New set of draft rules address ownership, unfair business practices, plant size
New draft rules from the Missouri Department of Health and Senior Services cover multiple facets of the program, including further definitions of ownership and the associated payments and organizational structure for the program. As with other licensing and regulations, a public comment period is currently open and ends Thursday, June 18.
The draft rules include the following – which are all in bold on the full list as proposed changes.
“(##) “Owner,” for purposes of determining ownership of medical marijuana facilities, means an entity that holds some portion of both the economic and voting interests of a medical marijuana facility, including any parent or subsidiary entities of that facility.”
“(##) “Unfair business practices” means fraud, misrepresentation, or oppressive and unethical practices committed against other businesses or consumers, such as conspiracy to fix market prices, conspiracy to allocate markets or customers, price discrimination, false or misleading advertising including by concealment of material fact, or any practice that seeks to circumvent requirements of Article XIV, such as requirements regarding majority Missouri ownership and disqualifying felony offenses, including— (A) Oral or written agreements, separately or in combination, granting to a non-owner any managerial authority or control over the facility or its operations; (B) Oral or written agreements, separately or in combination, granting a minority owner a degree of managerial authority or control over the facility or its operations disproportionate to or inconsistent with the minority owner’s percentage of ownership in the facility; (C) Oral or written agreements, separately or in combination, granting non-owners or minority owners or their affiliates a percentage of the facility’s revenue or anticipated revenue greater than what is common in the industry or, considering all such agreements, granting any combination of non-owners and/or minority owners a total of 10% or more of a facility’s revenues or anticipated revenues; (D) Payments to non-owners or minority owners for services, rights, or assets in amounts that exceed the typical price a facility should be able to negotiate on the open market or that otherwise suggest the price was not negotiated at arms-length, in the normal course of business; (E) If the facility is organized as a corporation, non-owners serving on the board of directors; and (F) If the facility is organized as a limited liability company, non-owners serving as the manager or on the facility’s board of managers.”
The intent of the proposed changes includes limiting potential fraud, as well as ensuring a market that adheres to Article XIV requirements for Missouri residency requirements and organizational decisions are appropriate for an LLC versus a corporation.
An additional draft rule on section 39, “‘Statewide track and trace system’ means the system the department uses to track medical marijuana from either the seed or immature plant stage, beginning when an immature plant is no taller than eight (8) inches and no wider than eight (8) inches, until the medical marijuana is sold to a qualifying patient or primary caregiver…” may limit plant sizes for starting plants, even during immaculate conception, for cultivation facilities.
The public comment suggestion form for the medical marijuana program is located here. Public comment on this draft rule set, published on the SMMR website on June 4, 2020, is available to be sent directly to DHSS for consideration prior to the formal rulemaking process.
Upon sending to the SOS, draft rules will be printed in the Missouri Register and subject to an additional 30-day public comment. Draft rules may be edited and changed prior to sending it to the Secretary of State for publishing and taking effect.
Read the full draft rules below:
http://health.mo.gov/safety/medical-marijuana/pdf/95.010-definitions-amended.pdf