Judge rejects residency requirement for state medical marijuana licenses

June 29, 2021 at 5:05 a.m. | Updated June 29, 2021 at 11:41 a.m.

by Jason Hancock, The Missouri Independent

FILE - In this Oct. 16, 2015 file photo, marijuana plants grow in the Flandreau Santee Sioux Tribe's growing facility in Flandreau, S.D. Members of the Oglala Sioux Tribe will vote this week on legalizing medical and recreational marijuana on South Dakota's Pine Ridge Reservation in an initiative that many hope will bring economic development to one of the most impoverished areas in the country. If the measure is approved, the Oglala Sioux Tribe would become the only Native American tribe to set up a cannabis market in a state where it's otherwise illegal. The Flandreau Santee Sioux Tribe attempted to set up a marijuana resort in the eastern part of the state in 2015, but eventually burned its cannabis crop out of fear of a federal raid. (Joe Ahlquist/The Argus Leader via AP, File)
FILE - In this Oct. 16, 2015 file photo, marijuana plants grow in the Flandreau Santee Sioux Tribe's growing facility in Flandreau, S.D. Members of the Oglala Sioux Tribe will vote this week on legalizing medical and recreational marijuana on South Dakota's Pine Ridge Reservation in an initiative that many hope will bring economic development to one of the most impoverished areas in the country. If the measure is approved, the Oglala Sioux Tribe would become the only Native American tribe to set up a cannabis market in a state where it's otherwise illegal. The Flandreau Santee Sioux Tribe attempted to set up a marijuana resort in the eastern part of the state in 2015, but eventually burned its cannabis crop out of fear of a federal raid. (Joe Ahlquist/The Argus Leader via AP, File)

A federal judge last week blocked Missouri from enforcing a requirement medical marijuana licenses go to businesses owned by state residents.

U.S. District Judge Nanette Laughrey ruled the residency requirement violates the U.S. Constitution's commerce clause.

A constitutional amendment approved by voters in 2018 that legalized medical marijuana requires facilities to be "majority owned by natural persons who have been citizens of the state of Missouri for at least one year prior to the application."

Mark Toigo, a marijuana investor from Pennsylvania and minority owner in a Missouri business awarded several licenses, filed a lawsuit last year to overturn that requirement.

Toigo argues in his lawsuit Missouri's medical marijuana market is expected to reach retail sales of $175 million to $275 million a year. But because of the residency rules, he is prohibited from investing more money into any Missouri company if it increases his ownership stakes above 49 percent.

The requirement, the lawsuit says, "limits Mr. Toigo's economic opportunities in Missouri's nascent marijuana industry."

The state justified the residency requirement on the idea the Department of Health and Senior Services can only investigate the backgrounds of individuals who have lived in Missouri for at least a year, Laughrey wrote.

But the judge dismissed the logic of that argument, writing in her ruling an applicant could "rack up an extensive criminal history and record of financial misdeeds in Kansas, move to Missouri, and one year and one day later apply for a license to operate a medical marijuana facility. It is unexplained how the durational residency requirement would aid DHSS in uncovering this applicant's presumed ineligibility in this circumstance."

The public interest is best served by "the protection of Toigo's constitutional right to fully participate in the medical marijuana business in Missouri on the same footing as a Missouri resident," Laughrey wrote, "a right that is likely being violated by the state's durational residency requirement."

Lisa Cox, spokeswoman for DHSS, declined to comment on the ruling or whether the state would appeal.

The Missouri Independent is a nonprofit, nonpartisan news organization covering state government and its impact on Missourians.