How Missouri Handles Medical Marijuana Licensing

Tyler Podcast Episode 40, Transcript

Our Tyler Technologies podcast explores a wide range of complex, timely, and important issues facing communities and the public sector. Expect approachable tech talk mixed with insights from subject matter experts and a bit of fun. Host and content marketing director Jeff Harrell – and other guest hosts – highlights the people, places, and technology making a difference. Give us listen today and subscribe.

Episode Summary

What happens when citizens of a state not only put the use of medical marijuana on the ballot, but also pass it in somewhat surprising fashion? Well, that’s exactly what happened in the state of Missouri a couple of years ago. What are the licensing and regulatory implications? Who needs to be involved and what are the steps forward to best serve the citizens of the state? In this episode, we learn exactly what happened from the person who figured all that out. Amy Moore is the Deputy Director and Counsel for the Medical Marijuana Regulatory Program at the Missouri Department of Health and Senior Services. She joined the program at its inception in December 2018. And to speak with Amy on this topic, we have the perfect person here at Tyler, Alex Valvassori. Alex is the General Manager for Cannabis Licensing at Tyler Technologies. He has worked in the cannabis industry since 2014, serving as Chief Compliance Officer for a variety of cannabis businesses.

Transcript

Amy Moore: That's one of those things that I really had to learn quickly after I joined, is what tools were out there to help us do these complex tasks. And as I continue to learn, even now, those tools are absolutely vital. The use of certain tools is even built into the law.

Jeff Harrell: From Tyler Technologies, it's the Tyler Tech podcast, where we talk about issues facing communities today and highlight the people, places and technology making a difference. I'm Jeff Harrell. I'm the Director of Content Marketing for Tyler, and I'm so glad that you joined me.

Well, here's the problem we're addressing in today's episode: What happens when citizens of a state, not only put the use of medical marijuana on the ballot, but also pass it in a somewhat surprising fashion? Well, that's exactly what happened in the State of Missouri a couple of years ago. What are the licensing and regulatory implications? Who needs to be involved and what are the steps forward to best serve the citizens of the state?

Well, today we learn exactly what happened from the person who figured all that out. Amy Moore is the Deputy Director and Counsel for the Medical Marijuana Regulatory Program at Missouri Department of Health and Senior Services. She joined the program at its inception in December of 2018. Before joining DHSS, she worked in Public Utility Regulation at the Missouri Public Service Commission, first representing the commission staff and hearings before the commission, and then serving as legal counsel and policy advisor to Commissioner and Chairman, Daniel Hall. Amy graduated from the University of Missouri School of Law in 2009 and holds a bachelor's degree in business and psychology from the University of Tennessee at Chattanooga.

And to speak with Amy on this topic, we have the perfect person here at Tyler, Alex Valvassori. Alex is the General Manager for Cannabis Licensing here at Tyler Technologies. He has worked in the cannabis industry since 2014, serving as Chief Compliance Officer for a variety of cannabis businesses. Alex later co-founded Complia, the first and only cannabis specific licensing technology platform on the market. In 2019 Complia was acquired by NIC, and Alex later joined Tyler Technologies via the acquisition of NIC by Tyler Technologies. Alex resides in Chicago and is a graduate of the University of Illinois. I think you're going to find this a very interesting topic.

Here's Alex Valvassori in his conversation with Amy Moore.

Alex Valvassori: Thank you for joining us today. I am here with Amy Moore of the Missouri Medical Marijuana Program. Amy, thanks for being here with us today.

Amy Moore: Very happy to be here.

Alex Valvassori: So before we get into the nuts and bolts of what's going on in Missouri today, I think it would be helpful for our listeners to better understand some basics. We hear terms like cannabis, marijuana, hemp, in the news all the time these days and so I'd love to first better understand how the folks in Missouri think about hemp versus cannabis and what your agency specifically is tasked with regulating?

Amy Moore: Sure. So our law in Missouri refers to this particular product that we regulate as medical marijuana. What that actually means is there is a particular plant that we regulate that many are familiar with. It's the cannabis plant in several different forms, but because our law legalized the medical use of that plant, the drafters of our law chose to call it medical marijuana. It is different from hemp, though only really in name and how long the plant is allowed to grow. It's really the same plant but per most laws that refer to hemp, hemp is that plant that has not been allowed to grow past the point where it would have a certain very minimal amount of THC in it.

