Missouri officials ripped for handling of medical pot program – STLtoday.com

Wednesday’s hearing came two weeks after marijuana program director Lyndall Fraker told lawmakers he wasn’t aware of potential conflicts of interest by the state’s third-party application scorer, Wise Health Solutions, until the state had already hired the company.

Fraker also said he was hired after being contacted by a top aide to Gov. Mike Parson, Robert Knodell, and Dr. Randall Williams, DHSS director. It was unclear whether Fraker faced any competition for the job.

On Wednesday, Rep. Jered Taylor, R-Nixa, sharply criticized Fraker, saying that whether it was his “ignorance or confusion or incompetence, Director Fraker clearly didn’t have the experience needed in the position.”

Lawmakers have questioned the department’s hiring of a third-party scorer to grade applications, a scoring bonus given to businesses located in certain ZIP codes, possible conflicts of interest and scoring discrepancies.

Rep. Jon Carpenter, D-Gladstone, said the governor’s office is ultimately responsible for the rollout of the program.

“Whether it’s perception or reality, the pretty widely held view is that this thing has been a disaster,” he said. “At the end of the day, the buck stops with the governor.”

Rep. Maria Chappelle-Nadal, D-University City, compared the process to a “drug cartel.”

Fraker has vigorously defended the state’s handling of the licensing program. “We’ve done everything by the book the way we were supposed to,” he said. “Some people just want us to give a license to everyone.”

The committee heard testimony Wednesday from Karen Boeger, director of the division of purchasing in the Office of Administration.

Williams was scheduled to address the committee later Wednesday.

The state Administrative Hearing Commission has received more than 800 appeals from companies that lost out on licenses to sell, grow or manufacture marijuana companies.

Legal bills related to the court challenges will likely cost millions of dollars, officials have said. The state will dip into a fund meant for veterans’ health care to pay the costs.

The money in that fund came from license and application fees from medical marijuana patients and businesses.

Jilted business applicants have complained of application scoring discrepancies by Wise Health. They say identical answers on cultivation and dispensary applications, for example, received different scores.

Losing applicants also noted possible conflicts of interest between Wise Health and other applicants.

A partial owner of Wise Health is Oaksterdam University, which offered cannabis business “boot camps” in Missouri prior to being selected as the state’s scorer.

One appeal, by the company EBC Missouri, said Debby Goldsberry held top positions at a California marijuana chain, CPC.

Case exhibits also show her listed as an instructor at Oaksterdam University.

The appeal alleges a successful Missouri marijuana company is related to the California brand.

CPC of Missouri won a dispensary license in Kansas City. CPC of Missouri-Smithville won three cultivation licenses.

“This apparent conflict of interest … makes clear problems with Respondent’s (the state’s) delegation of scoring responsibility,” the appeal says.

It is unclear what, if any, stake Goldsberry has in Missouri companies. The state has kept secret the ownership structure forms that would reveal such information.

A spokeswoman for Oaksterdam did not respond Wednesday to a request for comment.

Rep. Peter Merideth, D-St. Louis, asked about a market study released in April 2019 that DHSS  commissioned.

The department said it used information from other states, in addition to the study, to justify limits on medical marijuana business licenses, according to a letter from Williams, the health department director, to the House panel.

The 46-page report projected the the state could license about 26,000 qualified medical marijuana patients by 2022 — but, the state has so far licensed more than 36,000 patients, exceeding expectations.

One of the study’s authors was Joseph Haslag, director of the University of Missouri’s Economic Policy Analysis and Research Center. Haslag has also worked for the Show-Me Institute, a free-market think tank that St. Louis financier and political donor Rex Sinquefield founded.

Merideth asked if the state asked for bids for the study, or screened for conflicts of interest.

Boeger, the Office of Administration official, said agencies may contract directly with governmental entities such as the University of Missouri.

“If they’re contracting with another governmental entity, for the governmental entity to provide the products or services directly, competitive bidding is not required,” she said.

Sinquefield and his wife, Jeanne, contributed $100,000 to a failed medical marijuana initiative on the November 2018 ballot.

Great St. Louis, a group tied to Sinquefield, contributed $875,000.

The question appeared alongside the marijuana question that voters did approve.

Travis Brown, founder of Pelopidas LLC, a political consulting firm funded by Sinquefield, said in a text message Sinquefield had no ownership stake in any Missouri medical marijuana company.

Brown did not respond to follow-up questions about whether Brown owned a stake in any Missouri company, or whether Pelopidas or First Rule, another firm tied to Sinquefield, owned any part of a Missouri marijuana company.