The Missouri Supreme Court heard arguments Wednesday in a case that could reshape how the state awards cannabis business licenses, with officials challenging a lower court's decision to grant 13 facility licenses to Hippos LLC.
The case centers on a March appeals court ruling that found Missouri's 2019 application scoring process was inconsistent. "I'm asking this court to make findings as to the proper score for each of these applications," according to arguments presented to the court.
The dispute dates back to Missouri's initial medical marijuana licensing round in 2019, when hundreds of applicants competed for a limited number of cultivation, manufacturing, and dispensary licenses. Hippos LLC challenged its application scores, arguing the state's evaluation process lacked consistency across reviewers.
The Licensing Dispute
Missouri's Department of Health and Senior Services scored applications using a point-based system, with multiple reviewers evaluating each submission. But the appeals court found enough irregularities in how scores were assigned to warrant judicial intervention.
The March ruling didn't just invalidate scores—it directed the state to issue 13 licenses to Hippos LLC outright. That's an unusual remedy that prompted the state to appeal to Missouri's highest court.
Similar licensing disputes have played out across the country as states roll out cannabis programs. In Illinois, Oklahoma, and Michigan, applicants have challenged scoring processes in court, often citing inconsistent application of criteria or mathematical errors. But courts rarely order states to award licenses directly, instead typically sending cases back for re-evaluation.
What's At Stake
The outcome carries significant financial implications. Missouri cannabis licenses have proven valuable assets, with dispensary locations generating millions in annual revenue. Thirteen facility licenses represent substantial market access in a state where the adult-use program launched in February 2023 after voters approved Amendment 3.
The state's appeal argues the lower court overstepped by directing license awards rather than ordering a re-scoring process. Legal experts note this distinction matters for how much deference courts give state agencies in licensing decisions.
For Hippos LLC, the case has dragged on for years while competitors operated in the market. The company has maintained that its applications met or exceeded scoring thresholds under a consistent evaluation.
Industry Watching
Missouri cannabis operators are monitoring the case closely. A Supreme Court decision favoring Hippos could open the door to similar challenges from other applicants who scored near cutoff lines in 2019.
The state's medical program licensed 192 dispensaries, 60 cultivation facilities, and 86 manufacturing facilities in its initial rounds. Any wholesale changes to that licensing structure could ripple through the market.
The Supreme Court has not indicated when it will rule. Arguments Wednesday focused on whether the appeals court exceeded its authority and what remedies are appropriate when state agencies err in scoring processes.
Missouri's cannabis market generated over $1.1 billion in sales in 2023, its first full year with adult-use sales. The state collected $115 million in marijuana tax revenue during that period.
This article is based on original reporting by www.marijuanamoment.net.
