Despite hours of testimony in recent weeks from state regulators, Missouri lawmakers still have serious questions about alleged conflicts of interest in the fledgling medical marijuana industry.
With widespread reports of scoring irregularities and hundreds of appeals already filed by unsuccessful applicants, the Missouri House’s government oversight committee began holding hearings in early February to examine the roll out of the medical marijuana program.
Lyndall Fraker, the state’s medical marijuana czar, was grilled on a range of topics — from why a private company was hired to score applications to how the state will handle the more than 800 appeals of denied licenses filed so far.
But the main focus of the hearings thus far has been lingering concern among lawmakers that conflicts of interest could have tipped the scales in favor of certain applicants.
At the center of the allegations is the company hired by the state to score applications. Wise Health Solutions is a joint venture between Nevada-based Veracious Investigative & Compliance Solutions and Oaksterdam University, an unaccredited California institution in California that offers courses of study on the cannabis industry.
“I have concerns that there were conflicts,” Rep. Jared Taylor, R-Republic, said at a recent hearing. “I find it hard to believe that there wasn’t, or something that we would at least look into.”
Fraker has maintained that no evidence of conflicts of interest exists. Despite the hundreds of appeals of license denials filled with such allegations, Fraker noted, few contain any details or proof.
“We have attestations from (Wise Health Solutions) that there were no conflicts,” Fraker said. “We believe that.”
But the questions persist, and lawmakers expect to question the director of the Department of Health and Senior Services, Randall Williams, this week.
Complicating the state’s defense is the agency’s contention that the constitutional amendment approved by voters in 2018 legalizing medical marijuana stipulates that it can’t release information about the ownership of companies that won licenses.
That argument isn’t winning over legislators who worry a that lack of transparency could undermine public confidence that the system is fair or, worse, cover for someone who manipulated the system.
“The more transparency we can shine into the process would help give a little bit of peace of mind to folks,” said Jon Carpenter, a Kansas City Democrat who serves on the government oversight committee.
Conflicts of interest?
A company called EBC Missouri has appealed its denials of five dispensary applications and three for cultivation facilities, arguing that scoring errors, if corrected, would enable the firm to win licenses.
But the company’s appeal also includes accusations that another firm that won multiple licenses had improper ties to Oaksterdam.
The allegation centers on Debby Goldsberry, who is said to hold upper-level positions with California marijuana companies CPC of Pasadena and CPC Compassion in Santa Monica. She has also recently been listed as a faculty member at Oaksterdam University.
CPC of Missouri, LLC won a dispensary license for a proposed facility at 4446 Belleview Avenue in the West Plaza area of Kansas City.
CPC of Missouri-Smithville, LLC won three licenses for a cultivation operation 14816 169 Highway in Smithville.
It’s unclear what connection these companies have to the California entities with similar names. Both listed Lee Hoffman as chief operations officer. He did not respond to a request for comment.
Damian Martin, a California attorney and an owner of EBC Missouri, said the naming style is consistent with CPC dispensaries in California, which add the city name to the end of the title.
“There’s a link. Unless that’s a different CPC, which I highly doubt,” the lawyer said. “I was taken aback when I established that link.”
Martin argued that the state should not have outsourced the scoring to a private firm in the first place. But once it did, he said individuals shouldn’t be part of that process if they have a financial stake in its outcome.
“You’ve got to pick your side here,” he said. “Are you an entrepreneur and representing business interests? Or are you a scorer and representing government interests?”
Since the appeal, Goldsberry has changed her LinkedIn page. As recently as Jan. 20, 2020, it listed her as an instructor at Oaksterdam, according to exhibits in the appeal case. Now, her page says she stopped teaching at Oaksterdam in October 2017.
Likewise, internet archiving tools show Oaksterdam recently changed its own website. While Goldsmith was listed as a faculty member until late January, her profile has since been scrubbed from the site. She was previously listed as teaching patient relations, procurement and allocation, dispensary operations and business management.
“It seems like we hit a nerve,” Martin said after learning of the change. Chuckling, he said that the change only aids his company’s case. “Oh yeah, awesome.”
Dale Sky Jones, executive chancellor of Oaksterdam, told The Star that Goldsberry is considered a professor emeritus who hasn’t taught since at least 2017.
