurately reflect when Curio Wellness obtained a Good Manufacturing Practice certification in Maryland. It was in 2019. 

Tiffany (left) and Anwar (middle) Lee at an outreach event in St. Louis on June 22, 2023, where the state’s new chief equity officer, Abigail Vivas (in green), went through all the eligibility requirements for the cannabis microbusiness program (Rebecca Rivas/Missouri Independent).

More than 40% of the owners listed on applications for state’s social-equity marijuana licenses issued in October were from outside Missouri, according to an annual report released by the Division of Cannabis Regulation Wednesday.

About half of those owners came from California, Michigan, Louisiana and Arizona collectively.  

The microbusiness license program is meant to boost opportunities in the industry for businesses in disadvantaged communities, and it was part of the constitutional amendment to legalize recreational marijuana that voters passed in November 2022. 

A total of 1,625 applications were submitted for 48 microbusiness licenses — 16 for dispensaries and 32 for wholesale facilities. Nearly 1,900 owners were listed on the applications.

A central focus of the annual report is why the Division of Cannabis Regulation may be revoking 11 of the 48 social-equity cannabis licenses issued in October, after finding they didn’t meet eligibility requirements. 

Those applicants were issued notices of pending revocation of their licenses on Dec. 15, and they have until Jan. 15 to respond with additional information that could reverse the department’s decision.  

Among those who could face license revocation is Canna Zoned, a Michigan company that secured two of the 16 dispensary cannabis licenses — in Columbia and Arnold. 

Both of Canna Zoned’s licenses have been deemed ineligible, according to information the state provided to The Independent in December.

State records show Canna Zoned was connected to 104 out of the 1,048 applications that were entered into a lottery selection for the dispensary licenses. An investigation by The Independent in October found applicants thought they were partnering with the Michigan investor but in reality signed agreements requiring them to relinquish all control and profits of the business. 

Some applicants were recruited through Craigslist ads from around the country. 

Another company that used the strategy of flooding Missouri’s lottery with applications was an Arizona-based consulting firm called Cannabis Business Advisors. It was connected to more than 400 dispensary applicants, including six winners. 

The state couldn’t certify the eligibility for all six of the licenses connected to the firm’s clients.

A Missouri firm, Amendment 2 Consultants, is connected to more than 150 applicants, winning two dispensary licenses and two wholesale licenses. One of the group’s dispensary applicants was deemed ineligible.

Abigail Vivas, who oversees the microbusiness program as chief equity officer within the division, is constitutionally mandated to produce an annual report for the public and state legislators by the end of the year.

In an interview with The Independent Wednesday, Vivas said the fact that a fourth of the licensees are pending revocation shows the division is doing its “due diligence.”

“It doesn’t matter how you applied — whether you’re part of a group of multiple applications or a single application,” Vivas said, “we are going to look at all the information to ensure that these are going to truly eligible individuals.”

Flooding strategy

A big question that Vivas received after the division released the winners of the microbusiness licenses was why numerous applications had the same designated contact person and proposed locations. Did that mean that one person was submitting more than one application, which is against the rules? 

Vivas said she understood the concern but hopes the report clarifies that a designated contact could be an attorney or someone outside the business who represents more than one owner. It doesn’t have to be an owner.

There were three designated contacts who submitted 43% of the applications. And while the report doesn’t state this, the numbers match those of Michigan-based Canna Zoned, Arizona-based Cannabis Business Advisors and Missouri-based Amendment 2 Consultants.

In some cases, numerous people who believed they were eligible came together to submit separate applications for one business, and Vivas said this isn’t against the rules.

“There’s nothing that prohibits a group of five people that all meet an eligibility requirement individually, applying separately to increase their odds of winning in the lottery,” Vivas told The Independent. “There’s nothing that says that they can’t do that.”

If one person wins and the group wants to change ownership later, they can do that with department approval, she said. 

The applications with the same designated contact often had the same proposed location as well. And that’s not against the rules either, she said.

The strategy of flooding the lottery with applications to increase the odds was used mainly among the applications for dispensary licenses— and those licenses also drew the most out-of-state interest. State law originally required Missouri or majority Missouri ownership of marijuana licenses, but that was deemed unconstitutional by a federal judge in 2021. 

When the results first appeared, there was some rumbling within the cannabis industry that the strategy was successful — since those three designated contacts on multiple applications landed 9 of the 16 dispensary licenses statewide. 

However, now all nine of those licenses are pending revocation. 

When asked if it was related that the licensees with duplicate locations and designated contacts were all deemed ineligible, she said “no.” 

 “I wouldn’t say it’s related to them having a designated contact and then duplicate facilities,” she said. “We had people that were determined ineligible for several reasons.”

The report states that the ineligibility issues included “failure to provide documentation that the facility would be operated by eligible individuals.”

Other cited reasons included failure to provide adequate documentation to verify the majority owner met the eligibility criteria and for a disqualifying felony offense.

Overall, Vivas said she’s learned a lot through input from applicants about what resources the division can provide in the second round – which begins in March – to help applicants through the process. 

She said her “to-do list” includes offering educational sessions on potential predatory lending or business agreements. It also includes trying to explore opportunities to create a grant-funding program for the licensees, which some other states have done to help licensees obtain capital without feeling the need to enter into unhealthy business arrangements. 

“It’s been a fast and furious timeline of things that we had to do,” she said. “So we’re trying to take that time now to build some of those other things into our program.”

Delta-8 THC products like this cherry seltzer can be sold in stores in Missouri because the intoxicating ingredient, THC, is derived from hemp, not marijuana which is a controlled substance (Rebecca Rivas/The Missouri Independent).

A Republican state senator has filed legislation to renew last spring’s failed effort to regulate intoxicating hemp products in Missouri, such as Delta-8 drinks and edibles.

Delta-8 THC products can be sold in stores in Missouri because the intoxicating ingredient, THC, is derived from hemp, not marijuana which is a controlled substance. And hemp is federally legal.

There’s no state or federal law saying teenagers or children can’t buy them or stores can’t sell them to minors — though some stores and vendors have taken it upon themselves to impose age restrictions of 21 and up. 

And there’s no requirement to list potential effects on the label or test how much THC is actually in them.

State Sen. Nick Schroer, a Republican from O’Fallon who chairs the legislative committee that oversees Missouri’s marijuana rules, said the products are too easily accessible to children, particularly teenagers. 

“I’ve had constituents reaching out to me saying that their kids had been hospitalized,” Schroer said. 

Schroer’s bill would task the Missouri Department of Health and Senior Services with regulating these products, as the agency currently does for the state’s marijuana program. And products would have to be sold at DHSS-licensed dispensaries. State Rep. Chad Perkins, a Bowling Green Republican, has filed a companion bill in the House. 

DHSS spokeswoman Lisa Cox said the department does not take positions on proposed bills.

“However,” she said, “we do acknowledge the potential and ongoing public health impact of unregulated THC products.”

Over the past few years, Cox said there’s has been an increase in children going to the hospital for cannabis exposure.

“The department has increased its emphasis on regulatory mechanisms that protect health and children in order to minimize any contribution of the regulated cannabis market to such incidents,” she said. “As of right now, there is no such protective framework for unregulated THC products.”

Sean Hackman, president of the Missouri Hemp Trade Association, said his organization advocates for measures such as prohibiting sales to minors and mandating clear user instructions and rigorous product testing.

“While any overdose report, especially those involving minors, is deeply concerning, this does not constitute a public health emergency but rather an opportunity for improved regulation,” Hackman said in an email to The Independent, in response to the legislation.

The association opposes tasking the department with regulating the products and requiring them to be sold in dispensaries.

A similar bill filed by Republican state Rep. Kurtis Gregory of Marshall got stuck in committee during the last legislative session. 

During a hearing on the bill, both Republican and Democratic lawmakers pushed back on the idea of forcing the hemp industry under the umbrella of DHSS, saying that would allow the “marijuana monopoly” to take over this market given the limited number of licenses for dispensaries available.

After voters passed a constitutional amendment allowing medical marijuana in 2018, competition for licenses became fierce when the state capped the number of applications it would approve — initially issuing 338 licenses to sell, grow and process marijuana.

Widespread reports of irregularities in how applications were scored fueled criticism of the industry and accusations that insiders were building a monopoly. That criticism spilled into the campaign to legalize recreational marijuana last year, though the proposal still won voter approval.

Some applicants who didn’t land medical marijuana licenses turned to producing hemp-derived THC products.

Another concern critics had last year was that hemp is federally legal, and lumping it in with the regulations of a controlled substance could result in lawsuits.

Schroer said he’ll be closely watching the ongoing legal case of Robertsville-based marijuana manufacturer Delta Extraction.

Delta Extraction had its license to manufacture cannabis products revoked in November, months after a massive recall pulled more than 60,000 products off the shelves — which the state says were illegally made with a hemp-derived THC concentrate imported from out of state.

While hemp is federally legal, state regulators argue that once hemp-derived THC comes into the marijuana realm, they can regulate it. 

The question currently before the Administrative Hearing Commission is whether or not Missouri regulators have the authority to prohibit licensed companies from infusing Missouri-grown marijuana products with hemp-derived THC. 

If the company loses its appeal before the commission, then Delta will continue to fight in court, the company’s attorneys have said.

And Delta will be arguing the state has no authority to regulate hemp products at all. 

“The Division of Cannabis Regulation’s authority to regulate is limited to non-hemp marijuana and does not depend on whether it is used to make THC,” Delta’s attorney, Chuck Hatfield, wrote in a recent letter to the department. 

Schroer said his proposed legislation will be mindful of the court’s decision in the case. 

“We’re still going to use this judicial guidance to craft a type of law compliant with that case law,” he said, “that is going to protect the youth of our state and any type of consumer of these types of products.”

In September, a federal judge in Arkansas sided with hemp companies in granting a preliminary injunction on a state law — similar to the one Schroer and Perkins have proposed — aimed at regulating hemp-derived THC. 

U.S. District Judge Billy Roy Wilson said if Arkansas wants to participate in the federal hemp program, then it can’t pick and choose which parts of the law it wants to follow.

Despite the preliminary court order in Arkansas, Schroer said he’s not convinced the federal government has the authority to prevent state legislators from passing laws to regulate intoxicating cannabinoids. 

“When you’re putting these things into the stream of commerce and you look at the 10th Amendment,” he said, “there’s really nothing in the U.S. Constitution that says that we can’t clearly legislate this type of issue.”

(Rebecca Rivas/The Missouri Independent)

Missouri’s crackdown on a cannabis company accused of illegally importing THC concentrate could lead to a showdown over the state’s authority to regulate the industry.

Delta Extraction had its license to manufacture cannabis products revoked in November, months after a massive recall pulled more than 60,000 products off the shelves — which the state says were illegally made with a hemp-derived THC concentrate imported from out of state.

As the legal battle continues to drag out, the company has upped the ante: If the state continues its efforts to sanction Delta and the recalled products, it will respond with litigation the company’s attorneys believe could gut Missouri’s marijuana regulations.

“Delta is also not limited to only challenging the [Department of Health and Senior Services’] authority to regulate hemp-derived products,” Delta’s attorney Chuck Hatfield, wrote in a Nov. 15 letter to the state. “Any lawsuit will likely include claims relating to the department’s regulatory authority in other areas of the marijuana industry.”

On the outside, the company with 20 employees located at the end of a dusty farm road near Pacific seems an unlikely candidate for upending Missouri’s regulatory framework.

But behind the scenes, Delta’s owners and associates include some of the most influential players in Missouri cannabis.

From its ownership group — which hosted Missouri Attorney General Andrew Bailey at a Ladue fundraiser just two weeks after his office took over defending the state in Delta’s litigation — to the powerful lobbyists and attorneys enlisted to represent the company and its affiliates, Delta is anything but an underdog.

State Sen. Nick Schroer, a Republican from O’Fallon who chairs the legislative committee that oversees Missouri’s marijuana rules, said Delta hired the “big guns” to win its license back — including longtime Jefferson City attorneys Hatfield, a Democrat, and Lowell Pearson, a Republican.

“That’s where I think this is a very interesting issue because it’s not necessarily political,” Schroer said. “It impacts all the parties, all individuals across the state, from veterans to people that just like to smoke recreationally and so many others in between.” 

In order to reach a settlement with state regulators, Delta was willing to admit that it “failed to strictly comply with regulatory requirements,” according to Hatfield’s letter. 

However, the company won’t admit that it did something wrong when it imported a hemp-derived THC concentrate, Hatfield said, because hemp is not a federally controlled substance.

Lisa Cox, the department’s spokeswoman, said Delta Extraction’s license was revoked for “numerous violations of rules, including extensive failure to comply with seed-to-sale tracking requirements.” 

Cox also said the company “was not permitted to use THC in its products unless that THC was created from cannabis grown by a licensed cultivation facility.” 

A question for the courts

At the center of Missouri’s massive marijuana recall is a THC concentrate, or distillate, made partially from hemp.

Delta bought oil from a Florida lab containing THC-A extracted from the hemp plant. Once the oil was in Missouri, the company heated it through a decarboxylation process — which turns it into Delta-9 THC, the cannabinoid most commonly known for producing a high. 

Buying hemp-derived THC-A from Florida is much cheaper than producing it from Missouri marijuana.

While hemp is federally legal, state regulators argue that once hemp-derived THC comes into the marijuana realm, they can regulate it. 

The Missouri constitution “expressly requires all marijuana and marijuana-infused products sold in Missouri to be cultivated or manufactured in Missouri,” the department argued in a Dec. 4 document in the Delta’s appeal of the recall and license revocation before the Administrative Hearing Commission.

The question currently before the commission is whether or not Missouri regulators have the authority to prohibit licensed companies from infusing Missouri-grown marijuana products with hemp-derived THC. 

The commissioner overseeing the case, Carole Iles, has already said in an Aug. 29 order that it’s illegal to add “hemp-derived chemically modified ‘converted’ cannabinoids” to marijuana products.

That’s why the fight will likely end up in court. 

In September, a federal judge in Arkansas sided with hemp companies in granting a preliminary injunction on a state law aimed at regulating hemp-derived THC. 