So, in Missouri, hemp is regulated minimally by our Department of Agriculture and the law that established the medical use of marijuana gave regulation of that product, that part of the plant, that version of the plant, to the Department of Health and Senior Services in Missouri, and that's where I work.

Background on Amy Moore

Alex Valvassori: Got it. Okay. Well, I appreciate you explaining the difference there. And I think that lends itself to telling your story, Amy. You and I have known each other for a few years now, and I've been amazed to watch Missouri's program come to life over the course of the last couple of years. So I'd love to know, first, how did you get involved? When did that call come in and what was that experience like?

Amy Moore: Right. So our law passed in November of 2018 in a general election. It was passed by constitutional amendment by initiative petition. So the people decided they wanted to pass this law rather than it coming up through the legislature. And it was a surprise to many. There are a lot of people who worked on this for a really long time and there were several versions of a question to the people, "Do you want to have some version of medical marijuana?" They chose one. And, I'd say, a matter of days later, I got a call from our general counsel here at the Department of Health and Senior Services saying, "Hey, we need people. And here's what we would like to see if you're interested in and argue." And it took me all of two seconds to say, "Yes, I'm interested in this brand new opportunity in Missouri government," and I joined the program. I used to work in public utility regulation. That's where I was when I got that call.

Alex Valvassori: This was all totally brand new for you?

Amy Moore: Very much so. Wasn't involved in getting it passed. I was one of the ones that was surprised to see it appear on the ballot, much less get passed. And here I am.

Alex Valvassori: And did you have any idea what you were really signing up for, Amy?

Amy Moore: Oh, gosh. I have tried to answer that question for myself many times over the past, almost two years. In some ways, yes. I knew it would be a huge challenge. I'm an attorney, and one of the things that they wanted from me was to help draft the rules for this new regulatory framework. And I had an idea what challenge that would be on the timeframe that we had, but there were other things that I just had maybe some vague notion of what the experience would be like, but not really.

Alex Valvassori: You learn through experience, I'm sure. And so, I guess, that begs the question, Amy, so what was that process like? So the initiative passed in November, you got a call, a few days after that you took the job and it was off to the races. So tell me about what it was like and what you guys had to accomplish in such a short and rapid period of time?

Amy Moore: Yeah. Well, this will be casting back a bit, but some parts of it are very clear, such as that the law actually set the timeframe for us for getting to these big milestones, like the timeframe for having the rules done, which was just, I think, four months is what we had from effective date in December to when we needed to have those rules complete.

And then the next big milestone was being ready to accept applications for patients and their caregivers for authority to have the medical use of marijuana. And that, I believe, was in August. And then the ... No, not in August. I told you this will be casting back. I think it was maybe in July. You will probably remember that because you were a part of helping us get there.

Making New Rules

Alex Valvassori: That's right. That's right. I think the big go live, the first big go live was either late spring or early summer. So it was, I mean, I think we're talking about four or five months. And, Amy, coming from your past world in the regulating utilities and all of that, I've got to imagine these types of timeframes were not normal in your past world?

Amy Moore: No, not at all. Rule making alone is usually a process, painful long process of a lot of drafting, a lot of cooks in the kitchen. Eventually you get something you want to propose and you file it. And it takes six to eight months to get through the formal rule making process. So obviously we didn't have time for that.

So we went through an accelerated process where we threw a lot of drafts out onto our website of the many rules that had to be in place to get a brand new industry up and running and received a lot of feedback and incorporated that into new drafts and just kept pushing information out there to get as much expert input as we could in order to get some emergency rules filed that would then be effective immediately just in time for those patient applications. And then I think a month later, the facility applications, and then just a few months after that, our first licenses that had to know what they were going to be doing. So we had to have those rules all set up in an extremely expedited manner.

