The Missouri Supreme Court is weighing whether state regulators must issue 13 cannabis facility licenses to Hippos LLC after a lower appellate court found that the state’s 2019 application scoring was inconsistent and insufficiently documented.
Judges heard arguments Wednesday in the Department of Health and Senior Services’ challenge to the March ruling, according to a current report. The dispute asks the high court to decide not only whether the scoring errors justify relief, but whether judges may direct the agency to award licenses instead of sending the applications back for another administrative review.
Hippos initially applied for three cultivation licenses, six infused-product manufacturing licenses and five dispensary licenses. The state awarded one cultivation license and denied the other 13 applications. The company appealed through the Administrative Hearing Commission and Maries County Circuit Court before reaching the Southern District Court of Appeals.
That appellate court’s unanimous opinion said identical answers sometimes received different scores and that the record did not establish one evaluator’s qualifications. It reversed the circuit court and ordered the department to grant Hippos the two cultivation, six manufacturing and five dispensary licenses that remained in dispute.
The state contends that remedy went too far because courts reviewing administrative decisions generally evaluate whether the agency acted lawfully and had substantial evidence; they do not ordinarily replace the agency’s scoring judgment. Hippos argues the record already establishes that its corrected scores would have placed the applications above the licensing cutoffs, making another round of proceedings unnecessary.
The case arrives after State Auditor Scott Fitzpatrick documented broader defects in the original licensing process. His office’s February findings said 21 of 45 scorers reviewed made at least one assessment that contradicted the state’s minimum criteria without recording an explanation. The audit also found 59 instances in which identical or substantially similar responses received different scores.
The auditor estimated that litigation and administrative appeals tied to the 2019 process cost the Division of Cannabis Regulation more than $12.5 million from 2020 through 2023. It said 68 additional licenses were awarded through settlements, a 19.5% increase over the 348 licenses originally granted. The audit rated the program “fair” and said the department disputed parts of the report.
A decision for Hippos would add 13 licenses to Missouri’s regulated cannabis market and confirm that courts can order awards when the administrative record leaves no scoring question to resolve. A decision for the state could require Hippos to return to an agency process that began more than six years ago.
The Supreme Court did not announce a decision from the bench. Until it issues a written ruling, the 13 licenses remain contested and the appellate directive is not the final word on whether they must be granted.