U.S. District Judge Billy Roy Wilson said if Arkansas wants to participate in the federal hemp program, then it can’t pick and choose which parts of the law it wants to follow.

“Clearly, under the 2018 Farm Bill, Arkansas can regulate hemp production and even ban it outright if it is so inclined,” the Sept. 7 ruling states. “The legislature seems to have tried to keep the parts of the program it likes (purely industrial uses) and eliminate the parts it doesn’t (human consumption).”

Hatfield said that’s what Missouri cannabis regulators are trying to do. 

“The Division of Cannabis Regulation’s authority to regulate is limited to non-hemp marijuana and does not depend on whether it is used to make THC,” he states in the letter to the department. 

Schroer said he’s heard from numerous marijuana businesses that are suffering from the recall, and he’s not sure the state’s decision to pull Delta’s license and thousands of products from the shelves was the right one. He believes voters wanted a marijuana program where all products were homegrown in Missouri. 

“And arguably, was hemp part of that?” he said. “I think we’re gonna find out in the courts.” 

The underdog

Aside from the legal battle, the case sets up another conflict. 

For Missouri’s marijuana cultivators, hemp-derived THC poses a threat to their livelihoods because Missouri marijuana licensees must go through a rigorous and costly regulatory process — one that hemp companies don’t.

If Delta and other manufacturers can buy hemp-derived THC concentrate for a fourth of the price that it costs to purchase Missouri-grown marijuana THC concentrate, then the state’s marijuana cultivators will suffer. 

But it would be a big win for the state’s hemp farmers. 

Sean Hackmann, president of the Missouri Hemp Trade Association, said Delta sold more than $20 million of distillate that was a mixture of marijuana grown in Missouri and hemp from other states.

“Twenty million dollars in the Missouri hemp industry would be huge, if that was produced, extracted and processed inside our state,” Hackmann told The Independent in September. “But it was all some other state that benefited from that. Not our Missouri industry.” 

While normally the underdogs, the hemp industry now has people like the marijuana industry’s top lobbyist Steve Tilley and attorneys Hatfield, Pearson and Alec Rosenblum fighting for its interests because it benefits their clients.

And the web of political ties runs deep. 

A member of Delta Extraction’s ownership team, Josh Ferguson, hosted a fundraiser for Attorney General Andrew Bailey’s election campaign on Nov. 7. 

Delta’s lawsuit against the state has made its way to the Court of Appeals, and that’s where the attorney general’s office normally takes over legal representation in marijuana cases. 

Two weeks before the fundraiser, Bailey’s office began representing the state in Delta’s appeal. The case is being handled by Solicitor General Josh Devine, the highest-ranking lawyer in the attorney general’s office. 

“The AG’s Office represents state agencies in these cases at the appellate level,” said Madeline Sieren, Bailey’s spokeswoman. “That is what we did here. Any political activity is separate and apart from his work as attorney general. I would direct any questions about political activity to the campaign.”

Political power

Delta Extraction is 50% owned by A Joint Operation, a management group with three principals: Ferguson, Josh Corson, and Ryan Rich. 

Ferguson is the owner and founder of Kaldi’s Coffee. Corson comes from a real estate background and Rich is owner and CEO of Hot Box Cookies. 

Rachael Herndon Dunn is chief development officer at A Joint Operation and one of the initial founders of Greenway Magazine, which covers the cannabis industry. 

The other half of Delta Extraction is owned by Ozark Highland Cannabis LLC, which is the umbrella for the Midwest Magic brand that uses Delta Extraction’s facility to make its products. Edward Maritz is the registered agent for Ozark, and Jack Maritz is the general manager for Delta Extraction.

Delta was also manufacturing products for the Conte brand. According to documents filed in both the lawsuit and appeal with the commission, Delta has been producing Conte’s THC distillate for over a year. The majority of the distillate is hemp-derived THC-A combined with a small amount of Missouri marijuana. 

The company has sold 700 liters of this concoction since at least July 2022, Jack Maritz said in his Aug.14 testimony before the Administrative Hearing Commission. 

And it’s sold to 135 Missouri marijuana license holders, with Delta making $20 million since it began offering a hemp-marijuana distillate in April 2022, company leaders said in their testimonies. 

The 700 liters of oil has the potential to make “millions of packs of edibles,” Maritz said in his testimony.

Over the summer, Conte Enterprise Holdings hired the Jefferson City lobbying firm Strategic Capitol Consulting. The firm is owned by Tilley, a former state lawmaker and fundraiser for Gov. Mike Parson. 

Rosenblum serves as Conte’s attorney.

The Administrative Hearing Commission will hold a three-day hearing on the company’s appeal of the recall and license revocation in February or early March. If the commissioner sides with the state, then Delta will continue the fight in court. 

A separate lawsuit against the state was filed in September by a company that purchased the recalled THC oil from Delta and is now challenging the regulators’ authority to pull the product from the shelves. 

While not a Missouri licensee, the company, Integrated Sales Solutions, argues that its products are on lockdown and the company’s livelihood is suffering. 

Integrated Sales Solutions  is represented in the lawsuit by Marc Ellinger — Bailey’s campaign treasurer. 

Ellinger did not return The Independent’s request for comment.

Chief Equity Officer Abigail Vivas, who oversees the microbusiness program  under the Missouri Department of Health and Senior Services, said in a report released Friday that the ineligibility issues included “failure to provide documentation that the facility would be operated by eligible individuals" (Rebecca Rivas/Missouri Independent).

Missouri cannabis regulators may revoke 11 of the 48 social-equity cannabis licenses issued in October after finding they didn’t meet eligibility requirements. 

Nine were dispensaries and two were wholesale facilities.

Among those who could face license revocation is Canna Zoned, a Michigan company that secured two of the 16 dispensary cannabis licenses — in Columbia and Arnold. 

Both of Cana Zoned’s licenses have been deemed ineligible, according to information the state provided to The Independent Friday evening.

State records show Canna Zoned was connected to 104 out of the 1,048 applications that were entered into a lottery selection for the dispensary licenses. An investigation by The Independent in October found applicants thought they were partnering with the Michigan investor but in reality signed agreements requiring them to relinquish all control and profits of the business. 

Some applicants were recruited through Craigslist ads from around the country. 

Another company that used the strategy of flooding Missouri’s lottery with applications was an Arizona-based consulting firm called Cannabis Business Advisors. It was connected to more than 400 dispensary applicants, including six winners. 

The state couldn’t certify the eligibility for all six of the licenses connected to the firm’s clients.

A Missouri firm, Amendment 2 Consultants, is connected to more than 80 dispensary applicants and two winners. One of the group’s dispensary applicants was deemed ineligible.

Abigail Vivas, who oversees the microbusiness program under the Missouri Department of Health and Senior Services as chief equity officer, said in a report released Friday that the ineligibility issues included “failure to provide documentation that the facility would be operated by eligible individuals.”

The microbusiness program is meant to boost opportunities in the industry for businesses in disadvantaged communities, and it was part of the constitutional amendment to legalize recreational marijuana that voters passed in November. 

Following The Independent’s October report, state Sen. Karla May, a St. Louis Democrat, demanded the state investigate what she called an “egregious exploitation” of social-equity cannabis licenses.

The other eligibility issues cited in the report included failure to provide adequate documentation to verify the majority owner met the eligibility criteria and for a disqualifying felony offense.

The constitution mandates the chief equity officer conduct an eligibility review within 60 days of the microbusiness licenses being issued and make the results available to the public. 

The review was completed Dec. 1, according to a department press release Friday.

Licenses that are not certified may be revoked, and notices of pending revocation provide a 30-day response period, according to state marijuana rules.

During that 30-day window, licensees can submit records or information demonstrating why they are eligible and should not have their license revoked. All revoked licenses will be added to the available licenses awarded in the next application timeframe, the press release states.

The department will issue a minimum of 96 additional microbusiness licenses in two separate lotteries conducted by the Missouri Lottery. Applications for the second of three total rounds are tentatively scheduled to begin in March 2024 with licenses to be issued in July.

This story was updated after publication.

Sean Shannon, lead organizer with the United Food and Commercial Workers International Union Local 655 (left), and former budtender-turned-organizer Danny Foster visited several marijuana dispensaries in eastern Missouri in November to talk to employees about unionizing (Rebecca Rivas/Missouri Independent).

The first day was a breeze. 

Sean Shannon and Danny Foster walked into several marijuana dispensaries around Missouri with their matching “Union For Cannabis Workers” shirts and talked to employees about the possibility of unionizing.

“The first day, there were 57 stops amongst the teams,” said Shannon, lead organizer with UFCW Local 655, which actually stands for United Food and Commercial Workers International Union. “Reception was out-of-this-world positive. Workers were so excited.”

Shannon had gathered together a dozen organizers to help Local 655 visit every one of the approximate 100 dispensaries on the eastern half of Missouri — twice. 

Stirring up the excitement was the union’s big win of the recent settlement, where 10 Shangri-La South dispensary workers in Columbia received a collective $145,000 after being fired following a March union organizing drive.

“They were excited to hear that Shangri La [employees] actually won,” he said. “They couldn’t believe people were getting their jobs back. They couldn’t believe the amount of money.”

But by the third day, the reception got much colder, he said. Managers had warned their counterparts at other locations that union reps might be visiting.

“Employees were basically told, ‘If you talk to the union, if you take a card, if you take a sticker, you’re out,’” he said. 

Still, since the tour, union activity has “blown up,” Shannon said. 

An active campaign means the employees have signed agreements, or authorization cards, with the union authorizing Local 655 to represent them. It also means union leaders believe workers have a good shot at succeeding.

Shannon said Local 655 now has authorization to represent more than 20 locations in eastern Missouri.  

The next step is filing a representation petition with the National Labor Relations Board, seeking to have the board conduct an election among employees on whether or not to unionize. 

Last week, employees at Hi-Pointe Cannabis in St. Louis filed a petition — following the lead of workers at High Profile Dispensary in Columbia and Bloom Medicinal Dispensary in St. Louis in early November.

In October, Homestate Dispensary employees in Kansas City voted 6-1 to have Teamsters Local 955 represent them, becoming the second unionized dispensary in Missouri. The first was Root 66 Dispensary in St. Louis, where employees voted to join UFCW Local 655 in April 2022.

A big reason why employees are moving towards unions, Shannon said, is because Missouri is at the point where the “canna-bliss” of working with marijuana professionally is starting to wear off. 

Now the reality that workers aren’t getting paid enough, are sometimes working in poor conditions and have no job stability is starting to set in, said Danny Foster, a former cannabis worker who was helping with the union’s tour.

“We really weren’t given the industry that we were promised,” Foster said. “We all came in super excited. We love cannabis. We wanted to be able to make it a career. But as it is right now, cannabis isn’t a career.”

‘Vision of fully restorative relief’

The motivation to unionize for Andrew Nussbaum, the most veteran worker at Shangri-La South dispensary in Columbia, was to ensure job security. Because he loves his job as a patient consultant supervisor.

“A lot of us just want to help people and help them find something that works for them,” he said. “I’ve talked to people for 45 minutes to an hour to kind of get them squared away.”

When he and other dispensary workers filed a representation petition in April, they encountered strong resistance.

After he and nine other employees were fired, the board swiftly and firmly sided with the workers and approved a settlement that awards backpay to all the “unlawfully terminated employees.” It also cleared a path for them to unionize. 

Announcing the agreement, the board made a pointed statement about the case reflecting the “general counsel’s vision of fully restorative relief.”

Nussbaum is among five of the 10 terminated employees who will be returning to work in the near future. And despite it being a tumultuous year, he said he’s committed to his role. He has a degree in plant biology, and he enjoys learning about how cannabis can help people.

“That’s what this is all about,” he said. “That’s why it’s so important to all of us, because this was not an easy ordeal for any of us.”

An attorney representing the company in the case did not return The Independent’s request for comment.

One of the things that draws people to the industry is the camaraderie among employees who are passionate about cannabis, Shannon said. And that’s also what makes it the perfect breeding ground for organizing.

“Cannabis workers are the right community,” he said. “This is a tight knit community that takes care of each other. They’re already learning that… having a union backing you up, it’s the only way to truly make a difference. I’ve been telling people, ‘Wait till you feel that contract high.’”

Are they ag workers?

Will Braddum, a post-harvest technician, is facing a different kind of battle at BeLeaf Medical’s Sinse Cannabis site in St. Louis. Not long after he and 17 other employees filed their petition in September, the company argued before the board that the employees aren’t manufacturer workers — they’re agricultural workers. 

Agricultural laborers aren’t protected under the 1935 National Labor Relations Act, which ensures employees have the “fundamental right to seek better working conditions and designation of representation without fear of retaliation.”

It’s a frustrating “gray area” for manufacturing cannabis employees looking to unionize, Shannon said. 

On Oct. 27, company representatives described the employees’ job descriptions to the board, which included “a whole bunch of the cultivation side’s job description,” Braddum said. It was eye-opening for the employees who testified and had to refute that description, he said. 

“I’ve never watered anything and never touched any soil,” he said. “I’ve never touched a living plant at work. So I guess if they’re gonna tell the National Labor Relations Board that we’re doing agricultural work, maybe they’re not necessarily on our side at all.”

An attorney for BeLeaf Medical said the company was not able to comment.

It’s unclear how long it will take to get a decision from the board, but the decision will likely be reviewed closely nationwide. 

Braddum has been at BeLeaf for the last year and a half, but he’s been part of the legacy market since 2009. 

“I just kind of segued,” he said. “I went from an illegal career to a legal career without a hiccup basically.”

For him, this is his career. He’s seen how “cutthroat” the corporate side can be and how a human relations officer has the power to make someone lose their agent ID, or state-issued license to work in cannabis. He doesn’t want that to happen to him or any of his team.

“The only way to pad myself from Human Resources is to cultivate a union movement,” he said, “and talk to my co-workers about job security.”

St. Louis American publisher Donald M. Suggs speaks about the importance of community journalism, after receiving the 2015 Media Person of the Year award from the Press Club of Metropolitan St. Louis. "As a community newspaper, we see ourselves as a journalistic enterprise that is strongly identified with its community, its unique experiences and concerns," he said. (Photo by Lawrence Bryant/The St. Louis American).

