Feedback period set to close on rules governing marijuana operators in Missouri

With only one day left before the official end of the public feedback period, Missouri’s marijuana licensees are hoping that a final push and wave of comments and insight are enough to move the needle with the Division of Cannabis Regulation.

“It appears the second draft of the rules are trending to be more restrictive and not less,” Joe Patterson, Principal at Patterson and Associates told Greenway. “It is imperative that each operation works closely with their Security Director or Manager to fully understand the financial and operational impacts that these new security regulations will undoubtedly have if enacted.”

For a wide variety of reasons, both existing operators and potential new licensees view many of the rules as intrusive and overly cumbersome.

While Missouri moves from marijuana being only legally available as medical marijuana market to the legalization of adult use the state becomes an environment with less stringent laws, no requirement from a doctor to be certified for therapeutic use, the ability of nearly every adult grow at home, and allowing adults to gift marijuana to one another, the State’s regulating body has proposed rules that would completely replace and reframe the structure that businesses have operated under for nearly two years often by making the adult use market much more restrictive than the medical market has been.

In cases such as packaging that means significant changes and the price tag and waste that come along with it. Currently, packaging is required to be clearly labeled as marijuana or marijuana infused, with a cognitive warning label, in opaque, resealable, child-resistant packaging, with a label that displays ingredients and testing results. Packaging may not be designed in a way that causes confusion between a marijuana product and a product that does not contain marijuana, and it cannot be designed to appeal to children. The Department has advised operators not to use animals, humans, or other images – but those rules extend from language contained in state statute regarding marijuana edibles. 195.805 reads in part, “1. No edible marijuana-infused product, packaging, or logo sold in Missouri pursuant to Article XIV of the Missouri Constitution shall be designed in the shape of a human, animal, or fruit, including realistic, artistic, caricature, or cartoon renderings. However, geometric shapes, including, but not limited to, circles, squares, rectangles, and triangles, shall be permitted.”

While businesses have been operating within those parameters for more than two years, the new draft rules would see Missouri marijuana companies waste thousands of existing packages, labels, and containers in order to implement packaging restrictions that would limit operators to product packaging, including exit packaging and bags, that may only “utilize a single color and a single logo or symbol of a different color or colors, provided the logo or symbol is no larger than one inch in length and one inch in height.”

The Department says the changes to packaging are necessary to “protect public health,” but marijuana operators have asked how variations of colors and patterns cause a danger to public health when they have already been in use for more than two years.

“The idea that a logo being three inches rather than one, or that pink, yellow, and blue packaging somehow impacts public health and safety is one of the most preposterous notions I have ever heard,” one operator told Greenway.

Amy Moore, Deputy Director of the Division of Cannabis Regulation has explained the Department’s position on drafting rules with increased restrictions. “In Section 2 (of Article XIV of the Missouri Constitution), where the majority of our licensees will be operating and where we have to have rules for them to operate – there is a new purpose statement given to us.”

“How I would describe what’s written there in those purpose statements and values throughout the law is public safety and public health,” Moore said. “If you look at that purpose statement at the beginning of the new Section 2 about adult use, it says that the purpose is to make cannabis legal for 21 and up while protecting public health.”

“This focus, specifically on public health, is not a focus of a lot of other states,” Moore told members of the Missouri Cannabis Trade Association in November.

The section Moore refers to reads, “The purpose of this section is to make marijuana legal under state and local law for adults twenty-one years of age or older, and to control the commercial production and distribution of marijuana under a system that licenses, regulates, and taxes the businesses involved while protecting public health. The intent is to prevent arrest and penalty for personal possession and cultivation of limited amounts of marijuana by adults twenty-one years of age or older; remove the commercial production and distribution of marijuana from the illicit market; prevent revenue generated from commerce in marijuana from going to criminal enterprises; prevent the distribution of marijuana to persons under twenty-one years of age; prevent the diversion of marijuana to illicit markets; protect public health by ensuring the safety of marijuana and products containing marijuana; and ensure the security of marijuana facilities. To the fullest extent possible, this section shall be interpreted in accordance with the purpose and intent set forth in this section.”

For Missouri operators, the idea of more restrictive practices for businesses for a product that is no longer seen solely as a medical treatment is a hard pill to swallow.

For existing operators, changes to security directives could mean a tremendous change in cost and come with interesting caveats.