Alex Valvassori: So, of course, timing was a challenge and I'm still amazed at how much you guys got done in such a short period of time. What were some of the other challenges you guys experienced in those early years? It doesn't just have to be during that rule making process, but even once you guys got into licensing and got into getting these businesses up and running, where were some of the toughest challenges through that process?

Amy Moore: I can tell you there's a few that stick out. And one is just very much sausage making. To actually start a brand new office and a state agency with 52 employees, it's everything from, of course, creating a budget, but just writing a job description for one of those 52 because you have to have people to do the many things. And so setting up a brand new organization, big challenge. Putting out huge RFPs for IT solutions, that was a very large challenge to throw into the mix in that short time frame.

And once we got our licensees, we were blessed with the unique challenge of COVID. We are the only state to be in this phase of implementation when the pandemic hit. And we licensed our facilities in December and January of '19 and '20, and then in March of 2020, we were all sent home. And so we're home safe in our homes with our computers able to carry on, but our licensees, you can imagine: Finances disappeared, supply chains disappeared, people were gone. So that ended up being a completely unforeseen challenge, but that it has very much affected the rollout and how our licensees have proceeded to implement.

Alex Valvassori: Well, and I think important for our listeners to be reminded that there's no everyone working from home when you're growing a plant, right? We're talking about real facilities, physical facilities, growing physical plants, where there are human beings running around attending to these plants. And as the supply chain continues, processors manufacturing these plants, dispensaries transacting with patients. And so they didn't have, in some ways, the same luxury of working from home.

And so I'd be curious, how did you guys work with them to accommodate some of those challenges? I would imagine a lot of the rules that you guys had worked so hard on leading up to all of this, right now all of a sudden presented a whole new set of challenges for these operators?

Amy Moore: Well, one of the things that we learned, it was painfully obvious when we started implementing the law, is that we were on a timeline. There was definitely an expectation built into the law that we would be as quickly as possible getting medical marijuana to the patients of Missouri. And so one of the rules that we put in place was that every licensee had a year from the date they were licensed to become operational, to pass a commencement inspection and start doing the thing that they were licensed for. In our case, that's cultivation, manufacturing, dispensaries, testing, transportation, the whole gamut of the industry. And the majority of licensees didn't make it. Construction: You think about trying to get these brand new buildings constructed or existing buildings renovated for a purpose that no one has had to build in Missouri at this point. Just a huge lift under normal circumstances. And then we throw in the pandemic.

So what we ended up doing is we have the ability to issue variances or waivers from our rule. And so we accepted a lot of those requests to vary from that particular rule so that facilities could get themselves up and running. It's tricky. We have that duty to get that medical marijuana to patients in Missouri as quickly as possible, but there's the reality of what's happening and you have to sift through. Are these particular entities really experiencing challenges? Or are there some portion of them that were never prepared to do it, maybe didn't intend to? I think the vast majority of our licensees had every intention of implementing their license. They weren't trying to hang on and sell it later. These are Missouri owned businesses. That was one of the requirements of our law, majority Missouri ownership. Missouri owned businesses that are trying to implement and jump into this exciting industry. They want to do it. It was just massive challenges.

And so we issued a lot of variances giving each licensee, based on their progress and their circumstances, additional time to reach that finish line.

One Year in

Alex Valvassori: Yeah. I think that's a terrific approach. And I think it's something we saw across the board globally, right? People had to come up with new plans and we all had to be accommodating. And I'm really impressed with the fact that so many of them are now open and I think that's really an exciting thing for the state today.

And so what does the program look like today now that we've talked about building your team, getting the licenses out the door, getting this program stood up, doing the inspections? I think it was sometime last year you guys finally had that first transaction. And so tell me about what that was like as the industry was finally operational? And where are you guys at today?

Amy Moore: Yeah, you've caught us at almost exactly the one year mark from our first sale. So our first sale was in October of last year and that first dispensary is still running. They're doing great. And since then we now have ... Oh, gosh, I want to say something like 340 facilities up and running. Maybe it's 350.

Alex Valvassori: Wow.

Amy Moore: They're coming online so fast right now it's hard to keep up. We have license to total of approximately 370 in Missouri. We do have license limits in the law. There were some minimum numbers of licenses that we were to issue. We are issuing that minimum number. And so we're working on those last few licenses to get them to their finish line.

