Tawion Jackson considered the $250 he paid for a more-than-three-hour workshop on how to break into Missouri’s budding medical marijuana industry an investment.
“It’s a significant jump, but that’s the jump I need,” said Jackson, 42, of Bellefontaine Neighbors. “You never know until you try.”
Jackson, a Xerox employee who fixes copying machines, was one of at least 74 people attending the session Feb. 18, including established business owners and those looking to build a new career in a tightly regulated business that is estimated to generate millions in revenue for groups that win state approval for one of about 335 licenses to grow marijuana, make infused products like oils or edibles, or sell them.
Workshop attendees paid a Colorado consulting firm, Canna Advisors, to learn how to do just that. The firm’s owners, Jay and Diane Czarkowski, operated one of the first dispensaries in Boulder, Colo., and say they’ve since helped win licenses for dozens of companies in 29 states.
The Department of Health and Senior Services has been hosting public forums to hear questions from Missourians, while state officials write the rules for the industry and the license applications. They plan to finish that process June 4. The state won’t accept business applications until Aug. 3.
Meanwhile, the industry is buzzing with activity. State associations and business groups in and out-of-state are hosting conferences and workshops on medical marijuana and ancillary industries. The Missouri Cannabis Trade Association has a two-day conference Monday and Tuesday featuring panel discussions and workshops including the Czarkowskis and more than a dozen other companies.
The state has raked in at least $3.1 million from at least 434 pre-filed medical marijuana business applications since Jan. 5, but is keeping the identities of the filers secret. The Post-Dispatch has sued Gov. Mike Parson’s administration to release their identities.
Canna Advisors, which already has clients in Missouri, is one of dozens of out-of-state companies cashing in on the emerging market. Like Canna, several got their start in Colorado, one of the earlier states to legalize medical and recreational marijuana, and donated to the campaign to legalize medical marijuana in Missouri.
Department of Health and Senior Services officials are talking with groups from in and out of Missouri and reviewing other states’ regulations, department director, Dr. Randall Williams, told a crowd of more than 100 people at a Feb. 23 seminar in St. Charles, hosted by the Missouri Cannabis Industry Association.
“Especially in a startup like this that’s brand new for us and the state, we just think we’ll get to a better place in Missouri if we listen to many people who have been involved in this for a longer time,” Williams said in his opening address.
Williams responded to nearly an hour of wide-ranging questions.
“How seriously are you guys looking into the backgrounds of out-of-state investors coming in and basically stealing opportunities from residents of Missouri?” asked Powell, a security guard who said he is interested in applying for a manufacturing license. Several people in the crowd nodded at his question.
Missouri law requires any entity seeking a license to have at least 51 percent ownership by someone who has lived in the state for at least one year before applying. It prohibits any company from operating more than three cultivation facilities, five dispensaries or three medical marijuana-infused manufacturing facilities. Each license would have to be earned individually.
Williams also pointed to a provision of the medical marijuana law requiring Missouri officials to review “the character, veracity, background, qualifications and relevant experience” of license applicants’ “principal officers and managers.” He said each license would have to be approved individually.
License problems
In 2014, the Czarkowkis worked with several companies in Massachusetts that were applying for medical marijuana licenses. Three of the four companies that were approved for licenses listed Jay or Diane Czarkowksi on their executive management teams.
Their involvement came under fire after the Boston Globe published a report revealing that their cultivation and dispensary operation, Boulder Kind Care, lasted three years before its license was revoked in 2012 for numerous violations.
Boulder Kind Care was founded in 2009 and was among about 150 medical marijuana businesses in legal operation when the city required them in 2010 to apply for medical marijuana-specific licenses. Only about 75 met the requirements, said Mishawn Cook, licensing manager for Boulder.
According to Boulder city records, the violations included that Boulder Kind Care lied to obtain a construction permit to expand operations, did not have security cameras, didn’t properly store records, stored marijuana in unauthorized areas and had alcohol on the premises. Diane Czarkowski filed for bankruptcy the next year, leaving behind more than $400,000 in debt for luxury purchases, according to federal bankruptcy documents.
The Czarkowskis’ Canna Advisors staff did not tell the paying participants at their St. Louis workshop that they had lost their licenses. In an interview with the Post-Dispatch, the couple played down the violations and said they were victims of a “zero tolerance” approach from a city trying to rein in a new industry.
“Not only were there no rules nor regulations, but this had never been done before,” Jay Czarkowski said. “No one knew how to do it.”
Brenda McNoughton wished the Czarkowkis had been “more forthcoming,” but thought their workshop was informative, she said after learning about the revocations from a Post-Dispatch reporter.
“I think I would’ve wanted them to be more upfront with it and say, ‘Hey, this has been our experience, and that’s why we’re doing this, to help you avoid the same mistakes we made,’” said McNoughton, who with her husband runs a business that makes drying systems. Two years ago they started selling the equipment to marijuana facilities.
Jack Cardetti, a spokesman with the Missouri Medical Cannabis Trade Association, said he did not know the details of Boulder Kind Care’s history and could not comment on Canna Advisors specifically. He said that companies from the 32 states that previously legalized medical or recreational marijuana had experiences that could translate to Missouri.
“It’s important for any Missourian to vet any of these companies, but there clearly are some international companies that have a pretty good track record of helping clients put together and win licenses in other states,” he said.
Dan Viets, a Columbia lawyer and longtime medical marijuana advocate, helped write the ballot initiative that is now law. He also heads the Missouri Cannabis Industry Association. He said that Canna Advisors were generally well regarded in the industry and that it was difficult for companies in the early days of the medical marijuana industry to comply with regulations.
But he cautioned cannabis business hopefuls to choose carefully in seeking help, because there is no requirement that anyone pay for consultants or partner with an outside company.
“There are a lot of folks coming from out of state who claim to have expertise in the industry, but the truth is that Missouri’s program is unique, and I think that people would be best served to keep that in mind — that just because they know about licensing in Colorado doesn’t mean that they know how things are going to work in Missouri.”
Powell said the state should write the regulations and application in a way that is simple enough for people to understand.
“There are a lot of con artists out there,” he said. “It shouldn’t take somebody having to hire a lawyer or somebody from outside just to apply for a license.”
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