The Missouri Supreme Court affirmed a lower court decision upholding the denial of a medical marijuana cultivation facility license to MO CANN Do, Inc., in a ruling issued April 2, 2024. The court held that the company's application failed to meet minimum licensing standards because it did not include a proper certificate of good standing demonstrating its authorization to operate as a business in Missouri.
The case, *MO CANN Do, Inc. v. Missouri Department of Health and Senior Services* (Mo. 2024), arose from Missouri's 2018 constitutional amendment that legalized the possession and use of marijuana for medical purposes. The amendment granted the Missouri Department of Health and Senior Services authority to promulgate rules for the regulation and control of medical marijuana, including the power to grant or refuse state licenses for marijuana cultivation.
Following the constitutional amendment, DHSS established comprehensive rules and regulations governing medical marijuana licensing, including specific minimum standards that all applicants must satisfy. Among these requirements, applicants for cultivation licenses must provide a certificate of good standing from the secretary of state to demonstrate their legal authority to operate as a business in Missouri. Only after meeting these minimum standards would DHSS evaluate applications using additional criteria under a numerical scoring system to rank applicants for the limited number of available licenses.
In 2019, MO CANN Do submitted its application for a medical marijuana cultivation license. However, the company's submission contained a critical error that would ultimately doom its application. Instead of including the required certificate of good standing, MCD submitted a document labeled "CERT-OF-GOOD-STANDING" that was actually the company's certificate of incorporation from the state of Missouri.
The distinction between these two documents proved legally significant. A certificate of incorporation establishes that a company has been legally formed under state law, while a certificate of good standing demonstrates that the company remains in compliance with ongoing state requirements and is authorized to conduct business. DHSS rejected MCD's application based on this deficiency, determining that the company had failed to meet the minimum licensing requirements.
MCD challenged DHSS's decision before an administrative hearing commission, arguing that its certificate of incorporation should satisfy the good standing requirement. The AHC disagreed, affirming DHSS's determination that MCD was ineligible for licensure due to the missing certificate of good standing. The commission found that the application materials failed to demonstrate MCD's current authorization to operate as a business in Missouri, as required by state regulations.
Undeterred, MCD appealed the AHC's decision to the Circuit Court of St. Louis County, where Judge Thomas C. Albus presided over the case. The circuit court reviewed the administrative record and legal arguments, ultimately affirming the AHC's decision. Judge Albus agreed that MCD's application did not satisfy the minimum licensing standards established by DHSS.
MCD then appealed to the Missouri Supreme Court, seeking to overturn the lower court's ruling. The company argued that its certificate of incorporation should be sufficient to demonstrate its business authorization, or alternatively, that DHSS's interpretation of the good standing requirement was overly restrictive. However, the state's highest court rejected these arguments in its April 2024 opinion.
Writing for the court, the justices emphasized the importance of strict compliance with licensing requirements in the heavily regulated medical marijuana industry. The court noted that the certificate of good standing requirement serves important regulatory purposes by ensuring that licensed operators remain in compliance with state business laws and maintain their legal authority to conduct operations.
The Supreme Court's decision reinforces Missouri's commitment to maintaining rigorous oversight of its medical marijuana program. Since the 2018 constitutional amendment took effect, state regulators have worked to establish a comprehensive framework governing all aspects of medical marijuana cultivation, processing, and distribution. The licensing requirements serve as gatekeeping mechanisms to ensure that only qualified and compliant operators receive authorization to participate in the state's cannabis industry.
The ruling also highlights the importance of careful attention to administrative requirements in regulated industries. MCD's case demonstrates how seemingly minor documentation errors can have significant consequences, particularly in emerging industries subject to detailed regulatory oversight.
For other prospective medical marijuana operators in Missouri, the decision serves as a reminder of the need for meticulous compliance with all licensing requirements. The Supreme Court's affirmation of the administrative and lower court decisions suggests that Missouri courts will not second-guess DHSS's enforcement of clearly established minimum standards.
The *MO CANN Do* decision represents one of several cases that have helped define the scope and application of Missouri's medical marijuana regulations since the program's inception. As the industry continues to mature, additional litigation may further clarify the boundaries of regulatory requirements and the standards for compliance.