Missouri Sued Over Medical Cannabis Business Residency Requirements

A Pennsylvania cannabis investor is suing Missouri over its residency requirements for cannabis industry licensees, the Missouri Independent reports. Mark Toigo, a minority owner in Organic Remedies MO Inc., which holds three dispensary licenses, one cultivation license, and one manufacturer license, argues that the residency requirement discriminates against non-residents and violates the commerce clause of the U.S. Constitution.

The constitutional amendment approved by voters in 2018 requires cannabusinesses 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.”

The lawsuit argues that the residency requirement “has been and will continue to be to stifle Missouri’s medical marijuana program by severely restricting the flow of investment into the state.”

“This will mean that Missouri’s medical marijuana businesses will not be able to access the capital necessary to build a vibrant, viable, and successful industry,” the lawsuit states, according to the Independent. Toigo argues he is prohibited from investing freely because further investments could drive his ownership stake over 49 percent.

The lawsuit names the Missouri Department of Health and Senior Services, as well as its director, Randall Williams, as defendants.

Similar lawsuits aimed at cannabis licensing residency requirements have been filed throughout the U.S. In June, Oklahoma medical cannabis firms filed a lawsuit against the state over its two-year residency requirements. That case has not yet been resolved.

As part of a legal agreement, Maine regulators in May said they would not enforce the state’s four-year residency requirement for the industry. The plaintiffs in that case argued that the requirement violated the commerce clause and the state Attorney General’s Office said it was unlikely to win the case as the state Supreme Court had struck down residency requirements in the past. That decision was subsequently challenged in court by the Maine Cannabis Coalition who argue it violates the state’s legalization law and is ongoing.

In the Missouri lawsuit, Toigo estimates that the state’s medical cannabis market could be worth $175 million to $275 million a year.