The St. Louis American first hit newsstands on March 17, 1928.

At that time, the Black weekly newspaper was an eight-page tabloid with a circulation of about 2,000. 

More than 95 years later, The American reaches about 300,000 people each month through the print newspaper and website. It’s the largest weekly newspaper in Missouri and among the largest Black newspapers in the country.

For 40 of those years, Dr. Donald M. Suggs — a retired oral surgeon — has been its publisher. This September, he was inducted into the Missouri Newspaper Hall of Fame.

“Medicine is like a calling for most people who operate in that profession,” Suggs said during his acceptance remarks at the Missouri Press Association’s convention in St. Louis. “Journalism is as well. The highest level of journalism, in my view, is a calling.” 

As a former reporter at The American for 11 years, I’ve come to understand that Dr. Suggs deeply appreciates investigative, hard-hitting news stories. But that alone is not what he means when he says the “highest level of journalism.” 

He believes in uplifting journalism that serves as a community empowerment tool, especially for Black youth.

“He has always treated young Black people as these vessels of this enormous potential,” said Chris King, former managing editor at The American for 17 years.

The Ferguson uprising of 2014 offers one of the clearest glimpses of this.

With the community’s outrage over Michael Brown’s killing, The St. Louis American found itself at the epicenter of the most promising civil rights movement since the 1960s. Many of the initial demonstrators — including many who emerged as as leaders within the the Ferguson movement — were young Black people new to the arenas of politics and community engagement.

“Here is a situation where these other media outlets had no training whatsoever in writing about and featuring young Black leaders — but The American specialized in it,” said Stefan Bradley, a professor of Black studies at Amherst College in Amherst, Mass.

Bradley is writing a book that centers the role of youth in the Ferguson uprising. In his research, he found that many mainstream media outlets covering the movement had “an inability to sympathize with Black youth” because historically the outlets had portrayed young Black children from a “deficit perspective.”

“But what I saw with The American was the ability to portray Black children in all of their humanity,” he said.

That coverage, he said, informed the way people will forever remember the uprising.

“If it hadn’t been for The American, local history would look entirely different,” Bradley said.

Even in the moment, Kenya Vaughn, The American’s former website editor for 14 years, believes the coverage helped spur history.

“If you feel like you have a voice in this situation where somebody is being fair and balanced,” Vaughn said, “and really speaking to the issues that brought you out in the first place, it energizes you to go back out.”

And it also gave The American unparalleled access to movement leaders, she said.

The daily protests have ceased, but the movement has continued on. When I was on staff, I remember Dr. Suggs walking into our weekly staff meetings buzzing with energy and beaming with pride that the youth were challenging oppressive systems.

That energy has not waned, said Kevin Jones, longtime CEO of The American.

“Even still to this day, he comes in first thing in the morning he’s got a list of 10 ideas already written down,” Jones said. “It’s usually on an envelope from one of his bills at home.”

The American has won the state press association’s top honor – the Gold Cup – seven of the last 11 years. 

“Under Suggs’ leadership, the role of The American has been instrumental in informing policy, shaping politics and being an advocate for people who wouldn’t otherwise have a voice,” Vaughn said. 

Helping Black youth see themselves as leaders — even in small ways — was always a big part of his role as editor, King said.

King remembers getting a letter from a young man incarcerated in the St. Louis County jail whose little sister was running a book club. He felt he could help his sister by asking The American to write a story about her.

“I ran his letter as a front page news story with his byline,” King said. “Now what publisher would have said ‘yes’ to that? I don’t think anybody but Donald Suggs. Respecting and empowering Black youth, it’s just what animates him. It always has.”

A big point of pride for Suggs’ team and the Black community is the St. Louis American Foundation — it’s one of the biggest scholarship generators in the region. 

This year, the foundation fostered more than $2.8 million in minority scholarships for college students and community grants for educators — bringing it up to $17 million in total since 1994.

Fred Sweets, contributing editor for The American and longtime friend of Suggs, said Suggs sometimes talks about what he hopes people will see as his legacy.

And it’s the same as it was for Sweets’ late father, Nathaniel, who was The American’s publisher for more than 45 years.

“It’s so moving to me because my father started [The American], and he wanted the education of our youth to be an important part of our mission,” Sweets said. “Donald continued in that. And that’s what he’d want his legacy to be — making a difference in the lives of Black children.”

(Rebecca Rivas/The Missouri Independent)

The state’s Division of Cannabis Regulation is revoking the marijuana manufacturing license of Delta Extraction after accusing the company of illegally importing “marijuana product” from out-of-state and adding it to Missouri-grown marijuana products.

The revocation will take effect on Dec. 2.

The Robertsville-based company is at the center of Missouri’s massive marijuana recall that was issued on Aug. 14. The state recently rolled back part of the recall, but the fate of more than 45,000 recalled products — and those of dozens of marijuana businesses facing a steep financial loss if the products must be destroyed — is still pending. 

The recall will be debated during a hearing before the Administrative Hearing Commission in December, where Delta’s appeal on its license revocation will also likely be heard.

“We must be clear on this: Businesses that choose to participate in Missouri’s marijuana industry do not get to decide which rules and which parts of [the constitution] they want to follow,” Amy Moore, director of the division, said in a press release Thursday announcing the decision.

Delta Extraction has denied accusations that it illegally imported marijuana into the state by arguing it actually imported a non-psychoactive hemp product, THC-A, that was converted into the psychoactive delta-9 THC once in Missouri. Hemp is not a federally controlled substance.

“The department’s actions are illegal and unfounded,” said Chuck Hatfield, attorney for Delta Extraction. “The issue stems from Delta using legal hemp products in its legal marijuana products, which passed state testing before it was sold to consumers.”

In its appeal, Delta argues that the Missouri didn’t specifically ban adding hemp-derived THC-A to marijuana products until the state’s final rules went into effect on July 30.

Hatfield said the division never communicated that adding the hemp product was against the rules until the company’s license was suspended on Aug. 2. 

In an interview with The Independent, Hatfield pointed to an email that Adam Whearty, a compliance team supervisor with the division, sent two days before Delta’s suspension, which was uncovered during the appeals process. Hatfield said it shows that Whearty and compliance officer Heather Bilyeu — who was Delta’s main contact in the compliance office, Hatfield said — were confused about whether what the company was doing was allowed.  

“Heather thinks they found a loophole in the [emergency] rules, prior to 7/30, as does not think THC-A fell into the category of not being able to be used,” until the final cannabis rules took effect on July 30, Whearty wrote. “Heather and I are concerned about what we were to tell [Delta] about modified product in their inventory…”

However, during the appeals process, the state has argued that the emergency rules filed on Jan. 20 prohibited the practice.

Carole Iles of the Administrative Hearing Commission sided with the state in an Aug. 29 order. The only thing the cannabis regulating agency added to this line in the final rules, she wrote, was the clause “such as THC-A …” 

“We agree with the department that language added to the permanent rule … did not change the requirement of the emergency rule that THC in marijuana products could only be derived from marijuana cultivated by a Missouri-licensed cultivation facility,” the order denying a stay on Delta’s suspension states.

A hearing on Delta’s appeal of the recall and license revocation will be held next month.

Delta’s use of the hemp THC-A was not the only reason for revocation, Moore said in the press release Thursday.

“While Delta Extraction’s use of out-of-state cannabis in our regulated system has been well-publicized and is a critical issue, DCR also found numerous other violations of rules at this facility,” Moore said. 

The division also said Delta did not properly maintain video surveillance footage or have necessary safeguards to prevent intrusion at the facility. The division argues that Delta falsified product tracking records, and regulators could not ensure the product was properly tested. 

In a letter to the state’s attorney on Wednesday, Hatfield countered that the company did test the product in compliance with the law.

Delta also agreed to pay for retesting of any Delta product, Hatfield wrote in the letter, as well as to destroy all the product in its facility in order to reach a settlement with the state. 

“Should the parties not reach an agreement, Delta intends to challenge the Department’s authority to regulate hemp-derived products,” Hatfield’s letter states.

The courts will not entertain a legal challenge against the state until Delta Extraction’s appeal process is completed, a judge has already ruled.

Missouri would then be among several states where companies are challenging the state cannabis regulators’ authority to regulate hemp. Unlike marijuana, hemp has very little psychoactive properties naturally — which is why it was taken off the federal controlled substance list in the 2018 farm bill. 

But since then, businesses have been in a race to create ways to produce the most predominant psychoactive active element in marijuana, delta-9 THC, using the hemp plant. 

On Sept. 8, a federal judge in Arkansas granted a preliminary injunction in a lawsuit against the state, saying that hemp-derived cannabinoids, like THC-A, are protected under the 2018 farm bill. 

“Should Delta succeed in that challenge,” Hatfield wrote, “the industry would be free to engage in bringing in industrial hemp products from out of state for use in marijuana products.”

Under Missouri's new cannabis regulations, labels and packages for marijuana-related products must have limited colors and can't appeal to children or resemble candy. (Photo by Rebecca Rivas/The Missouri Independent)

A panel of Missouri lawmakers have spent several hours in recent weeks debating whether or not aliens and robots should be banned on marijuana product labels.

Humans, animals and fruits are already not allowed — an effort by the state to keep products out of the hands of children. But would robots fall under that ban? 

“In my opinion, a robot is not encompassed within the definition of a human or the shape of a human,” said Sen. Nick Schroer, a St. Charles Republican who is chair of the bipartisan Legislative Joint Committee on Administrative Rules, during an October committee meeting. “Any alien that I’ve seen doesn’t look like a human being.”

Division of Cannabis Regulation Director Amy Moore countered that some robots and aliens look like humans and some don’t. And it’s up to cannabis regulators, she said, to make the call. 

The robot debate is part of an ongoing power struggle between the division and the committee over one line in the constitutional amendment that legalized recreational marijuana last year. It states that labels and packaging for marijuana-related products, “shall not be made to be attractive to children… to protect public health.”

Missouri is one of few states that require plain packaging in the adult-use cannabis market, according to new rules that went into effect on July 30. Businesses have until May to comply with the rules, specifying the packaging should be one primary color and can have up to two logos or symbols that can be different colors. 

The committee, along with marijuana industry leaders, expressed opposition to these rules in May. And at a hearing Wednesday, the committee voted 9-0 to send a report to the department and House and Senate leaders stating that the division overstepped its authority when it included examples, such as an alien and graphics of appropriate color use, in the new packaging guidance issued in July.

Legislators said during the Oct. 18 meeting they’ve heard from marijuana businesses that find the guidance too complicated to navigate, and they questioned the division’s authority overall to set the plain packaging rules.

“What we’re saying is these [rules] aren’t rationally related to protecting kids,” said state Rep. Peter Merideth, a St. Louis Democrat and a member of the committee, “and they are not something that you have authority to do under our constitution. And our job is simply to make sure they’re not exceeding their statutory and constitutional authority.”

Merideth told The Independent the report is essentially a “strongly-worded letter” that puts the division on notice. At the October meeting, Merideth questioned Moore about the need for the division’s pre-approval process of new labels. 

Moore said the division has had constitutional authority to require licensed companies to submit their packaging for approval since medical marijuana was legalized, but didn’t start using that authority until after recreational use was legalized last year. 

“We learned from how operations played out,” under medical marijuana, Moore said. “It was an area of greatest non-compliance. It also is one that is particularly difficult to enforce on the back end, where there’s already been all this investment.”

Requiring licensees to destroy everything has a “very large financial impact,” she said, and businesses are resistant to do that. She said it’s beneficial for everyone to get approval before businesses print their labels to avoid that situation.

“But we also, through the change in the law, understood that there should be an even greater importance placed on this for public health and protecting children,” Moore said.

Merideth said he’s largely been voicing the concerns of marijuana businesses at the committee hearings because he hasn’t heard from any constituents who are concerned about the issue. 

But Nichole Dawsey, executive director of PreventEd, formerly known as the National Council on Alcoholism and Drug Abuse, said she’s heard from plenty of parents worried about kids getting sick off cannabis products with enticing labels. 

“The fact that people are not concerned about the impact of cannabis on young people is false,” Dawsey said. “It’s just our voices are not quite as loud.”

She said PreventEd is largely made up of “public-health nerds” who view the division’s new label and packaging requirements as essential to achieving the constitutional mandate.

A study published earlier this year in the journal Pediatrics found calls to poison control centers about kids 5 and under consuming edibles containing THC rose from 207 in 2017 to 3,054 in 2021 — a 1,375% increase. 

The findings were based on more than 7,000 pediatric cases reported to the National Poison Data System, a database that tracks reports of poisonings. 

Labels and packaging can also impact teenagers who are “starting to experiment,” and don’t understand that edibles and vapes can be much more potent, Dawsey said.

“Clear is kind,” she said. “While it might seem a little silly to say no aliens, no robots, no humans… we’ve seen what happens when we are not clear.” 

Filings in the case — which includes emails, agreements and sale projections — offer a rare glimpse into what was happening in the early days of medical marijuana applications (Rebecca Rivas/Missouri Independent).

After Missouri voters legalized medical marijuana in November 2018, Jefferson City lobbyist Jeffrey Altmann went to work.

Altmann knew out-of-state investors would be looking for Missouri residents to partner with — since Missourians, by law, needed to have majority ownership in marijuana businesses.

Touting his political connections, Altmann caught the attention of an investor from a New-York based pharmaceutical company named Matt Wolf. 

Altmann is owner of Viceroy Government Relations, a lobbying firm he has operated since 2017. His brother Daniel worked for the legislature for two years and eventually as a lobbyist for the Missouri Secretary of State’s office in early 2019. 

Wolf agreed to partner with the Altmanns on a cannabis license application, after meeting for several hours at Felix’s restaurant in St. Louis in July 2019. As they left, they all shook hands and Wolf told them: “We are going to make a lot of money together.”

But that’s not what happened.  

Despite being one of the first cannabis licenses awarded in the state, their testing lab, Botannis Labs MO Corp., never got off the ground in Springfield because of a series of internal battles between Wolf and the brothers. 