And we, as a program, are now in yet another transition period because it's been all about getting to commencement, working through commencement inspections. But now with the vast majority of licensees operating, we're in the middle of some are still commencement and maybe they're ones who have experienced a lot of challenges because they're the ones that are still trying to get there. We've got that whole world but, at the same time, we're now into compliance.

Our goal is to stay out of enforcement as much as possible. We have that authority, but we feel we're in partnership with these licensees to the extent that if we're doing our job on compliance and communicating the expectations, everyone should have the opportunity to be compliant. But that's going to be part of our role too. We'll get into enforcement, as well.

Alex Valvassori: So it sounds, Amy, that that's the attitude today, to be accommodating and to be an educator in some ways and to be a partner to these folks? But eventually there'll come a time when that approach might have to shift?

Amy Moore: Yeah. We know that that's what we've seen happen in other states and we expect that we do have every intention of using that authority. But, again, we really want to focus on compliance as much as possible, be proactive in communicating expectations and what the rules mean. And there's so much opportunity in this industry for success in so many different ways. We don't see ourselves, and I don't think we're really perceived, as being excessively regulatory. We have this fairly limited set of rules that very closely follow the law and as long as we can work with our licensees to help them remain in compliance, we hope that the enforcement will be minimal.

The Role of Technology

Alex Valvassori: Yeah. So on that topic, I know that software can play a really critical role in compliance and enforcement. And I know that there's probably a handful of technologies that you guys use across the board to manage your team and to make sure that you guys are doing your part on the compliance side of things. So tell me about the role of technology on your team. What's working, what isn't working and where do you guys see opportunities?

Amy Moore: That's one of those things that I really had to learn quickly after I joined is what tools were out there to help us do these complex tasks. And as I continue to learn, even now, those tools are absolutely vital. The use of certain tools is even built into the law. For instance, seed-to-sale tracking of marijuana is something that was built into our law. It said that, "Every facility is responsible for tracking cannabis from immature plant stage all the way to sale to patient." And it is a massively complex endeavor to ensure that every bit of medical marijuana in the 370 plus facilities is tracked through all its many movements as it disperses throughout the state in various ways, it gets incorporated into other products and then packaged into completely new things that is eventually sold to a patient.

And we had to have technology for that. There is no way to do that by hand or Excel spreadsheets. So we had to put out an RFP for one of the several IT companies that have designed software for that purpose, and we have one that's working very well. And that's one of those things that, as I said, just keep learning. What an amazing tool it is from our regulatory side. The facilities are tasked with doing that, but we are tasked with ensuring that they do. And we are tasked with monitoring all of that data to ensure that facilities are in compliance. There's several other tools. That's one that stands out to me because it was actually mandated that we use that technology.

Alex Valvassori: And are there other areas where you guys see opportunities as the program continues to grow and evolve? How do you guys see yourself leveraging technology to support that growth now that you've got out of that initial launch phase? Of course, our platform being critical in the launch of that licensing process, what are some of those new needs that you see as things shift? It sounds like seed-to-sales is critically important and I'd be curious, have you guys encountered a case where you had to do a recall or had to do an investigation?

Of course, probably some things you can't talk about here, but would love to hear how some of that technology has worked in action?

Amy Moore: Your software was absolutely critical in getting us up and running and we continue to use it. And yours being, for our listeners, that we had to have an application system for patients and caregivers and then also for our business licenses and the applicants who wanted to be business licenses. Accepting these applications online was a ... Can't even overemphasize how important that was for allowing us to meet our deadlines. We constantly run into regulators at other states who are jealous of the fact that we didn't have to deal with paper and the mess that that was.

So in our accelerated timeframe, online applications were amazing. We continue to use that platform now as our licensees are making changes to their business. There are certain changes that they have to first seek our approval for and we use that same application system to accept those requests.

The State of Missouri

Alex Valvassori: Changing gears a little bit, now that the system, that the program is up and running, dispensaries are open, this initial setup process is behind you guys now, how have you observed any changes in public perception? To your comment earlier, you were surprised that this initiative passed. And so I'd be curious to know how have things shifted? Has this program been welcomed by the people of Missouri? Have there been people who have been upset about certain things that have happened? What is the state of the state today?