“Debby had absolutely nothing to do with Wise Health Solutions or this scoring project,” Sky Jones wrote in an email. “We have not spoken in over a year, nor has she been to (Oaksterdam University) campus.”
Goldberry’s information was likely deleted from Oaksterdam’s website because of an internal audit of new faculty at the school as it prepares to open a Los Angeles campus, Sky Jones said.
Asked about Goldsberry’s alleged involvement in CPC of Missouri, Jones said: “We did not know Debby Goldsberry was involved in a license in Missouri and frankly — as I said earlier — I have not talked with her lately.”
“We simply wouldn’t have known and did not research such things,” Jones said in an email. “I’m sure sDebby [sic] can personally confirm she has not discussed her project with or at Oaksterdam University.”
Goldsberry did not respond to multiple requests seeking comment.
Sky Jones said only a few Oaksterdam faculty members were “hand-picked” to help in the Missouri scoring process. She said Oaksterdam ensured there were no conflicts of interest with graders and said none of that work was completed on the Oakland campus.
Goldsberry’s alleged conflict of interest is fodder for several appeals brought by Jon Dedon, an attorney at Kennyhertz Perry in Mission Woods, Kansas.
“Obviously, our client’s goal is to get a license,” Dedon said. “We think this is an argument that will further that goal.”
As part of the discovery process, Dedon said he would request documents showing the owners involved in CPC Missouri. Such forms would clearly show whether someone like Goldsberry was affiliated, but Dedon isn’t sure whether the state will release that information.
“I think that’s going to be a fight,” he said. “We’d like it. We think we’re entitled to it. We think it’s relevant.”
Fraker told The Star he hasn’t looked into the details of the situation with Goldsberry, but if she did work for Oaksterdam while applying for a license “it would be a conflict. I believe that would be.”
Lawmakers have also taken notice of Oaksterdam, zeroing in on a “cannabis business licensing boot camp,” series of seminars the university held last year in Missouri.
The boot camps were promoted as workshops to help license applicants with, among other things, “exclusive access to required industry relationships necessary to build teams and businesses that succeed.”
Oaksterdam has insisted that none of the boot camp instructors who went to Missouri had anything to do with the subsequent scoring process that Oaksterdam was involved with through Wise Health Solutions.
But lawmakers questioned whether those who paid to attend these boot camps could have been given an unfair advantage.
“These folks have applicants who have been their customers, who have given them money,” said Rep. J. Eggleston, R-DeKalb County. “And now they may recognize the answers on the tests, and that might taint the whole grading system.”
Fraker said the department was not aware of Oaksterdam’s involvement in the boot camps before Wise Health Solutions was awarded the scorer’s contract.
He said he’s has not heard of anyone who attended the boot camps getting licenses, then asked if Eggleston knew of any.
“That’s not my job to know,” Eggleston said. “That would be more your job to know.”
Richard Moore, general counsel for the Department of Health and Senior Services, told lawmakers it’s important to note that the boot camps took place before application questions were finalized.
And there were no boot camps in Missouri at all, Moore said, after Wise Health Solutions submitted a bid to score the marijuana applications.
One lawmaker asked whether it was a conflict that the husband of Fraker’s deputy director is an attorney who has medical marijuana clients.
The deputy director was walled off from any decisions involving applications submitted by a client of her husband, Moore said, with Fraker adding: “No company that her spouse represented got a license, if that helps.”
The state has long argued that the constitution requires it to keep ownership information about marijuana businesses secret.
So far, the state has released only selected details about the businesses, and only after it was sued by the St. Louis Post-Dispatch to force disclosure.
Dave Roland, director of litigation at the libertarian Freedom Center of Missouri, said the state is probably correct in its decision to keep ownership information confidential.
The constitution says the state “shall maintain the confidentiality” of this information, Roland said, meaning the state’s hands are tied.
But that confidentiality shouldn’t extend into litigation, Roland said.
“It seems to me that although courts should make clear that any information subject to this provision must be kept confidential or under seal,” he said, “there is no reason that it would not be subject to discovery, so long as appropriate protective orders were in place.”
Jean Maneke, attorney for the Missouri Press Association, echoed the concerns of lawmakers that keeping the information secret undermines the system’s legitimacy with the public.
“This is becoming a textbook case,” Maneke said, “for why transparency in regard to government records is so important.”