Missouri’s cannabis regulators eventually revoked their license.

Since March 2022, the Altmanns and Wolf have been in a legal standoff over lost money and allegations of deceit. 

Wolf, who was going to be CEO of Botannis, filed a federal complaint asking for a jury to clarify what his legal responsibility is in the business, along with court costs. Daniel Altmann, president of Botannis, filed a counterclaim alleging fraud and a breach of fiduciary responsibility, demanding Wolf pay $25,000 in damages.

An attempt to settle failed earlier this year.

Despite the legal mess, the filings in the case — which include emails, agreements and sale projections — offer a rare glimpse into what was happening in the early days of medical marijuana applications. 

Some Missourians who were trying to partner with outside investors weren’t selling their marijuana expertise — they were selling their knowledge of Missouri’s political landscape.

And some investors were trying to strongarm Missourians into signing agreements that would ultimately push them out of ownership for a token payment.

The drama echoes the recent controversy involving microbusiness cannabis licenses, where some applicants thought they were partnering with a Michigan investor but signed agreements that forced them to relinquish all control and profits of the business. 

Henry Elster, attorney for Daniel Altmann, said he couldn’t comment on the pending litigation. Wolf’s attorneys did not respond to requests for comment.  Jeffrey Altmann declined to comment.

How they met

The way Wolf tells the story in his complaint, he was exploring business opportunities in Missouri in June 2019 when he was introduced to Jeffrey Altmann as a lobbyist.

“Jeffrey Altmann aggressively markets himself and his supposed influence on Missouri lawmakers and regulators,” states the complaint Wolf filed on April 4, 2022, in the U.S. District Court for the Eastern District of Missouri.  

According to Daniel Altmann’s counterclaim, an attorney with the cannabis law firm Vicente Sederberg (now called Vicente LLP) contacted Jeffrey on behalf of Wolf to “explore opening a medical marijuana lab in Missouri.” 

Jeffrey was a registered lobbyist in Missouri for Vicente Sederberg from March 2019 to March 2020, and had already worked with the firm to help another of its clients.

At a meeting with Jeffrey, Wolf talked about his family’s business in New York, Contract Pharmaceutical Corp., where he’s been CEO for the last 17 years. Wolf told Jeffrey that he wanted to establish cannabis labs in multiple states using the name Botannis, according to Daniel’s counterclaim. 

That same day of that meeting, Jeffrey registered as a lobbyist for Botannis and “began actively working on behalf of Wolf and Botannis to obtain one or more marijuana licenses in Missouri,” the counterclaim states. 

At that point, Jeffrey felt like he was “part of the Botannis team,” it states, and that the law firm Vicente Sederberg was representing him as well. 

In July, Jeffrey and Wolf officially decided to partner together on a testing license application. Yet by the end of that month, there was some “uncertainty” regarding Jeffrey’s eligibility under state law to be on the application, Daniel’s claim states.

So, they recruited Daniel, who had just graduated from college and had also recently been a legislative liaison for Secretary of State Jay Ashcroft. 

“Wolf thoroughly vetted Daniel as to his knowledge, experience and credentials, including his positions with the Missouri Secretary of State,” according to Daniel’s petition.

Wolf said he “tentatively agreed to this substitution” in order to apply for the license.

“Mindful that he would be potentially contributing capital and expertise — while the recently graduated Daniel Altmann was contributing merely state residency,” the petition states, “Wolf made clear that the parties would have to agree to protections reflecting Wolf’s potential investment, were Botannis to obtain a license and the business to go forward.”

Where it all broke down

If it wasn’t clear to the brothers at the time that Wolf saw Daniel as “contributing merely state residency,” it became clear the day the team landed the marijuana license on Dec. 18, 2019.

That day, a Vicente attorney sent Daniel an email with an option agreement. It offered Daniel $1,000 to agree to sell enough shares of the company to give Wolf majority ownership — if Missouri’s residency requirement was ever changed. And that arrangement would be intact for 15 years. 

He also sent a revised copy of the bylaws that would add Wolf’s brother as a director — giving Matt and his brother majority voting power with only three directors.

Wolf viewed these moves as a way to protect his investment and intellectual property, his petition states.

Daniel’s response was delayed because he said he was on vacation and was recovering from an illness, according to Wolf’s petition.

At the end of January, Daniel responded that he read the documents and was feeling “optimistic,” the petition states, but that he wanted his attorney to review the documents.

Then on Feb. 4, 2020, Jeffrey emailed the Vicente attorney, stating: “My brother won’t be signing anything you have provided, and I think you know why. Nice try, but no thanks…Very disappointed, and hoping this was a miscommunication we can fix.”

Signing the documents, according to Daniel’s counterclaim, would mean he’d lose control of Botannis immediately if the law changed and it’d render his shares “effectively worthless.”

Daniel alleges Wolf refused to do anything for the company until he signed the documents.

Wolf argues he offered to make revisions to the bylaws and shareholders agreement, but the option agreement is not among the revised documents listed. Communication fizzled for about a year after that.

On Feb. 9, 2021, Jeffrey emailed Wolf stating that he was reviewing the documents with his attorney. He later sent back some marked-up versions of the shareholders agreement and bylaws.

But on March 2, 2021, the state revoked Botannis’ license.

Wolf’s commitment

In his lawsuit, Wolf denies that he ever had any obligation to Daniel “or to anyone to provide capital to, or to provide services on behalf of, Botannis.”

He admits that he signed an affidavit included in the state’s license application stating that he’d make a “revocable pledge” of $400,000 to “successfully carry out the activities described in the application.”  

But he emphasized that it was “revocable” in his lawsuit.

The Independent asked cannabis regulators if they would’ve approved the license if Wolf’s $400,000 pledge was contingent on the Missouri resident agreeing to sell his shares. Lisa Cox, spokeswoman for the Missouri Department of Health and Senior Services, said in an email: “It would depend on the details of the agreements at issue.”

During early discussions with Jeffrey, Wolf sent an email stating he would make a funding commitment of $200,000 at close, $300,000 at licensing, $500,000 at first revenue.”

But Wolf emphasized the email also states, “for discussion.” 

“No written agreements to which Daniel Altmann is a party impose on Wolf any obligation to provide funds to or to perform services on behalf of Botannis,” Wolf’s petition states.

The attempt to reach a settlement fell aparted when Wolf demanded that Jeffrey be named in the settlement agreement, though Jeffrey isn’t named in the litigation. Jeffrey refused. 

When Daniel’s attorneys tried to force Wolf to sign the settlement agreement, a judge issued an order on Oct. 13 ruling that Wolf wasn’t obligated to do so. 

The litigation is ongoing.

The key question facing the state is how the recalled products were created — and whether that process poses a risk to public health (Uriel Sinai/Getty Images).

The state rolled back its recall of nearly 15,000 cannabis products last week and allowed them to return to the dispensary shelves, after requiring Missouri companies to keep them in storage since early August. 

The Missouri Division of Cannabis Regulation said in an Oct. 20 notice that after a review of product-tracking records, regulators can verify that “some of the marijuana products on recall contain THC solely sourced from marijuana grown in the Missouri regulated market.”

The future of the other 45,000 products recalled on Aug. 14 — and those of dozens of marijuana businesses facing a steep financial loss if the products must be destroyed — is still pending.

The Robertsonville-based marijuana manufacturer Delta Extraction has asked the Administrative Hearing Commission to rescind the company’s license suspension and fully rollback the recall. 

A trial is scheduled for the beginning of December, if the division and company can’t work out an agreement before then.

The key question facing the division and commission is how the recalled products were created — and whether that process poses a risk to public health.

If Delta Extraction can present evidence showing the products were created safely, then there’s a possibility the state won’t order 45,000 products to be destroyed. The company could still likely face a hefty fine, and even license revocation, for importing a hemp product into the state and adding it to Missouri-grown marijuana products. 

The commissioner overseeing Delta’s appeal of the recall and license suspension issued a protective order on Oct. 25 that will allow some records in the case to be closed and confidential. 

Those records could include “trade secrets or financial and proprietary information,” the order states, as well as the division’s investigations of other licensees. 

The imported product

At the center of the recall is a THC concentrate, or distillate, made partially from hemp.

In August, the state accused the company of adding “hemp-derived chemically modified ‘converted’ cannabinoids” to marijuana products.

Unlike marijuana, hemp has very little psychoactive properties naturally — which is why it was taken off the federal controlled substance list in the 2018 farm bill. But since then, businesses have been in a race to create ways to produce the most predominant psychoactive active element in marijuana, delta-9 THC, using the hemp plant. 

The most common way to get delta-9 THC from hemp is usually a chemical conversion process from CBD, which is the more common cannabinoid in hemp. 

Cannabis lab experts say it’s a process that could involve a variety of chemicals that Missouri marijuana labs don’t test for – making the labs unable to verify the product’s safety.

And because hemp is no longer a controlled substance, no agency in Missouri or in the federal government is monitoring the production of chemically converted THC from hemp. 

However, the lab in Florida where Delta bought a good amount of product told The Independent in September that its distillate wasn’t created using harsh chemicals, as the state suspected, but rather through the same extraction process employed in the regulated marijuana market.

J.J. Coombs, owner and CEO of Arvida Labs in Fort Lauderdale, walked The Independent through the process to make the concentrated THC-A, which isn’t intoxicating unless you heat it up, at which point it turns into delta-9 THC. 

For example, eating raw marijuana flower won’t produce a high because there’s only a small amount of delta-9 THC but a lot of THC-A. 

It’s a fairly new process, Coombs said, that involves breeding hemp plants to have higher concentrations of the potentially intoxicating property THC-A. 

Hemp has very little THC-A, so it takes about 90 pounds of hemp to make 1 kilo of THC-A isolate, or powder, Coombs said. 

The confusion about Arvida Labs’ product being made using a chemical conversion process is understandable, Coombs said, because most people don’t know labs can extract large amounts of THC-A from the hemp plant.

It’s a process neither the state nor Delta leaders could explain during the company’s appeal proceedings, regarding how it’s different from the CBD conversion process.

Delta’s leadership testified the conversion process was being used, at one point, with its products — a revelation that shocked businesses who purchased Delta’s distillate and thought it was made with 100% marijuana. 

Chemicals from this process is one concern, lab experts said, but another is the possibility that the hemp came from outside the United States — meaning they could contain foreign pesticides that cannabis labs don’t test for. 

Coombs said Arvida purchased the hemp from farmers in Texas, Tennessee and Kentucky who’ve learned to breed the plants to have higher concentrations of THC-A, using federally-approved strains. Any of the pesticides used in those states would have shown up on a lab test as being safe, Coombs said.

Green Precision Analytics is one of the labs that Delta Extraction used to test the distillate at the heart of the recall. Anthony David, the lab’s owner and chief operating officer, told The Independent previously that he had no idea Delta was incorporating imported hemp in the products.

David also said there was no trace of the THC coming from a chemical conversion process. Usually he can see a difference in curves of the chromatography, David said, but he didn’t in this case. 

Coombs said that’s because it was done through a normal extraction process. 

Coombs said that marijuana companies who purchased Delta’s distillate should not feel “duped” because the same extraction process used to get delta-9 THC from marijuana was used to get THC-A from hemp. 

“It’s the same exact thing,” he said. “There’s no difference. Hemp is cannabis, just with no delta-9 THC.”

Voters approved the microbusiness program last November, as a provision in the constitutional amendment that legalized recreational marijuana (Rebecca Rivas/Missouri Independent)

A St. Louis lawmaker is demanding that Missouri regulators investigate what she called an “egregious exploitation” of social cannabis equity licenses, following a report by The Independent last week about a company that recruited out-of-state license applicants on Craigslist. 

State Sen. Karla May, a St. Louis Democrat, sent a letter on Thursday to the state’s Division of Cannabis Regulation and Missouri Attorney General Andrew Bailey demanding action.

Voters approved the microbusiness program last November, as a provision in the constitutional amendment that legalized recreational marijuana. May wrote that the program was intended to “rectify past injustices” of marijuana criminalization. 

“I condemn these actions as an affront to the principles that guided the citizens’ initiative,” May stated. “The people of Missouri spoke loud and clear in their support for a fair, inclusive cannabis industry that addresses historical disparities. It is disheartening to see bad actors attempt to exploit the system for personal gain, undermining the very opportunities we sought to create.”

May’s letter was sent hours after The Independent published a story revealing that a Michigan real estate group, Canna Zoned MLS, offered to pay eligible people to enter lotteries awarding social equity licenses in Illinois and Missouri. 

But two applicants told The Independent that they didn’t realize the company’s contracts forced them to relinquish all control and profits of the business, according to an agreement they said they signed. 

On Oct. 2, the state issued 48 licenses to the winners of a lottery that determined who gets to participate in Missouri’s microbusiness program. Of the 16 dispensary licenses awarded, the Michigan group obtained two of them — one in Columbia and the other in Arnold.

“The schemes orchestrated by these applicants potentially involve fraudulent activities,” May said, “gaming the system to secure licenses through the exploitation of legacy advantages that the ballot language aimed to mitigate.” 

Jeffrey Yatooma, the designated contact on licenses associated with the Michigan group, told The Independent last week that the group rejects “any allegations that we have defrauded the state.” Any final agreements with partners in Missouri, he said, “will absolutely comply with all state laws and regulations.” 

In response to May’s letter, Yatooma told The Independent he stands by his previous statements.

Applicants recruited on Craigslist competed for Missouri social equity cannabis licenses

Division of Cannabis Regulation Director Amy Moore responded to May in a letter Friday morning. 

Moore said the division shares the senator’s desire that the program be “implemented exactly as designed and that no unscrupulous actors be allowed to subvert the law.” 

“In fact, the law itself anticipated the need to investigate whether microbusiness licenses were awarded to eligible applicants post licensure,” she said, “and we are currently conducting that mandated verification process.”

Moore said the division’s “post-licensure verification” for the 48 license winners will be completed in early December, followed by a public report of the results.

“If we determine that an application was false or misleading in any way, the license issued based on that application may be revoked,” Moore said. 

The division has broad authority to conduct investigations.

Under a new rule that went into effect on July 30, the department now has the power to issue subpoenas directly to licensed marijuana businesses and third parties during an investigation to obtain records and information. 

“Applicants and licensees must cooperate in any investigation conducted by the department,” the rules state.

In her letter, Moore said that if the division uncovers activity “that is of concern but outside our jurisdiction, we will refer that information to the appropriate authority.”

The attorney general’s office, which also received the letter, did not respond to a request for comment. 

After reading The Independent’s article, state Rep. Ashley Bland-Manlove, a Kansas City Democrat, called the actions “predatory and criminal.” 

“I encourage all states involved to revoke any licenses issued and reissue them to actual residents who qualify,” she said. “I’d like to see criminal charges for the lawyers who created the contacts and whomever created the Craigslist posts for fraud.” 

Jack Cardetti, spokesman for the Missouri Cannabis Trade Association, said it’s up to the division’s verification process to make sure the laws and rules were followed. 

“Article 14 of the Missouri Constitution entrusts the agency to run this voter-approved program effectively,” he said, “and we hope they live up to that.”

Cannabis microbusiness licenses are designed to boost opportunities in the industry for businesses in disadvantaged communities, and it was part of the constitutional amendment to legalize recreational marijuana that voters passed last year (Rebecca Rivas/Missouri Independent).

James Harnden has been a longtime activist for cannabis legalization, ever since he got slapped with a low-level felony possession charge for having an ounce of weed.

The 56-year old Rockford, Ill., resident says that charge has cost him job opportunities for 30 years.

Earlier this year, he saw an advertisement in the Craigslist “gigs” section posted by a Michigan cannabis real estate group called Canna Zoned MLS. It was looking for “partners who qualify as a social equity applicant” to participate in Illinois’ lottery to award cannabis business licenses that are, in part, meant to benefit people impacted by marijuana criminalization.

“I spent most of my life applying for jobs and not getting them,” Harnden said. “So I’m like, ‘Okay, so maybe one of these licenses will swing my way.’”

The Craigslist ad read: “If you are eligible and provide the required documentation, we will give you $2,000, just for helping us submit the lottery application! If we win the lottery and secure a license, we will give you an additional $20,000!”

Harnden says what he didn’t realize was that he signed a contract agreeing to hold 100% ownership interest on the application, but that he wouldn’t get revenue or profits from the business. After the business passed through all the state and municipal approvals, the contract stated that Harnden would be required to sell his share of the business for $1 to the group or be held in breach of contract. 

The contract also authorized the group to enter Harnden’s information into lotteries for social equity cannabis licenses in other states — and that’s how Harden says he got paid $500 to be part of the lottery for Missouri’s microbusiness license program. 

Harnden was eligible to apply in Missouri because of his marijuana charge, which is among seven eligibility categories that also includes living in census tracts with high poverty and unemployment rates. Canna Zoned’s Jeffrey Yatooma is listed as the “authorized agent” on the contract Harnden provided to The Independent, leaving a space for his signature at the bottom.

Yatooma secured two of the 16 social equity cannabis licenses — in Columbia and Arnold — issued earlier this month, according to information obtained by The Independent through a public records request. Those records show Yatooma is listed as the “designated contact” for 104 out of the 1,048 applications for dispensary licenses in Missouri’s lottery.

Yatooma’s group was not the only one using the strategy of flooding Missouri’s lottery with applications to obtain a dispensary license.  An Arizona-based consulting firm is connected to more than 400 dispensary applicants, including six winners, and a Missouri firm is connected to more than 80 applicants and two winners. Both said their clients did not advertise or promise payment for submitting applications.

In at least three states holding lotteries for social equity cannabis licenses this year — Illinois, Maryland and Missouri — Yatooma’s group has offered to pay eligible people up to $2,000 to apply on their behalf and $20,000 more if they won.

While the Craigslist ads posted in Missouri can no longer be seen online, a screenshot of a similar ad posted by Canna Zoned in Illinois was included in a story by the Chicago Sun Times. Ads are currently up in Maryland, where the state’s social equity cannabis application opens on Nov. 13.

Provided with a copy of Harnden’s agreement, Yatooma said his company,  “never signed any agreements along the lines of the one you mentioned.”  

He said that the agreement was part of “early business discussions.” Yatooma’s group made a similar argument earlier this year when efforts to secure licenses in Illinois faced criticism. 

“The parties never moved forward with the referenced document, and the state subsequently provided guidance advising on how to structure partnerships,” Yatooma said in an email to The Independent. “In our experience with new laws, it is frequently important to begin business discussions and then be prepared to pivot — and finalize a partnership when new state guidance is announced.”

Yatooma also said he’s aware the microbusiness dispensary licenses “must continue to be majority owned by an individual who meets at least one of the eligibility qualifications” outlined in the constitution. 

Voters approved the microbusiness program last November as a provision in the constitutional amendment that legalized recreational marijuana.

Nimrod Chapel, an attorney and president of the Missouri NAACP, reviewed the agreement signed by Harnden and provided to The Independent. He believes it “defrauds the state” because it gives the eligible applicants no voting or financial interest, in violation of the state’s constitution.

“The very people who were victimized by cannabis laws in the first place are yet again on the losing end of what appears to be a distinctly inappropriate power grab,” Chapel said.

Yatooma said he rejects “any allegations that we have defrauded the state.” Any final agreements with partners in Missouri, he said, “will absolutely comply with all state laws and regulations.”  

Lisa Cox, spokeswoman for the Missouri Division of Cannabis Regulation, did not say whether or not the division had seen the agreements between Yatooma and the applicants. 

However, she said such an agreement will be reviewed as part of the post-licensure verification process, where the division will “determine whether any microbusiness applications were false or misleading and to ensure all microbusiness licenses are majority owned by eligible applicants.”

That process will be completed by the end of the year, she said.

If the state takes no action to revoke Yatooma’s two licenses, Chapel said the Missouri NAACP would consider litigation to obtain a cease and desist order on the entire microbusiness program.

“If [the division] were to look at the agreements — that show the applications are not true — and they don’t take some action against these licenses,” Chapel said, “then I think that they would be totally complicit in a fraud.”

In response to the NAACP, Cox said the division will revoke the license if it “determines the applicant provided false or misleading information in the application.”

A pattern and practice

Simone Booker, a 52-year-old Chicago resident who works in tax preparation, remembers sitting down with an attorney for Canna Zoned, Amanda Kilroe, this spring at Starbucks to talk about a “great business opportunity.” 

Kilroe’s number is currently listed on the Craigslist ads in Maryland, and she’s who responded when The Independent called the number.

However, Booker never saw a Craigslist ad. She was referred to Kilroe by a friend and never received $2,000 for applying.

“She’s a wonderful person,” Booker said of Kilroe. “I have met a few people [from Canna Zoned]. They are absolutely wonderful people. So that was the impression I got from them.”

Booker remembers asking Kilroe multiple questions about what her commission would be and what percent of the profits she would get. She said Kilroe assured her that she would be seen as a “social equity partner” and would get a share of the profits at every fiscal quarter. 

Then after a year, Booker would agree to sell her shares of the company for an amount that “we would work out later,” she says Kilroe told her. They talked about how Booker could potentially make $200,000 before she sold her shares, and she could also choose to buy back into the business later if she wanted.

Booker says she now realizes she didn’t read the contract’s fine print closely because Kilroe seemed so trustworthy and professional.

Booker said Kilroe never mentioned the contract would force her to sell her shares for $1. And Kilroe’s description of the partnership, Booker said, was “completely different” than what she signed — that she agreed to receive “no disbursements” other than the $2,000 to apply and the $20,000.

More specifically, she’d get $10,000 after the municipality where the dispensary is located approved the location, and another $9,999 after the state approves the license and she transfers her ownership of the business.

Booker was shocked to find these provisions in her contract when asked about them by The Independent. 

“I’m completely blessed that God didn’t approve this business,” Booker said. “I would have never signed the contract… not even for the $20,000 because $20,000 is not worth the millions that they’re going to make off of my name.”

Kilroe did not respond to The Independent’s requests for comment.

Booker fears for the other people who don’t realize what they signed. Having a tax background, she knows how to fill out the paperwork to ensure the group can’t use her name for an federal tax identification number (EIN) in the future. 

The contract authorized the use of her Social Security number for an EIN, meaning she would be completely on the hook for tax liability of the business even though the contract claims otherwise, Chapel said. But other people don’t know how to do that, she said.

“Their name is going to be forever used for business, but they’re never going to profit,” she said.

Chapel said he’s never seen a contract like it. 

“This agreement is wide ranging, not limited in time,” he said. “It’s not clear when — I guess at death — you would be released.”

It’s essentially agreeing to let the company use their “likeness” and name indefinitely, he said.

“How is this not literally buying at least a piece of a person?” he said. 

A public warning

Kilroe told the Sun Times that Canna Zoned “didn’t end up moving forward” with any of the respondents to the ad, after the newspaper reached out to her about a similar agreement the group made with a gun-violence victim.

“We didn’t enter the game in Illinois,” Kilroe told the newspaper.

However, Yatooma’s group was behind at least 20 dispensary applications in Illinois under variations of the name “Chicago Retail LLC,” including Booker’s and Harnden’s, according to state business records. Chicago Retail LLC wasn’t on the state’s list of winners released on July 13, but it’s unclear if Yatooma came away with a license in Illinois. 

Chris Slaby, spokesman for the Illinois Department of Financial and Professional Regulation, which oversees the social equity program, said the state’s cannabis law prohibits him from disclosing if Yatooma obtained a license. 

The department was aware of posts like the Michigan group’s and issued a public warning in February to potential applicants about the dangers of these types of agreements, Slaby said in an email to The Independent.

Illinois conducted its lottery on July 13, and the department is currently assessing the winners’ eligibility. Slaby said it “may deny a license in the event it determines any false information was used to apply.” 

Booker’s contract appeared to be identical to the one Harnden signed in Missouri.

Both stated that Yatooma’s group can use the applicants’ information in any of the other states lotteries for social equity cannabis licenses, and the group recently contacted Booker again about entering the next lottery in Illinois. 

At the end of July, Harnden was notified that the group was entering his name in the Missouri lottery, which was conducted on Aug. 28. 

The Missouri contract is with a Michigan limited liability company called “Report Head LLC,” but Yatooma is the authorized agent listed on the contract. 

Adolphus Pruitt, president of the St. Louis City NAACP chapter, also reviewed the agreement and said it establishes up a “modern-day indentured servitude.” 

Pruitt agrees with Chapel that the Michigan group is defrauding the state, as well as putting the applicants in that position whether they know it or not. The St. Louis City NAACP chapter, he said, would support the state NAACP’s move to get a cease and desist order. 

“It appears that it was never the intent for the ‘social equity partner’ to own, operate, nor benefit from the micro license as envisioned by the voters,” Pruitt said.

Flooding the lottery

Of the 16 winners of dispensary licenses, only five appeared to have submitted just one application — meaning they didn’t make agreements with eligible people to apply on their behalf.

On Oct. 2, the state issued 48 microbusiness licenses in total — six winners in each of Missouri’s eight Congressional districts. 

In each district, two were microbusiness dispensaries, and four were microbusiness wholesale facilities — where the owners can grow up to 250 plants.

According to records obtained by The Independent, the wholesale side — where there was 577 applicants total — did not appear to see the same kind of flooding strategy as for dispensaries, which had total of 1,048 applicants.

As far as finding multiple eligible applicants to apply on one person’s behalf, Yatooma’s operation was not the biggest. And he only applied in half of the state’s eight congressional districts — the 2nd, 4th, 5th and 6th. 

A Phoenix cannabis consulting firm, Cannabis Business Advisors, is listed on 42% of the applications for dispensary licenses. And they are the designated contact for six of the 16 winning licenses. 

In every congressional district where the firm’s clients won a dispensary license — including the 1st, 2nd, 4th, 5th 6th and 7th — its president, Maxime Kot, is the contact listed on between 40% and 60% of the applications in that district. 

For example, in the 1st Congressional District — which encompasses the City of St. Louis – Kot was listed as the contact person for 76 dispensary applications, making up 62% of the total submitted. In the 2nd District, it was 63% and in the 4th, 53%. 

When asked how CB Advisors was able to find that many eligible people to apply, Sara Gullickson, founder and CEO of the firm, said: “As far as our intellectual property and how we submit applications — either lottery or merit based — obviously that’s the secret sauce of the company.”

However, after hearing about Yatooma’s strategy of posting Craigslist ads and paying applicants, she said that was “not our business model.” 

“We’ve probably worked in 30 states and five countries,” Gullickson said. “I’ve been at this since I was 26 years old. I’m now 40 years old. I’ve just been around for a while.”

Gullickson has a stake in several cannabis licenses across the country that are minority- or women-owned. But in Missouri, she was acting as a consultant, she said, and wasn’t vying for a license herself.

When asked how many of the applicants are from out of state, she said that she didn’t want to disclose the information. 

John Payne, founding partner at Amendment 2 Consultants, acted as campaign manager for both of the constitutional amendments to legalize medical and recreational marijuana in the state. He’s listed as the contact for 16% of the dispensary license applications statewide, including two winners — both in the 3rd District.

One of his winning clients applied with just one application, records show and Payne confirmed. The other had 68, which Payne said the person pooled with friends and associates to work together to apply and to get a license. 

Like Gullickson, Payne said also he didn’t advertise or offer payment like Yatooma.

“It was almost all internal networks,” Payne said. “We knew a lot of people and those people knew a lot of people. So that’s how we kind of grew our client base.”

Payne said any questionable agreements made as part of the microbusiness license application process should come out in the next couple months, during the state’s post-licensure verification process.

“The department does a pretty thorough job of vetting these sorts of things,” Payne said. “They do ask for your operating agreements and contracts that you’ve signed, so that could be something that they look into.”

(Rebecca Rivas/The Missouri Independent)

Missouri’s Division of Cannabis Regulation said last week that it’s “become aware” that some people who recently received small-scale cannabis business licenses — which are meant to boost opportunities for businesses in disadvantaged communities — are now trying to sell them. 