One example comes in the form of new security draft rule language that reads, “Video monitoring shall include video cameras with a recording resolution of at least 1920 x 1080p, or the equivalent, capable of recording videos at a rate of at least fifteen (15) frames per second, that operate in such a way as to provide continuous monitoring and allow identification of people and activities in all lighting levels, and that are capable of being accessed remotely at all times by the department or a law enforcement agency in real time.”

“DHSS is making clear both they and law enforcement will have complete and free access to an operator’s camera system for remote viewing,” Patterson explained. Additionally, the Division of Cannabis Regulation proposes that “Video cameras must provide coverage of—All limited access areas, except for restrooms, locker rooms, lactation spaces, and closets smaller than three feet (3’) by three feet (3’).”

According to Patterson, that means cameras in spaces where sensitive activities may take place outside of cannabis including HR activities, strategic planning, or administrative business activities.

Why does the Department need access to conference rooms, offices, and areas of facilities that don’t involve marijuana plants or materials, and how does that fit the scope of ensuring public safety?

At nearly every juncture the proposed draft rules would make the process of owning and operating a marijuana business more restrictive and more costly than it has been previously.

For dispensary operators like Jason Crady of Missouri Wild Alchemy, the Department’s rules seem to lose focus on patient care.

For more than two years Missouri Wild Alchemy has allowed patients to bring in a support person of their choosing. In some cases that support person has been a child under the age of 21, now draft language would make it so that “No one under the age of 21 may enter any areas beyond the facility’s public access point area, unless the individual is a qualifying patient.” But for patients who have come to rely on their children for support, or the ability to shop at their own discretion at their local dispensary, that choice will be taken away.

“A support person should be allowed regardless of age,” Crady said.

Crady and other dispensary operators have been frustrated by the detachment of the draft rules from the focus on patient care that shaped the current way of serving patients for more since the first dispensary opened more than two years ago.

Nicc Higbee, Vice President of Operations for Verts Dispensary Group has his own reservations regarding the draft rules.

“The new facility rules should not inconvenience the foundation that they are built from,” he explained. For dispensaries, the draft rules create an environment with little room for common sense and rationality and create unneeded restrictions, operators say.

A disadvantage for small business

All rules are applicable to licensees despite the facility type, which means microbusiness licensees will be subjected to the same security measures, certification, and testing requirements.

While Amendment 3 was intentional in its approach to creating opportunities for disenfranchised people and communities, the associated costs of many of the increased measures listed in the draft rules may make it even harder for those the Microbusiness licenses are designed to help to maintain a compliant business.

One dispensary operator told Greenway that the increased number of cameras, the additional storage space needed in the vault, and the inability to use stationary secured cases without emptying them out each night would increase the initial build-out to a dispensary by roughly $100,000.

Similarly, a microbusiness cultivation facility limited to cultivating 250 flowering plants will need to meet the same security and compliance standards as a facility that may grow up to 90,000 square feet of flowering canopy. While the reduced size means a lower initial cost, the increased security measures that previous operators weren’t required to initially meet, including fencing for greenhouses, create more obstacles and another barrier for entry.

Timeline for implementation

For operators, investors, and other interested parties it is imperative that feedback be given before the deadline.

It has been unofficially communicated to several industry participants that there will likely be no further draft rules posted and no further comment periods prior to the filing of emergency rules.

This means the feedback taken now will dictate what, if any, further changes are made prior to the effective implementation of rules.

“I would strongly encourage each operator to closely analyze this second draft and provide feedback to the Department as soon as possible,” Patterson said.

It is anticipated that the Department of Health and Senior Services Division of Cannabis regulation will submit its proposed rules as emergency rules, meaning that the industry will operate under the proposed rules for the majority of the year in 2023.

While the proposed rules will be open to public comment, and changes may be made, operators will need to be prepared to operate under the requirements cultivated from the draft rules until after the comment period.

Once the comment period concludes, the Department will prepare a final order of rulemaking that includes summaries of all the comments received, the Department’s response to each comment, and any changes made to the proposed rule as a result of the comments. Within 90 days from the date for filing public comment, or within 90 days after hearing if a hearing is held, but after the proposed rules have been sent to the Joint Committee on Administrative Rules for 30 day review period, the final order of rulemaking is filed with the Secretary of State. The new rules and changes become effective 30 days after being published in the Code of State Regulations.

For those looking to comment on the draft rules, you can submit feedback here, https://health.mo.gov/safety/medical-marijuana/suggestions.php

You can review each of the draft documents in full below: