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[WEED NEWS]
Green with Envy
Regulatory compliance company hired by Missouri for medical marijuana program loses $28 million lawsuit
Written by DANIEL HILL
Acompany hired by Missouri officials to help review applications for the state’s medical mari uana program has been ordered to pay million to one of the applicants it re ected. ise Health olutions, a oint venture between akland, California’s aksterdam niversity and evada-based regulatory compliance company eracious nvestigative, was awarded a contract by the issouri epartment of Health and enior ervices in ugust 01 . ccording to a press release from the company at that time, its purpose was to review applications for prospective medical cannabis businesses, in anticipation of issouri’s burgeoning medical cannabis industry. ut, as the St. Louis Post-Dispatch reports, the heads of at least one company that was passed over for a license believe that the process was unfair. t. Charlesbased G Consulting, one of many groups who applied to be a part of the state’s medical mari uana industry, leveled a lawsuit against ise Health olutions, asserting that its methodology in scoring potential participants was flawed, even going so far as to accuse the company of corruption. he case wound its way into arbitration, and G prevailed. he arbitrator determined that ise Health olutions negligently performed its consulting duties for H , which caused G Consulting, LLC to be wrongfully denied dispensary licenses. he decision was approved by a uchanan County udge in July. t awarded million to G , which is now trying to collect. he company is asking a Cole County court to compel ise’s insurance company, Hiscox nsurance Co., to pay up. ise Health’s role in issouri’s medical mari uana program consisted of providing for-profit boot camps to interested applicants through its affiliated and unaccredited weed school aksterdam niversity. hen the company used a blind process to score those and other applicants before providing its findings to the H for review. t issue, though, is the fact that some believe aksterdam’s coaching may have provided the applicants who attended its boot camps with certain keywords and phrases that may have influenced scorers to give them preferential treatment. t’s not the first time ise Health has faced allegations of impropriety in a regulatory setting. 1 page white paper published in 0 0 by the Cannabis Consumer Coalition about issouri’s confusing medical mari uana licensing process details multiple instances in which the group claims ise Health misrepresented itself, as well as multiple potential conflicts of interest among its employees. ne portion of the report highlights ise Health’s own ugust 01 press release announcing its partnership with the issouri H . he release touts the company’s role in assisting with the implementation of cannabis licenses in evada and rkansas. ith expert practitioners from both sides of the regulatory field and a successful history of scoring applications in evada and rkansas, ise Health olutions anticipates reviewing and scoring license applications to open cultivation and manufacturing facilities, testing labs, and dispensaries, the statement reads. ut according to the Cannabis Consumer Coalition’s report, this was a misrepresentation of the facts. n one instance, the report notes a piece written by Geoffrey Lawrence for the eason Foundation, which points out that evada’s licensing implementation was beset with controversy that was glossed over in the press release. n fact, Clark County istrict Court Judge Eli abeth Gon ale ruled in an ugust 01 court order that evada’s licensing agency acted beyond the scope of its authority, taking actions she found to be arbitrary and capricious, amounting to conduct that is a serious issue. he voter-approved initiative required the process to be impartial and numerically scored,’ Lawrence writes. However, the regulations contained scoring criteria that demonstrated bias toward some applicants. he controversy in evada is almost identical to the allegations and issues that have been raised in issouri’s mari uana program, asserts the white paper. rbitrary and capricious scoring of applications, questions about conflict of interest and privileged access to regulators by representatives of winning licensees, and market allocation and collusion by winning licensees. s for rkansas, the Cannabis Consumer Coalition asserts that the state dealt with similar problems, including allegations of conflicts of interest and bias bordering on corruption. he odd thing in this instance, though, is that the group could find no evidence in the public record that the ise Health-affiliated company eracious was involved in any part of the process whatsoever, despite claims to the contrary in the resume its owner submitted to the state. he resume of eracious owner Chad estom submitted to the H as part of the ise Health olutions scoring vendor bid claims that eracious was part of the review team for rkansas’s dispensary license applications, the report reads. However, no public record that we could find confirms this. espite the considerable controversy, issouri Governor ike arson’s office doesn’t believe the million udgment against ise Health reflects poorly on the state. hile H was not involved in that matter, the issue appears to be a terms dispute with an insurance company and a non-execution agreement, not a decision by a court on the merits of scoring, H spokeswoman Lisa Cox tells the Post-Dispatch. he issouri edical Cannabis rade ssociation similarly downplayed the case and its impact on the state’s medical mari uana program. his litigation between two private parties doesn’t include the state and will have ero impact on issouri’s more than 1 0,000 medical cannabis patients, our industry, or issouri’s program, the group said in a statement.
The RFT reached out to a representative from ise Health for comment, but did not receive a response by press time. n