On Oct. 2, the state issued 48 licenses to the winners of a lottery that determined who gets to participate in Missouri’s microbusiness program. 

The division warned in a guidance issued on Oct. 10 that if winners try to sell the licenses, the businesses must continue to be majority owned and operated by individuals who meet the eligibility qualifications. 

There are seven categories where people could qualify for a microbusiness license, ranging from having a lower income level or living in an area considered impoverished to having past arrests or incarcerations related to marijuana offenses. 

When asked how many licenses the division is aware of being posted for sale, spokeswoman Lisa Cox said in an email to The Independent that the division is “aware of two advertisements.”

“We spoke directly with the licensees, and they explained they are seeking investors and do not intend to sell the licenses prior to becoming operational or without department approval,” Cox said. “Seeking additional investors prior to being operational is allowed, if the change in ownership does not exceed 50%.”

In the guidance, the division said any application to change ownership “must also include eligibility documentation for any new individual whose voting or financial interest will contribute to majority ownership.”

If ownership changes hands without the division’s approval, it “may result in penalties, including fines, suspension or revocation.”

The microbusiness program was approved by voters in November through the constitutional amendment that legalized recreational marijuana.

Missouri announces lottery results for microbusiness cannabis licenses

“It is imperative that the microbusiness program operate as the voter-approved law was intended,” division Director Amy Moore said in a press release Friday. “Regulations around microbusiness ownership ensure marginalized or under-represented individuals are leading and benefiting from this portion of the legal marijuana market.”

The division posted the list of the final winners on Oct. 2, but not much is known about them. While the division normally posts contact information for licensed facilities on its website, it didn’t do so with the microbusiness license holders. 

Cox said the division is working on posting that information. 

Six winners were selected in each of Missouri’s eight Congressional districts. 

Of the six in each district, two will be microbusiness dispensaries, and four will be microbusiness wholesale facilities – where the owners can grow up to 250 plants.

In many cases, the winners – including names like “Cannarooted LLC” and “Frankenstein Enemy, LLC” — are not names registered as legal businesses in the state of Missouri. 

In one district, the winner is nameless and only identified as “individual.” 

John Payne, founder and managing partner at Amendment 2 Consultants, said he worked with a number of clients who applied for microbusiness licenses throughout the state. None of his winning clients are trying to sell their licenses, he said, but he’s aware that “some licenses are being shopped.”

In total, the state received applications from 1,625 people from July 27 to Aug. 10. 

The state has not yet said which categories of eligibility were the most prevalent in the applications, but it will likely be included in the chief equity officer’s annual report due by Jan. 1.

Any applicant not chosen by lottery is eligible for a refund of the $1,500 application fee, which must be requested by submitting a microbusiness application refund request form. Requests for a refund will be accepted beginning Nov. 2, and the microbusiness application refund request form and refund instructions will be available on the division’s website by that date.

An additional 48 licenses will be issued in both 2024 and 2025. For more information about microbusiness licensing and application requirements, visit Cannabis.Mo.Gov.

Delta-8 THC products like this cherry seltzer can be sold in stores in Missouri because the intoxicating ingredient, THC, is derived from hemp, not marijuana which is a controlled substance (Rebecca Rivas/The Missouri Independent).

Hemp is often known for being the part of the cannabis plant that doesn’t get people high. 

It’s full of CBD, a nonpyschoactive cannabinoid that helps people relax and often found in massage oils and sleep aids.

But much has changed since hemp was taken off the controlled substance list in 2018 by the last U.S. Agriculture Improvement Act, more commonly known as the farm bill. 

Now state regulators can barely keep up with the constantly evolving ways that people have found to make intoxicating products from hemp. The market for things like Delta-8 drinks and edibles is one of the fastest growing markets in the country. 

In Missouri, the issue has taken center stage in a massive cannabis recall, where a company is accused of illegally importing marijuana but insists it actually brought legal, unregulated hemp into the state.

With the farm bill up for renewal, the debate on whether some hemp products need to be considered controlled substances is back on the table — though delays make it unclear if any changes will occur at all.

Hemp industry leaders, state marijuana regulators and members of Congress all seem to agree on one thing — the U.S. Food and Drug Administration should regulate CBD. But the divides come with intoxicating hemp products, and the standoff is over criminalization and prohibition. 

Hemp industry leaders don’t want to see these intoxicating products banned and have suggested the Alcohol and Tobacco Tax and Trade Bureau handle their regulation. 

But state regulators believe Congress should “set the floor not the ceiling” on creating standards of hemp products.   

“…states should be able to enact regulations that extend beyond federal minimums to further protect their communities and consumers,”  said leaders of the Cannabis Regulator Association (CANNRA) in a statement provided to Congress.  

When the current farm bill passes, it will likely have guidance for the FDA to monitor the production and testing of CBD.

But it won’t likely have anything to help states regulate intoxicating hemp products, said Jonathan Miller, general counsel for the U.S. Hemp Roundtable, a coalition of hemp industry leaders across the country.

“My guess is that the farm bill will not resolve that,” Miller said, “and that will be something that will be continued to be studied and handled in the states.”

Hemp industry leaders in Missouri have pushed back regulation coming under the Department of Health and Senior Services, the agency that oversees the cannabis program. The Missouri Hemp Trade Association told Congress that it would like a separate “regulatory regime” that would allow for the use of intoxicating hemp products while providing for consumer safety and product testing. 

“This approach has avoided the massive bureaucratic costs of enforcing outright prohibition, criminalizing and incarcerating responsible, law-abiding adults, and forcing consumers away from alternatives to opiates and other deadly drugs,” the association stated in a Congressional Request for Information on cannabinoid hemp regulation from the U.S. House Committee on Energy & Commerce and the U.S. Senate Committee on Health, Education, Labor, and Pensions.

Small piece of the farm bill

The previous farm bill expired Sept. 30. Its renewal, a process that occurs every five years, remains in the drafting stage.

The expansive agricultural and food policy bill covers farmer safety net programs, conservation and sustainability incentives, international trade, rural area development, and food and nutrition programs for low-income Americans — the last of which by far accounts for the largest portion of the bill. 

A very small piece of the bill would be the hemp provisions.

“We’re one of the very rare industries out there that is asking Congress to regulate it,” Miller said. 

In its response to Congress, CANNRA suggested closing “loopholes” that have allowed for intoxicating hemp products to go unregulated, including the “0.3% loophole” and the “THCA loophole.” 

Delta-9 THC is the most common form of intoxicating cannabinoid. While the threshold of 0.3% delta-9 THC by weight is a small amount of THC in a hemp plant, when applied to things like chocolate bars or beverages that can weigh significantly more, 0.3% by weight can amount to hundreds of milligrams of THC. 

For example, a 50-gram chocolate bar at 0.3% THC would have around 150 mg of THC — 30 times the standard 5 mg THC dose established by the National Institute on Drug Abuse. A family sized pack of cookies weighing 20 oz can contain around 1,700 mg of THC using the 0.3% THC threshold.

Instead, Miller and other hemp leaders suggest setting the intoxicating floor at 5 mg. 

Others believe it should be 2.5 mg.

Missouri is currently shining a light on the THCA loophole. After more than 60,000 cannabis products were recalled in August, a company has revealed that it was importing THCA extracted from the hemp plant and putting it in marijuana products — arguing that THCA is not actually intoxicating until it is heated, so it doesn’t count as total THC. 

CANNRA told Congress that despite some states’ efforts to address this issue, many hemp businesses are selling “THCA hemp” flower that contains less than 0.3% delta-9 THC but has a total THC concentration of 15% to 20%. 

“This so-called ‘hemp’ is indistinguishable from marijuana flower,” the association stated. 

Patchwork of state laws 

Right now states have passed a “patchwork of different laws,” including some that are being challenged in courts, Miller said. 

Miller is hoping that the current legal conflicts between recent court decisions and the DEA will push Congress to act.

On Sept. 8, a federal judge in Arkansas granted a preliminary injunction in a lawsuit against the state, saying that hemp-derived cannabinoids, like THCA, are protected under the 2018 farm bill. 

But a few months before that, the U.S. Drug Enforcement Administration reaffirmed its position that all these cannabinoids are illegal under federal law and not protected by the farm bill.

The federal judge indicated that Congress should be the one to decide how to regulate hemp-derived THC products. 

“If we don’t change the definition and the federal court in Arkansas is correct, then maybe you can’t put limits on these products other than .3% Delta-9 THC,” Miller said. “It’s possible that if there’s no action at the federal level that courts could say, ‘We are kind of in the wild west without federal action.’”

(Rebecca Rivas/The Missouri Independent)

Companies around Missouri have been required to store nearly 63,000 recalled cannabis products since early August. 

But if they want to destroy that product, they can now consult with state cannabis regulators about how to do it, after a Sept. 29 hearing on the recall was postponed until at least December.

Licensed cannabis businesses may not take action on the recalled product without permission for the state, said Lisa Cox, spokeswoman for the agency that oversees the state’s cannabis program, the Missouri Department of Health and Senior Services, in an email to The Independent Thursday. 

“If a licensee wishes to voluntarily destroy product on hold, they should contact the department to discuss,” Cox said.

However, it’s possible, she said, the case surrounding the recall could be resolved by Oct. 20.

Robertsonville-based marijuana manufacturer Delta Extraction has asked the Administrative Hearing Commission to rescind the company’s license suspension and rollback the recall.

The company’s attorney, Chuck Hatfield, said he also “hopes and believes” the matter can be resolved by Oct. 20 or sooner. 

“We’re providing all the records that they’re asking for,” Hatfield said. “We’re making folks available to them for interviews, and we have been doing that since the first day that this was raised. Delta Extraction is an open book.”

Attorneys for the state and Delta Extraction agreed in a Sept. 25 joint motion that the hearing will not be rescheduled prior to Nov. 30. A commissioner with the Administrative Hearing Commission granted the motion the next day.

The state also agreed not to order any cannabis licensee to destroy the recalled products, which potentially contain a THC concentrate that’s under investigation. If licensees choose to destroy it voluntarily, Cox said, “it would be destroyed according to the requirements for destruction/waste in applicable regulations.”

On Aug. 2, the state regulating agency suspended Delta Extraction’s operations after accusing the company of sourcing untested “marijuana or converted hemp from outside of a Missouri licensed cultivation facility.” 

The state issued an administrative hold on the products days after and then a full product recall on Aug. 14. 

Delta has denied accusations that it illegally imported marijuana into the state by arguing it actually imported a non-psychoactive hemp product that was converted into THC once in Missouri. 

The commissioner overseeing Delta’s appeal of the recall and license suspension said the company will likely lose that argument, because it’s illegal in Missouri to add “hemp-derived chemically modified ‘converted’ cannabinoids” to marijuana products.

Last month, the department asked the commission to delay the hearing that was scheduled for Sept. 29. Delta opposed the motion, and a commissioner denied it.  

However in the Sept. 25 joint motion, the department agreed to hold off on its attempt to revoke Delta’s license until Oct. 20 — and Delta agreed to pushing back the hearing date.

The department issued a notice of pending revocation on Sept. 1, and Delta would’ve had until Oct. 2 to prove its case against the accusations. However, Delta’s attorneys argued in an email that there was no need to expedite the revocation process because the company’s operations have already been suspended. 

The two parties agreed that the revocation process will be completed by Oct. 20. And if the parties cannot reach an agreement, then a hearing would be set after Nov. 30.

Marijuana dispensaries and warehouses across Missouri are holding on to more than 62,000 recalled products in special vaults (Rebecca Rivas/Missouri Independent).

Recalls on cannabis products have become common in other states where marijuana is legal. 

But when Missouri regulators issued their first recall last month, veterans of the industry were surprised. While recalls most commonly involve a company cooperating with regulators to understand the issue — was there bacteria in the product, or perhaps a wrong label — that was not the case in Missouri. 

Products were immediately pulled from the shelves, and the manufacturer’s operations were suspended, as the state alleged “inversion” — illegally importing marijuana or converted hemp products into the state. 

The saga was scheduled to come to a head Friday, with the state and marijuana manufacturer Delta Extraction facing off before the Administrative Hearing Commission over whether Missouri overstepped its authority.

But that hearing was cancelled and will instead take place at a future date. 

Marijuana dispensaries and warehouses across Missouri are holding on to more than 62,000 recalled products in special vaults. Lisa Cox, spokeswoman for the Missouri Department of Health and Senior Services, which regulates the state’s cannabis program, said the products are being held “until the department determines the product is safe, may be remediated or must be destroyed.”

What typically happens in a recall

During Delta’s appeal process, the Missouri Division of Cannabis Regulation has said regulators learned about the company’s activities — that it was adding out-of-state hemp-derived THC to marijuana products — through an anonymous tip. 

How they verified its credibility was through the software the state uses to track information about marijuana products, called Metrc. 

From the moment the marijuana plant starts to sprout, it gets a tag that goes into Metrc, and that plant’s yield is tracked until it finds its way into a vape pen or joint. 

Because marijuana products are so closely tracked in Metrc at various stages of production, a “traceability” recall like this is pretty rare, said Matt Regusci, technical director of the St. Louis-based  Cannabis Safety & Quality, an accredited cannabis certification program.

“Typically companies are just following the rules because they don’t want to lose their product,” he said. “This is usually very spelled out in each state’s regulations on how they’re tracking it from seed to sale.”

Traceability issues are usually “one-off cases,” he said, as a result of human error — because an employee typed in the wrong weight or amount into the system.  

But it’s normally not the reason for a “huge recall like this,” he said.

“It’s kind of up there with white-collar crime,” Regusci said. “It’s very difficult to catch, without some sort of whistleblower saying that something’s going on.”

Delta Extraction filed a lawsuit against the state in an attempt to stop the recall. A Missouri judge dismissed the case, ruling that the Administrative Hearing Commission needed to finish its process before the court intervenes. 

“Lawsuits do happen,” Regusci said, regarding recalls. “Particularly in an industry like this, where everybody’s kind of new to it… As more of these entities start figuring out more of what they need to do on both sides, we’re going to see less and less lawsuits.”

Another notable difference in this situation was that the state immediately suspended the company’s license, which experts say is not typical.

