A Primer on Missouri AHC Appeals of Medical Marijuana Cultivation License Denials
On December 26, the Missouri Department of Health and Senior Services (DHSS) issued 60 licenses for medical marijuana cultivation facilities. Headed by Lyndall Fraker, the medical marijuana unit within the DHSS reviewed nearly 600 applications and approved facility applications through a blind scoring process.
For the many whose applications for a Missouri medical marijuana cultivation license was denied, all is not lost. The DHSS is given broad authority to issue additional licenses to settle appeals whenever it determines that doing so would “best serve implementation” of the medical marijuana program.
Article XIV, Section 1.3(23) of the Missouri Constitution and 19 CSR 30-95.025(6)(A)1 provide that all denials of medical marijuana facility licenses shall be appealable first to the Missouri Administrative Hearing Commission, and then subject to judicial review following exhaustion of administrative remedies. 19 CSR 30-95.025(6)(B) requires that all petitions for review be filed with the Administrative Hearing Commission (“AHC”) within 30 days of the notice of denial.
Having served as former appellate litigator, I have contested a number of cases before the AHC. In addition, the Kennyhertz Perry law firm is home to both a former federal regulatory enforcement attorney, Braden Perry, and a former federal prosecutor, Ben Tompkins. Having this extensive background I thought it made sense for us to provide a brief primer on AHC practice and procedure; particularly in the context of a highly regulated area like medical marijuana licensure.
Generally speaking, appeals of license denials to the AHC are governed by RSMo § 621.120. Section 621.120 requires that the prospective licensee file a “complaint” with the AHC within 30 days of notice of the denial. Similarly, 19 CSR 30-95.025(6)(B) requires that all petitions for review of denials of medical marijuana licenses be filed with the AHC within 30 days of the notice of denial.
The AHC will then itself serve a copy of the complaint on the named agency, and set a date for the case to be heard. If at the hearing the “applicant shall show that under the law he is entitled to . . . licensure or renewal, the administrative hearing commission shall issue an appropriate order to accomplish such . . . licensure or renewal, as the case may be.”
Thus, at least in licensure cases under Section 621.120, the burden is on the applicant to make the showing.
In addition, the AHC has its own procedural rules which govern the contents and filing of the complaint, and provide that an opposing party then may file a responsive pleading. This can take the form of an answer, a motion to dismiss, a motion for a more definite statement, etc. The time limit for filing a responsive pleading to the complaint in an action before the Administrative Hearing Commission is the same as that for filing an answer under the Missouri Rules of Civil Procedure.
A number of procedural devices are available before the AHC in addition to the bare-bones complaint-answer-hearing-decision approach. For example, the AHC’s procedural rules allow for motions for stays of agency action (and hearings on those motions), and most importantly, discovery, along with motions to compel and sanctions for failure to comply.
Finally, it should be noted that 19 CSR 30-95.025(6)(C) provides that:
Notwithstanding the limits on licenses and certifications set forth in 19 CSR 30- 95.050(1)(A), 19 CSR 30-95.060(1)(A), 19CSR 30-95.070(1), and 19 CSR 30-95.080(1)(A)-(B), the department may grant additional facility licenses or certifications as a remedy to timely appeals when:
1. Ordered to do so by the administrative hearing commission or a court of competent jurisdiction; or
2. The department determines doing so in settlement of such an appeal best serves the implementation of Article XIV, Section 1 of the Missouri Constitution.
Again, initial denial of a medical marijuana cultivation license does not mean that all is lost. This blog post is intended for informational purposes only, and every situation is different. However, given the resources most groups invested in their license application, along with the DHSS’s discretion to award additional licenses, it makes sense to at least explore what an appeal would look like. We are happy to help walk you through that analysis.
–Jon Dedon, Kennyhertz Perry, LLC
About Kennyhertz Perry’s Medical Marijuana Practice Group
Kennyhertz Perry advises clients on a wide range of medical marijuana compliance and regulatory matters. Kennyhertz Perry attorney Jon Dedon is a former appellate litigator at an AmLaw-100 law firm, and has litigated numerous appeals before the Missouri Administrative Hearing Commission. In addition, he has assisted numerous groups submit medical marijuana license applications in Missouri.
Kennyhertz Perry attorney Ben Tompkins is a former federal prosecutor in Los Angeles as well as a former Trial Attorney for the U.S. Department of Justice Tax Division. As such, he is well acquainted with high-stakes litigation.
Kennyhertz Perry partner John Kennyhertz is former in-house counsel at a private equity firm, and has structured transactions for very small and very large clients alike. He has substantial experience in highly-regulated industries such as online lending, and industries with rapidly-evolving regulations, such as cryptocurrency. He provides medical marijuana operational and compliance counseling, and offers advice on appropriate modifications of transaction structure and documentation.
Kennyhertz Perry attorney Arthur Chaykin is a former law school professor and head of litigation at Sprint. He is an expert on intellectual property law, and devises creative solutions to protect client’s IP in the medical marijuana industry, even when certain federal protections are unavailable.
Kennyhertz Perry attorney Jeff Donoho is an expert in small business formation and government compliance. His knowledge of the labyrinthine medical marijuana application process helps him provide detailed guidance to clients.
Kennyhertz Perry attorney Mit Winter is a former partner at an AmLaw 100 law firm. An expert litigator, his skill in anticipating issues before they become serious problems is valuable to all clients, and particularly those in the medical marijuana industry. In addition, his skill as a writer makes him a valuable asset to our application writing team.
Clients also benefit from Kennyhertz Perry’s experience in related areas of law, such as banking, securities, tax, intellectual property, employment, insurance, and its regular practice before the Missouri administrative agencies and courts. Medical marijuana clients choose Kennyhertz Perry because the firm’s lawyers tailor their advice to the unique issues presented by each matter they handle. To learn more about Kennyhertz Perry, LLC, please visit kennyhertzperry.com.