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Discoverability of Constitutional Mandated Confidential Information in Medical Marijuana License Appeals

by | Apr 1, 2022 | Firm News |

Adopted in November of 2018, Article XIV of the Missouri Constitution authorizes and regulates medical marijuana, and directs the Missouri Department of Health and Senior Services (“Department”) to administer the State’s medical marijuana program, including granting or denying “state licenses . . . for the cultivation, manufacture, dispensing, sale, testing, tracking, and transportation of marijuana for medical use as provided by law.” Article XIV directs the Department to make available to the public license application forms to operate “medical marijuana cultivation facilities, medical marijuana testing facilities, medical marijuana dispensary facilities, and medical marijuana-infused products manufacturing facilities.”

In evaluating license applications, the Department must determine whether applicants meet certain minimum standards described in the Missouri Constitution and the State regulations. When more qualified applicants apply than there are available licenses in the facility category, both the Missouri Constitution and State regulations authorize the Department to “use a system of numerically scoring ten (10) additional evaluation criteria to rank the applications in each such license . . . category against each other.” In further discussing how the numerical scoring of evaluation criteria is to be conducted, the State regulations reiterate that “[e]ach type of facility . . . application will be scored and ranked against the other applications of the same type.” When an application for a medical marijuana license is denied, the aggrieved applicant may appeal the Department’s denial to the Missouri Administrative Hearing Commission (the “AHC”).

In State ex rel. Dep’t of Health & Senior Services, v. Slusher, No. SC99205 (Mo. banc Feb. 8, 2022), an aggrieved license applicant appealed the denial of its two medical marijuana cultivation facility licenses to the AHC alleging that its applications were subjected to an arbitrary and capricious scoring process by the Department. During its appeal to the AHC, the aggrieved license applicant requested the Department provide it with information from applications of applicants who were successful in obtaining a cultivation license. The applicant sought this information to prove that its applications were subjected to an arbitrary and capricious scoring process in which successful applicants received different scores for answers that were the same or substantially the same as the answers that unsuccessful applicants submitted. The Department refused this request, but upon motion by the aggrieved license applicant, was ordered by the AHC to produce substantially all of the documents that were requested. Unsatisfied with this result, the Department appealed.

On appeal to the Supreme Court of Missouri, the Department contended that it could not be compelled by the AHC to disclose data submitted by medical marijuana license applicants because the Missouri Constitution required it to maintain the confidentiality of that information. Specifically, the Department argued that the intent of the voters in enacting Article XIV of the Missouri Constitution was to mandate that all information filed in medical marijuana license applications be kept strictly confidential and immune from disclosure under any circumstances, including responses to a discovery request in the cases of an appeal of a license denial. The Supreme Court however rejected the Department’s contentions, noting that while the Constitution required the Department to maintain the confidentiality of reports or other information obtained from an applicant, Article XIV expressly allows such information to be “used” for a purpose authorized by law. The Court then noted that an aggrieved license applicant has the right to appeal the Department’s denial of an application to the AHC and the right to seek judicial review. The Court reasoned that because appeal to the AHC and judicial review is authorized, the plain language of Article XIV allows the confidential information obtained by the Department to be used for the purpose of an appeal of a license denial. Further, because the Constitution does not limit the use of the information in an appeal of a license denial, that information is subject to discovery. As a result, the Court held that, because the plain language of Article XIV allows confidential information to be used for purposes of appealing the Department’s decision to deny a license, the AHC did not err in ordering the production of certain confidential information pursuant to a protective order.

Thus, based on the Missouri Supreme Court’s holding in Slusher, in the case of an appeal of the denial of a medical marijuana license, any relevant, non-privileged, information and records concerning the State’s medical marijuana program, including reports and other information obtained from an applicant or licensee containing constitutionally mandated confidential information, is subject to disclosure by the State through the proper channels of discovery.