JEFFERSON CITY — A House panel investigating Missouri’s medical marijuana program tore into top state officials on Wednesday, blasting the Department of Health and Senior Services for how it scored and awarded licenses.
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.
On Wednesday, Rep. , 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.â€
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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. , 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.â€
Rep. , D-University City, compared the process to a “drug cartel.â€
Fraker on Wednesday 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.â€
Williams said on Wednesday evening that he anticipated legal challenges from losing applicants, and made the decision to choose a third-party scorer to avoid corruption concerns.
“I’ve always told everybody everything we do is going to be scrutinized at the Administrative Hearing Commission or here — I’ve told everybody, every email, everything you do,†Williams said.
Jilted applicants
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:
EBC Missouri, for instance, noted in its appeal that Oaksterdam University, which offered cannabis business “boot camps†in Missouri, is a partial owner of Wise Health.
Oaksterdam instructor, Debby Goldsberry, also held top positions at a California marijuana chain, CPC, the appeal alleges. And two CPC-related companies won licenses in Missouri: CPC of Missouri won a dispensary license in Kansas City; CPC of Missouri-Smithville won three cultivation licenses.
The appeal said the apparent conflict of interest “makes clear†the problems with the state’s scoring practices.
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.
State’s study
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 report projected 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. , a free-market think tank founded by St. Louis financier and political donor Rex Sinquefield.
Merideth asked if the state asked for bids for the study, or screened for conflicts of interest.
Karen Boeger, director of the division of purchasing in the Office of Administration, 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 , 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.
Jack Suntrup • 573-556-6184 @JackSuntrup on Twitter jsuntrup@post-dispatch.com