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The process for determining who received licenses for operating Missouri's new medical marijuana facilities was flawed, an attorney for the Paul Callicoat family argued Thursday morning.

Joe Bednar, the family's attorney, hammered at a point that, not only was the process flawed, decisions made by operators of Missouri's Medical Marijuana program limiting how many Missourians were approved for licenses were wrong.

Bednar argued in court Thursday that the state's medical marijuana law, which voters passed Nov. 6, 2018, allowed for many more facilities than organizers of the state program licensed.

In late December, as state health officials began announcing the recipients for medical marijuana facility licenses, they anticipated blow-back from spurned applicants.

They anticipated about 33 percent of applicants who paid tens of thousands of dollars in non-refundable application fees to appeal their cases.

Callicoat and his family sued the state after they were denied a license to operate a marijuana cultivation site called Sarcoxie Nursery Cultivation Center, LLC. The state also denied the family's four applications for dispensaries and an application for a marijuana-infused product manufacturing facility.

Thursday, about two years after voters approved medical marijuana, the Callicoat's suit will be the first to reach a courtroom.

The suit calls into question the use of a "blind scoring" process. The Callicoat suit claims the limitations to medical marijuana licenses violates their right to farm.

Although the Missouri Department of Health and Senior Services received more than 550 applications for cultivation sites, the department limited the number of approved sites to 60, the minimum number the initiative allowed for.

Motions in the case filed last week state DHSS Director Randall Williams admitted to using his personal mobile phone to conduct state business.

They also show the state is sitting on a stockpile of funds generated by medical marijuana fees — nearly $25 million. Although the amendment directs the state transfer the money to the Veterans Commission, it has only sent $2.1 million to that organization. The state is prepared to spend about $8 million of that defending its licensing decisions.

Bednar, on Thursday, called two witnesses to testify in the trial, which is expected to conclude today. He questioned Williams and Amy Moore about how rules for the program came about. Moore, Deputy director and counsel for the Section on Medical Marijuana Regulation, the plaintiff's first witness (whom he characterized as a hostile witness, said draft rules for the program were properly vetted and DHSS took feedback from anybody who offered.

Early members of the group created to quickly wrap their hands around the new law voters had passed began asking for thoughts from the public, Moore said.

"As soon as I started, we had a lot of public input — suggestions and comments," Moore said.

People involved with passing the amendment offered their ideas. Physicians offered input, as did their patients, she said.

Being new to the medical marijuana industry, Williams and the department accepted advice and questions from everyone, Moore said. When he received them, Williams passed them down to staff members, she said.

Bednar entered a communication into the record from individuals who recommended some rules they would have liked incorporated into the new law.

"Within these rules they recommended a limitation on licenses," Bednar said.

Moore said she could not recall what they were suggesting.

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Bednar also pointed out the authors of the amendment only limited the minimum number of licensed facilities the state could approve.

"Those limitations — are the limitations that were later promulgated May 24, 2019 as an emergency rule, correct?" Bednar asked. "The limitations in the Constitution are not mandatory, correct? While the department has the authority within the Constitution it could not promulgate a rule limiting licenses below that level."

Moore agreed.

The amendment limits the program's authority to set limits and promulgate (creating a rule or law by official proclamation) rules, Bednar argued.

He pointed out that right now there are only three (maybe four) dispensaries open of 192 that have received licenses, and one has already sold out of medical marijuana. He added prices are sky high — well beyond black market prices for marijuana.

He argued the amendment is intended to make patients' access to medical marijuana easy.

"Access is both geographic and economic, correct?" he asked Moore. "The price of a product has a definite impact on the ability of a patient to afford their medicine, correct?"

Missouri researched other states and found they too had higher prices when they first opened, she responded.

"When you are implementing a brand new industry, you have to start somewhere," Moore said. "You can't flip a switch and have businesses appear out of nothing."

Moore said there is a lot that goes into promulgating a rule, no matter how small.

Bednar argued rules created for the new industry didn't all go through the state's rule-making process. Asked about his experience making rules and laws, he pointed out he was chief counsel for Gov. Mel Carnahan for seven years.

Bednar entered another email into the record from the governor's office. The March 9, 2019, email included a portion of a rule that discussed offering incentives to dispensaries to locate throughout a congressional district, rather than allowing them to be clustered. Bednar said that at one point the state had considered including criteria for scoring applications within the rules.

"This is a great example of how much thought and consideration went into our rules," Moore responded. "There is a lot of details there regarding the questions in rule making. You can put significant batches of information in the rule or you can incorporate it by reference."

Bednar also called Williams to the stand.

During cross examination, Williams said the decision to limit licensing came about through an evolving process.

He said the state gathered information from a number of sources to determine it could expect only about 3 percent of state residents (about 180,000) to apply for medical marijuana licenses within the first three years of the program.

That number combined with how much medical marijuana the constitution allowed them to have went into deciding to limit how many cultivators there should be.

"We decided to look at Missouri data to get a Missouri estimate," Williams said.

The second consideration was that marijuana can be addictive in about 10 percent of cases.

"I heard from other states, in which there was diversion and even creation of a black market," he said. "So there was a public health consideration."

He warned medical marijuana is a regulatory agency.

"If you're unable to regulate it safely, then nobody will get medical marijuana," Williams said. "Because you'll collapse under an administrative burden of trying to do too much."

The trial is expected to conclude today.

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