Amy Moore: That's a really interesting question and I am never confident that I have a clear perception because we live in this little fishbowl and I get my Google alerts that tell me what everybody's saying about me every day. And so it makes it feel like there's a spotlight on our program. And we see the things that tend to rise to the top in media are the more sensational assumptions or observations. So it's sometimes hard for me to tell, but as best I can, I think for the average Missourian, in our case, our law passed with over 60% of the voters approving this measure, this particular measure, I think for most Missourians, this is something that they've heard about, it's happening. They're, generally, aware of it, generally, comfortable. We definitely have not seen the grassroots opposition, even in implementation where we were. Doors were flung open for anybody and everybody's input. We rarely received input, critical one way or another, of the initiative itself. So there's that.

Over time there has been a shift. In the beginning, everybody was excited: The advocates, the patients, the potential business owners. Since then settling into that more typical regulatory role, we're not exactly the bad guy, but we are there to make decisions as best we can. And in most cases, if you're making a, generally, fair decision, everybody's a little unhappy. So there's that shift that we've been experiencing.

But, overall, I mean, I think Missouri has been very welcoming of this change. Welcoming or just not even noticing it.

Alex Valvassori: Well, I think that's certainly a testament to the work of your team and of the business community, and I think very often what I've found is these are normal businesses. They're engaging in something new, but they're normal business people running what are rapidly becoming normal businesses today. And my sense is that's how it's being perceived by many in Missouri.

Amy Moore: I would agree with that. And I think when people see their local business person who's now involved in this and they know that person and that person's part of their community and they know that that person is very successful at running businesses, it's taking any, if it were any, predisposition towards suspicion about what is this industry doing? There are so many Missourians who are working in their own community, building a business that it's making the path towards comfort for anyone who may have been uncomfortable with this shift a lot easier.

Alex Valvassori: Let's look to the future now. A lot going on at the local level in Missouri, at federal level, global shifts. We hear about new countries all the time that are now very carefully examining the role of cannabis in those communities. And so let's start about what may be coming here in Missouri. And, of course, the media has been quick to pick up on the fact that activists are pursuing yet another initiative for the November 22 ballot here. And so obviously a lot of unknowns.

But first, Amy, I'd love to get your take. If this makes it to the ballot, do you think it's going to pass?

Amy Moore: Oh, gosh, I have no-

Alex Valvassori: Do you need to find your crystal ball real quick?

Amy Moore: Yeah. I have no idea.

Alex Valvassori: Okay.

Amy Moore: Some days I think, "Well, obviously." And other days I think, "Well, hold on. Do I have any idea what I'm talking about here?" I don't know.

Alex Valvassori: It's a tough question. And in recent times we really haven't seen initiatives fail. One of the last big failures was Arizona several years ago now, which has since passed, where they tried again two years later. Of course, in South Dakota, that initiative was struck down and is currently being litigated in the state supreme court. And so if recent history is any indicator it's likely going to pass.

And so with that context in mind, how is your office thinking about these things? Obviously there may be other agencies involved, but are there things that you guys are doing today to prepare for what may be coming in the not too distant future?

Amy Moore: Well, it's interesting. In Missouri currently we have two competing initiatives that are gearing up and neither of them have got past, as far as I can tell, the stage where they file language for the state and the agencies to look at and come up with a fiscal impact analysis.

The next stage would be actually going out and getting signatures and they have to get a certain number of signatures across the state in certain ways. It's expensive. So that'll probably be the first indication if we start to see that happening about whether or not both initiative groups are really serious about moving forward to getting their language on the ballot.

And those two proposals are pretty different. One of them would give adult use fairly lightly regulated to our agency that regulates alcohol and tobacco. And the other one would give it to us. It's fairly complex. It would give it to the Department of Health and Senior Services where medical marijuana is. It would be, initially, the licenses would be limited to those who already hold a medical marijuana license. And it would have some new license types, including micro businesses that are geared towards, essentially, a social equity type of license. So that one's complex and, generally, I'm not part of it, but it seems to be supported by the existing industry.