“It’s rare for the state to issue a suspension order on the front end of things,” said attorney Clark Wu, an Arizona-based who specializes in hemp and cannabis law. “Normally what happens in other states in the recall process is the state will issue some form of what’s called a deficiency notice.”

What’s on the table

In the hearing, the commissioner will be looking into both state’s authority to issue the immediate suspension of the company’s operations and the recall. 

The company, Delta Extraction, is a Robertsville-based licensed marijuana manufacturer that specializes in making THC distillate, a highly potent and pure form of THC used for things like vape pens, infused pre-rolled joints and edibles. 

On Aug. 2, the state regulating agency suspended Delta Extraction’s operations after accusing the company of sourcing untested “marijuana or converted hemp from outside of a Missouri licensed cultivation facility.” 

And the state issued a product recall on Aug. 14.

According to the commission, the main questions addressed during the hearing will be: Was there a credible threat to public health? And should Delta’s suspension be lifted now that potentially dangerous products are pulled from the shelves? And is the investigation as it relates to a credible and imminent threat to public health or safety still ongoing? 

By law, the only way the state can issue an immediate suspension — rather than give 30 days notice — is a threat to public health or safety. 

Carole Iles of the Administrative Hearing Commission addressed this in her preliminary order on Aug. 29, denying a stay of Delta’s suspension. 

Iles wrote that the state constitution allows for immediate suspension of operations by a marijuana licensee “in instances where there is a credible and imminent threat to public health or public safety.” 

And according to the state’s cannabis regulations, a threat could include a situation where the product wasn’t “compliantly tested” or “a credible report, such as from law enforcement, that diversion or inversion of marijuana product is occurring at the licensed facility.”

The state’s rules don’t define “inversion,” Iles said, but a state regulator gave an acceptable definition in testimony — that it occurs when cannabis seeds, plants, or products made from them come into the regulatory market from outside the system. This includes when “hemp-derived chemically modified ‘converted’ cannabinoids” are added to products, she said. 

Iles also stated in her order that the information about a possible threat was credible because Metrc reports verified that, “Delta was incorporating hemp-derived tetrahydrocannabinol into its marijuana products in violation of emergency rule.”

The emergency rule was in effect from Feb. 3 until the final rule took effect on July 30.  

“The regulation prohibited manufacturers from including in their products any THC produced by the conversion of THC-A or CBD from any source other than marijuana grown in Missouri by a Missouri-licensed cultivator,” Iles said in her order. “The use of THC produced from THC-A or CBD from industrial hemp plants was prohibited.”

This article has been updated since it was initially published.

On Sept. 8, a federal judge in Arkansas granted a preliminary injunction in a lawsuit against the state, saying that hemp-derived cannabinoids, like THC-A, are protected under the 2018 farm bill (Rebecca Rivas/Missouri Independent).

At the center of Missouri’s massive marijuana recall is a THC concentrate, or distillate, made partially from hemp.

Robertsville-based marijuana manufacturer Delta Extraction has denied accusations that it illegally imported marijuana into the state by arguing it actually imported a non-psychoactive hemp product that was converted into THC once in Missouri. 

The commissioner overseeing Delta’s appeal of the recall and license suspension said the company will likely lose that argument, because it’s illegal to add “hemp-derived chemically modified ‘converted’ cannabinoids” to marijuana products.

But a lab in Florida — where Delta bought a good amount of product — says the commissioner’s description of “chemically modified” isn’t quite right. 

JJ Coombs, owner and CEO of Arvida Labs in Fort Lauderdale, walked The Independent through the extraction process to make the concentrated THC-A, a cannabinoid that must be heated to produce a high — insisting it didn’t involve a chemical conversion.

It’s a fairly new process, Coombs said, that involves breeding hemp plants to have higher concentrations of the potentially intoxicating property THC-A. And it’s a process neither the state nor Delta leaders could explain during the company’s appeal proceedings.

Unlike marijuana, hemp has very little psychoactive properties naturally — which is why it was taken off the federal controlled substance list in the 2018 farm bill. But since then, businesses like Coombs’ have been in a race to create ways to produce the most predominant psychoactive active element in marijuana, delta-9 THC, using the hemp plant. 

“THC-A is becoming popular because it’s able to convert into delta-9,” he said. “It’s like the new hot thing… That’s what everybody wants right now.”

For Missouri’s marijuana industry, businesses like Coombs’ pose a threat to their livelihoods, especially because Missouri cannabis licensees must go through a rigorous and costly regulatory process — one that hemp companies don’t.

However, for the Missouri hemp industry, the Delta Extraction case makes their argument for them: That hemp-derived THC is legal under federal law and it’s a safe, viable business for Missouri farmers. 

Sean Hackmann, president of the Missouri Hemp Trade Association, said Delta sold more than $20 million of distillate that was a mixture of marijuana grown in Missouri and hemp from other states.

“Twenty million dollars in the Missouri hemp industry would be huge, if that was produced, extracted and processed inside our state,” Hackmann said. “But it was all some other state that benefited from that. Not our Missouri industry.” 

As the Delta recall winds its way though state legal proceedings, the future of the hemp industry has also been in legal flux on a federal level.

On Sept. 8, a federal judge in Arkansas granted a preliminary injunction in a lawsuit against the state, saying that hemp-derived cannabinoids, like THC-A, are protected under the 2018 farm bill. 

But a few months before that, the U.S. Drug Enforcement Administration reaffirmed its position that all these cannabinoids are illegal under federal law and not protected by the farm bill, said attorney Clark Wu, an Arizona-based who specializes in hemp and cannabis law.

“Ultimately, it’s hard to say whether this judge or the DEA is more ‘right,’ as different limitations of authority constrain them,” Wu said. 

The federal judge indicated that Congress should be the one to decide how to regulate hemp-derived THC products, Wu said. 

“The DEA, on the other hand, is viewing everything from a criminal lens,” Wu said, “and the agency is also bound by precedent in agency decisions and international treatises concerning cannabis scheduling. These cases will likely continue to arise until Congress resolves the gap in federal hemp legislation.”

An attorney for Delta Extractions did not respond to a request for comment. 

Arvida’s process

Coombs, who is an advocate within the hemp industry in Florida, says staying in line with the changing legal opinions is taxing on hemp businesses.

“You’re literally sometimes a couple of degrees away from something not being compliant and losing a lot of money,” he said.

As far as his company’s process and products, he says he’s an open book. 

“I just want to be transparent about this,” he said, “and make sure that people understand what this is — because it is complex, right?”

The confusion about Arvida Labs’ product being made using a chemical conversion process is understandable, he said, because most people don’t know labs can extract large amounts of THC-A from the hemp plant.

Missouri company at center of cannabis recall used hemp instead of marijuana in products

The most common way to get delta-9 THC from hemp is usually a chemical conversion process from CBD, which is the more common cannabinoid in hemp. 

And that’s exactly the process Delta’s leadership testified was being used, at one point, with its products — a revelation that shocked businesses who purchased Delta’s distillate and thought it was made with 100% marijuana. 

But it also outraged labs that test cannabis products in Missouri and need to know what chemicals were used in the process in order to ensure safety tests are accurate. 

Although Delta’s leaders were asked during appeal proceedings to explain the difference between the CBD conversion process and the THC-A product, they failed to do so.

The distinction is important, Coombs said.

Coombs says Arvida purchased the hemp from farmers in Texas, Tennessee and Kentucky who’ve learned to breed the plants to have higher concentrations of THC-A, he said, using federally-approved strains.

THC-A is not intoxicating unless you heat it up, and then it turns into delta-9 THC. For example, eating raw marijuana flower won’t produce a high because there’s only a small amount of delta-9 THC but a lot of THC-A. 

Hemp has very little THC-A, so it takes about 90 pounds of hemp to make 1 kilo of THC-A isolate, or powder, Coombs said. 

“It’s not that much in the grand scheme of things,” he said. “Most labs that are still in business are doing on average 16,000 pounds of extraction per day, if not more.”

The isolate is then put into oil for transport, which is why the shipping labels the state authorities presented as exhibits in the Delta Extraction case said “THC-A oil,” Coombs said. It didn’t mean that it was concentrated THC-A oil, he said, because that would make it more likely to convert into delta-9 THC before it got to Missouri — and the company went through what’s called a “decarboxylation” process, or heating it. 

He said Arvida’s THC-A didn’t go through an “isomeric conversion” — or the process of converting CBD to THC which often involves a variety of chemicals. Because of that, he said it would have passed all the Missouri mandated tests, which look for residue from chemicals used in the typical extraction process. 

And because the hemp was grown in Texas, he said, so there were no foreign pesticides used that the lab wouldn’t have picked up on if the hemp was grown in another country.

However, Kevin Halderman, board member for the hemp association and a hemp business owner in Osage Beach, said he questions whether or not the hemp came from Texas.

“They don’t have to disclose that,” Halderman said. “If they’re in Florida, a lot of Florida products come from out of the country. They’re coming from Colombia, Costa Rica or Panama.”

Coombs insists that it isn’t foreign hemp.

Green Precision Analytics is one of the labs that Delta Extraction used to test the distillate at the heart of the recall. Anthony David, the lab’s owner and chief operating officer, told The Independent previously that he had no idea Delta was incorporating imported hemp in the products.

However, David also said there was no trace of the THC coming from an isomeric conversion process. Usually he can see a difference in curves of the chromatography, David said, but he didn’t in this case. 

Coombs said that’s because it was done through a normal extraction process. 

Delta’s appeal

The question about the hemp product was discussed during a Aug. 14 hearing regarding Delta Extraction’s license suspension and the recall.

Delta Extraction is a licensed marijuana manufacturer that specializes in making distillate, a highly potent and pure form of THC oil used for things like vape pens and edibles. 

On Aug. 2, the state regulating agency suspended Delta Extraction’s license after accusing the company of sourcing untested “marijuana or converted hemp from outside of a Missouri licensed cultivation facility.” 

The state argues it banned importing hemp from other states and adding it to marijuana products in its emergency rules filed on Jan. 20.

In its appeal, Delta argues that the Missouri didn’t specifically ban this process until the state’s final rules went into effect on July 30 of this year.

But Carole Iles of the Administrative Hearing Commission said in an Aug. 29 order that the company will likely lose on that point. The only thing the cannabis regulating agency, the Missouri Department of Health and Senior Services, added to this line in the final rules was the clause “such as THC-A …” 

“We agree with the department that language added to the permanent rule … did not change the requirement of the emergency rule that THC in marijuana products could only be derived from marijuana cultivated by a Missouri-licensed cultivation facility,” the order states.

Did recalled Missouri cannabis products pose health risks? Regulators aren’t sure 

The hemp association does not have an official position on the Delta case. However, Halderman said he’s personally “sad” that customers were misled. 

At some point, Delta Extraction was taking CBD and chemically converting it into THC. They were then adding it to THC concentrate from Missouri-grown marijuana concentrate and not disclosing that to marijuana customers.

“They were straight up lied to,” Halderman said. 

Probably the most frustrating piece for Halderman, he said, is that Missouri industry leaders have consistently been using “rhetoric” that hemp-derived THC products are unsafe. This spring, marijuana industry leaders also pushed for legislation to regulate hemp-derived THC products, and Halderman said it would’ve killed their industry. 

This spring was also the time when Delta Extraction was selling large amounts of the distillate that led to the recall. 

“At the same time that they’re trying to make us illegal, they were using our whole process,” he said. “Not a portion of it, our whole process.”

‘Unclear’ testimony

During the hearing, Iles was trying to understand more about what Delta Extraction was doing. She said the company leaders and state officials were using the CBD and THC-A oils “interchangeably.” 

“I think the testimony was kind of unclear,” Iles said at the hearing. “It looks like we’re all kind of confused here.”

Coombs said that marijuana companies who purchased Delta’s distillate should not feel “duped” because the same extraction process used to get delta-9 THC from marijuana was used to get THC-A from hemp. 

“It’s the same exact thing,” he said. “There’s no difference. Hemp is cannabis, just with no delta-9 THC.”

Both hemp and marijuana belong to the same species, Cannabis sativa, and the two plants look somewhat similar. The defining difference between hemp and marijuana is how much delta-9 THC they each have.

By federal law, marijuana refers to all parts of the plant cannabis sativa with more than 0.3% delta-9 THC by dry weight. Hemp is any part of the plant containing less than that.

Wu, along with leaders of Missouri’s hemp industry, call these definitions “legal fiction” because it’s all the same plant. 

“Seeds have no THC,” Wu said. “So even though certain seeds can be cultivated into ‘cannabis plants,’ some operators – hemp and marijuana – have taken advantage of the current state of law and lack of federal enforcement to sell seeds across the United States. That is likely how the Florida operator acquired hemp and high THC strains of plants for THCa production.”

(Rebecca Rivas/Missouri Independent)

The Missouri Division of Cannabis Regulation is responding to questions about the effectiveness of the software it uses to track information about marijuana products, including the results of state-mandated testing. 

In a guidance document issued on Monday, the agency addressed questions regarding testing regulations that cannabis businesses rely on to ensure product is safe — defending its protocols by arguing that regulations can only do so much when “bad actors” intentionally falsify records to evade oversight. 

“The risk of bad actors attempting to circumvent regulatory requirements exists in every regulated industry,” the division said in the guidance document. 

The new guidance comes on the heels of a major statewide recall of products infused with a THC concentrate, or distillate, purchased from a Robertsville-based company called Delta Extraction.

Delta is accused by state regulators of “inversion,” or bringing in illegal marijuana products from other states and adding it to their own products in order to keep their production numbers up. But the company argues it hasn’t violated the law because it was importing hemp, a federally legal substance. 

Missouri cannabis business owners told The Independent previously that there was “no way” for companies to know that Delta was producing a distillate that wasn’t made completely from Missouri marijuana — because it was listed as passing all the required testing in Metrc, the state’s tracking system. 

The state has paid the company running Metrc between $700,000 and $900,000 every year since 2020. 

Missouri company at center of cannabis recall used hemp instead of marijuana in products

From the moment the plant starts to sprout, it gets a tag that goes into Metrc, and that plant’s yield is tracked until it finds its way into a vape pen or joint. 

Various manufacturers saw the distillate listed on Metrc, along with the “certificate of analysis” from the lab that showed it was safe for consumers. They bought it and infused their products with the distillate, leading to 62,000 products being recalled in August.

In its Monday guidance document, the division responded to the question: “If marijuana product is recorded in Metrc as passing all required testing, how can a product still present a potential health risk?” 

The division said that “intentional falsification of Metrc records” and non-compliance can lead to unreliable test results. 

“Where records are falsified or sampling requirements are not followed, a passing test result does not mean all cannabis in a harvest or production lot has been appropriately evaluated,” the guidance document said. 

If a company has incorporated “unregulated cannabis” into products, the division said it can also present health risks. 

“For example, chemical conversion of CBD to produce THC can result in a product with harmful residual solvents, other harmful compounds, and even new compounds of unknown impact,” the division said in Monday’s guidance document. 

Using “highly toxic and illegal pesticides” can cause immediate and long-term health risks with repeated exposure, it stated.

The other question the division responded to was: “If licensees can falsify tracking information in ways that cause public health risks, how can downstream licensees protect themselves from purchasing noncompliant product from bad actors?” 

Regulators are committed to investigating any evidence of tracking and testing evasion or manipulation, the guidance document said, and “treating these events as particularly egregious violations.”

The division encouraged licensees to question distillate with “unusually low prices and unusually high availability of supply.” Licensees should also ask for evidence of the source of the product and establish contractual arrangements for return or refund of products later deemed noncompliant.

Rich Chrismer, a spokesman for Delta Extraction, said in an email to The Independent Monday that Missouri “approved all of Delta Extraction’s procedural documents and the company was always careful to be in compliance with (Division of Cannabis Regulation). The company’s operations, at all times, met all statutes and administrative rules outlined within Missouri’s cannabis program. There are many well-documented email interactions with its compliance officer approving this exact process.”

Delta sold at least 700 liters of the distillate in question, according to case documents. A liter of 80% concentrated THC can make more than 70,000 individual “doses” at 10mg THC a piece, industry experts say. 

That’s almost 50 million doses.

Delta Extraction is still fighting to get the recall overturned. The Administrative Hearing Commission will hold a hearing in the case on Sept. 29.

Karina Hernandez, horticulture student at St. Louis Community College at Meramec, visits the greenhouse on her first day of introduction to cannabis (Rebecca Rivas/Missouri Independent).

Karina Hernandez’s ideal work environment is surrounded by plants, with her hands in the dirt. 

Although she already has a biology degree, she recently decided to go back to school to take classes in horticulture at St. Louis Community College at Meramec, the state’s largest horticulture program. 

And she was surprised to see courses on hemp and cannabis cultivation on the list. 

On the first day of her introduction to cannabis course this semester, she and her fellow classmates shared why they wanted to take the class.

“It’s a growing industry, so it’s cool to be at the forefront,” Hernandez said. “As long as I’m not sitting at a desk — and I feel like that’s a lot of people here.” 

Many of her classmates agreed the cannabis market just might be their ticket to a career working in plant science.

Student interest is likely why the number of cannabis certificate programs at colleges has rapidly expanded in Missouri. A majority of the programs are online courses, but some — including the one at Meramec — are providing hands-on instruction using hemp plants. 

Now for the first time, beginning this semester, Missouri students can get a bachelor’s degree in cannabis and natural medicinals at Truman State University in Kirksville.

“Everybody that we’ve talked to who’s currently in the industry are all really excited about the potential of having students who are coming out with an undergraduate degree,” said Tim Walston, Truman’s dean of science and mathematics, “and that they could take into their workforce right away.” 

Marijuana sales in Missouri have been averaging about $120 million a month since March. That means the Missouri industry will easily surpass $1 billion in its first year of recreational marijuana sales. 

A booming industry means more jobs. 

Since November when Missourians voted to pass a constitutional amendment legalizing recreational marijuana, the number of licensed marijuana employees has increased by nearly 8,000 — bringing the total up to 17,615 employees statewide, according to the state’s August report.

“I have companies contacting me constantly saying, ‘We are looking for X, Y, Z employee,’” said Stacy Godlewski, manager of the St. Louis University’s cannabis science and operations online certificate program. “I am sharing job opportunities constantly with the students, and the students are reporting back getting hired within the industry before even graduating the program.”

Preparing students for ‘green jobs’

St. Louis University was among the first two Missouri colleges to launch online cannabis certificate programs in 2020, along with Northwest Missouri State University. Godlewski said SLU was nudged to do so by Mitch Myers with St. Louis-based BeLeaf Medical, the first medical marijuana company to begin operations in the state. 

“It was Mitch Myers of BeLeaf who actually came to St. Louis University and said, ‘You know, we’re about to go medically legal. We need to educate the employees of the industry. And, you know, why not SLU,’” Godlewski said.

And it’s now SLU’s most popular professional studies program.

What makes their program unique, Godlewski said, is the number of experts in the field who teach the courses — including Kayla Brown, director of human resources, compliance and legal at Vibe Cannabis in St. Louis. 

“The majority of the questions that I get asked are, ‘How did you get into the industry? And how should I do it?” Brown said. “The program does a great job of giving them such a full spectrum of options.”

This semester, Metropolitan Community College in Kansas City launched an online program, partnering with California-based company Green Flower. Students can get three certificates including for cannabis cultivation specialist, cannabis retail specialist, and for cannabis extraction & product development specialist.

Both Truman and St. Louis Community College say what sets their programs apart is the fact that students can work directly with hemp plants. Because the institutions receive federal funding, they can’t use marijuana plants in instruction. However, the 2018 farm bill took hemp off the federal controlled substance list, and that makes hemp plants a good substitute.

“We actually work with live hemp plants in this program, which is unique,” said Patrick Vogan, assistant professor of horticulture. “We really do think that will help to prepare students.”

The college first offered its intro to cannabis in the fall of 2021, and last spring the college added a cannabis and hemp cultivation class. Vogan co-taught the cultivation course with the manager of a cultivation facility, which they’ll do again this year. Now this fall, the college has added an extractions class. 

St. Louis Community College is hoping to soon gain approval of its program from the Missouri Department of Higher Education and Workforce Development, Vogan said.

So far, the department has approved two cannabis programs statewide — Truman’s and Southeast Missouri State University’s in Cape Girardeau. 

At Southwest, horticulture and cannabis is an option within the agribusiness bachelor program, and it was added in June 2022. It’s not a full program like Truman’s, a department spokesman said.

Southwest’s program focuses on preparing students for “green jobs that include sustainable food horticulture to greenhouse management.”

 Truman aims to distinguish itself by focusing on natural medicine and holistic healing in its program, as well.

“We do want to focus on cannabis,” Walston said, “but there’s also a growing industry of other natural medicinals — things like essential oils and plant based medicine.”

The degree program would provide a foundation for students to explore the scientific, cultural and legal backgrounds of natural medicines, he said.

“A lot of it has been around for centuries or millennia,” he said, “but people are just now starting to go back to.” 

Missouri voters legalized medical marijuana in 2018 and recreational marijuana in 2020 (Kevork Djansezian/Getty Images).

Richard Batenburg Jr. feels deceived and cheated. 

His cannabis brand, Colorado-based The Clear, has been partnering with a licensed Missouri manufacturer to produce pre-rolled joints. Some were infused with a THC concentrate, or distillate, purchased from a Robertsville-based company called Delta Extraction.

When the state issued a recall last month of all products made with the same distillate — a total of 62,000 products — Batenburg’s company was stuck with 90,000 joints taking up space in a Missouri warehouse that he still can’t do anything with.

But it’s not just the recall that got under his skin. 

As Delta Extraction was fighting off their license suspension and the recall by state regulators, the company revealed it had been importing concentrated THC oil made from industrial hemp — which is about four times cheaper to make than marijuana THC concentrate in Missouri.

Batenburg had no idea his team was likely buying what he calls a “synthetic” THC — or THC that had been converted from hemp’s CBD using a heavy chemical process — mixed with a small amount of marijuana, while still paying marijuana prices.

Did recalled Missouri cannabis products pose health risks? Regulators aren’t sure 

Even more infuriating than overpaying for hemp, Batenburg said, is that he was unknowingly deceiving his own customers who thought they were getting a pure marijuana product.

“They were duping all these compliant operators,” he said. “What they’re doing — from a commerce perspective — it’s criminal. They were probably more surprised than anybody that they weren’t getting caught.”

Delta declined comment for this story, citing ongoing litigation. 

But Delta has fiercely denied any wrongdoing, both in the company’s lawsuit to stop the recall and the administrative hearing to appeal their license suspension. 

The only reason Batenburg learned about Delta’s hemp process is because the recall sparked litigation, which in turn resulted in dozens of court filings that include emails, testing results, material purchases and a transcript with hours of testimony from the company’s leaders.

That’s also how John Lopez, CEO of Old Route 66 Wellness whose brand Bison Infused was also on the recall list, learned about Delta’s use of hemp. His business only bought a small amount of the distillate in April, when there was a dip in supply after Missouri’s recreational marijuana sales began. 

And that decision has cost him $800,000 in products. 

While Delta manufactured and sold the distillate, Lopez puts most of the blame on the brand that contracted with Delta to follow a recipe and make the product — Oklahoma-based Conte Enterprise.  

“We would have never bought it” had his team known it was chemically converted THC from hemp, Lopez said. 

A spokeswoman for Conte said the company, “stands by the safety and quality of its product. However, it does not comment on pending litigation.” 

Rachel Herndon, COO of Delta, also defended the product during an Aug. 14 commission hearing.

“We bolstered this industry, we supported this industry, and we cut costs low for consumers,” she said. “And we did it all while being in constant communication with the state and believing that our processes were allowed and appropriate. All of our product was tested. And we have no consumer complaints.”

Batenburg works with the manufacturer Dark Horse Medicinals to produce his brand. That company is now suing Conte and Delta Extraction to recoup its losses after purchasing nearly $325,000 of distillate in May that went into making about $1 million worth of products. 

A Missouri judge has already dismissed Delta’s lawsuit against the state to stop the recall, and a commissioner handling the company’s appeal of its license suspension recently denied its request for a stay. A final decision in the appeal is still pending, and the commission will hold a hearing on Sept. 29.

As the Delta case winds through the legal system, it offers a rare glimpse into Missouri’s burgeoning cannabis industry, which has been shrouded in secrecy since voters approved medical marijuana in 2018.

And the ordeal also brings up a major question for Missouri consumers:

How often were they overpaying for what they thought was Missouri-grown marijuana but were actually getting hemp grown somewhere else?

What we now know

Delta Extraction is a licensed marijuana manufacturer that specializes in making distillate, a highly potent and pure form of THC oil used for things like vape pens and edibles. 

On Aug. 2, the state regulating agency suspended Delta Extraction’s license after accusing the company of sourcing untested “marijuana or converted hemp from outside of a Missouri licensed cultivation facility.” 

Delta is accused by state regulators of “inversion,” or bringing in illegal marijuana products from other states and adding it to their own products in order to keep their production numbers up. But the company argues it hasn’t violated the law because it was importing hemp, a federally legal substance. 

“As a matter of law, industrial hemp is not marijuana,” according to an Aug. 25 brief Delta’s attorneys filed with the Administrative Hearing Commission. “The Missouri Constitution and the department’s own regulations define marijuana to specifically exclude industrial hemp.”

While this type of inversion is illegal in Missouri, it is allowed in Conte’s home state of Oklahoma and others, including Arizona and Wyoming, said attorney Clark Wu, who specializes in hemp and cannabis law and is a partner at the Arizona-based law firm Bianchi & Brandt.

“Inversion is not illegal everywhere,” Wu said. “In some states … you can do an inversion. There’s a legal process for introducing hemp-derived products into the cannabis system.”

The state issued an administrative hold on the 62,000 products days after the company’s suspension and a full product recall on Aug. 14. 

According to documents filed in both the lawsuit and appeal, Delta has been selling Conte’s THC distillate for over a year. The majority of the distillate is likely hemp-derived THC-A — a compound of the cannabis plant that isn’t intoxicating until heated — combined with a small amount of Missouri marijuana. 

The company has sold 700 liters of this concoction since at least July 2022, said Jack Maritz, general manager and lab manager of Delta Extraction, in his Aug.14 testimony before the Administrative Hearing Commission. 

And it’s sold to 135 Missouri marijuana license holders, with Delta making $20 million since it began offering a hemp-marijuana distillate in April 2022, company leaders said in their testimonies. 

The 700 liters of oil has the potential to make “millions of packs of edibles,” Maritz said in his testimony.

In the state’s initial investigation, regulators found two examples where altogether, Delta Extraction used 9 grams of THC originating from Missouri marijuana, but produced 168,698 grams of distillate.

“Delta Extraction, practically speaking, is importing cannabinoids from other states, converting it to THC, and then selling it in the regulated market as if it is Missouri marijuana,” according to a Aug. 22 brief filed by the state in the company’s appeal before the Administrative Hearing Commission. “The distillate, at least in the two unrefuted examples set out above, contains virtually no Missouri cultivated marijuana at all.”

Hemp doesn’t naturally have a lot of potentially intoxicating cannabinoids like THC or THC-A. When the Farm Bill of 2018 took hemp off the federally controlled substance list, it unintentionally also gave the green light for people to legally make THC and THC-A from CBD, using various chemicals and heat.

Currently, chemically converted THC from hemp is completely unregulated on a federal and state level.

Batenburg said he has a personal aversion to the process used by Delta and would never have allowed it in his products had he known it was happening.

“I don’t think it’s the same if it’s been tortured to get to the same molecule,” he said. 

Big profits

Delta is a “white labeling” marijuana manufacturer, Maritz said in his Aug. 14 testimony. This means that cannabis brands contract with the company to make their products using the exact recipes that their customers have come to expect. 

These arrangements are common for out-of-state brands, such as Conte, that are not licensed to produce or sell marijuana in Missouri.

“We’ll fill up cartridges or make products for them and put their packaging on it,” Maritz said.