And then there's the other one that's not as complex, goes to alcohol and tobacco. Would be wide open to anyone who wants to be a licensee. So very different. And at this point we don't know which way it will go. Maybe both will make it on the ballot. Would be really interesting to see what people decide on how they want this industry to run.

Alex Valvassori: Interesting. Well, we're all going to be sitting on the edge of our chairs with our popcorn here, gleefully entertained by with whatever's going to come next. But I know, Amy, you and the team are ready for whatever's coming.

Of course, we also might be talking about federal legalization or reform at some point. And, of course, there's still a way to go, there's a lot of talk in Congress right now. But one of the things that comes up regularly is how are state markets impacted by the possibility of interstate commerce? And so I'm curious if that's something that you've spent any time thinking about and do you see a world where maybe one day products are coming in from another state? Or maybe Missouri becomes an exporter? Where do you see the chips falling on that?

Amy Moore: I think eventually if there is some form of legalization on the federal side, eventually all of these programs are going to have to streamline one way or another. How exactly we get there largely depends on what happens at the federal level. And it's just ... I don't even want to speculate on where they end up or when they do.

I know it's got to be a consideration now for states like ours who are thinking about do we spend the time and the resources to getting an adult use program passed and implemented maybe if it's on the November 22 ballot and then we have a year implementation we're into '23/'24? At that point, if the feds legalize, was that really the best use of resources? Now, what do we do with a brand new program that has to somehow now reorient itself to whatever happens on the federal level? I think that has to be a consideration right now. And I don't know. Maybe that's why I haven't yet seen those signature campaigns.

Alex Valvassori: That's a really interesting point and it certainly is a moving target. I think the whole industry is anxiously awaiting an understanding of what the tax regime is going to look like, what's going to happen to 280E, what's going to happen in states where they haven't enacted any reform? There's a lot of question marks out there. And I think the bottom line here is you and your team are going to be very busy over the course of the next couple of years here.

Amy Moore: I'm going to need a nap.

Alex Valvassori: And a vacation, maybe. So, I guess, with that, Amy, I'm sure we've got folks who are at home listening today who are sitting in your shoes but three years behind you. Maybe they're in Mississippi, maybe they're in Alabama. What words of wisdom do you have for folks who are new to this? Who are staring down the barrel of this very daunting task of standing up a brand new program? What do you wish someone would've told you three or four years ago?

Amy Moore: Well, I was told this and I wish that they had emphasized it more: I think you get so overwhelmed with just getting through the task of making this happen the best way that you can, trying to do the best job that you can. The thing I was told was reach out to those who've gone before you. We have an increasingly connected national organization for regulators, so many resources. And my experience has been, now that I've come up for a breath and can take a moment to remember that advice and reach out to people, my experience has been now, and even in the past when we were able to connect with people, that other regulators who've gone before us are so willing to help.

So to those regulators who are just getting into this, everybody still has a lot to learn, but there's got to be somebody out there who's gone through almost exactly what you're struggling with. And reach out to those regulators because they are willing and there's so much experience and expertise out there. It's just incredibly helpful to have those connections.

Alex Valvassori: Well, Amy, it's been a real pleasure having you on the podcast here today, and we wish you and your team all the best. And we hope to have you back on in a couple of years once we're talking about federal legalization or adult use in Missouri. So, hopefully, we can pick up the discussion at that time.

Amy Moore: All right. That sounds great. Thanks, Alex. It was a pleasure, as always, and I'd be happy to come back.

Alex Valvassori: All right. Thanks, Amy.

Jeff Harrell: Well, thank you both, Amy and Alex, for that great conversation. I know I learned a lot. Hope you did as well.

And thank you for listening. At the Tyler Tech podcast we bring you brand new episodes every other Monday, so please subscribe. We have lots of great episodes planned for the remainder of Q4 and on into 2022, as well.

So again, thanks so much for joining me. This is Jeff Harrell, Director of Content Marketing for Tyler Technologies. Thanks for joining me. We'll talk to you soon.