Lobbyist under FBI scrutiny had regular contact with Missouri medical marijuana leaders
It had been three weeks, and Bootheel CannaCare still couldn’t get answers about the status of applications it filed in August 2019 to grow and sell medical marijuana.
The company’s lawyer had gone through official channels, but to no avail.
So its chief operating officer implored the company’s lobbyist to intervene.
“Can you leverage your relationship with the state to get some answers for us?” the executive wrote to Steve Tilley, a former state lawmaker-turned-lobbyist and longtime friend and adviser to Missouri Gov. Mike Parson.
Like he’d done dozens of times over the months that the state’s fledgling medical marijuana program was getting off the ground, Tilley didn’t bother with official channels.
He went straight to the top, emailing Director of Medical Marijuana Lyndall Fraker.
Within hours, Fraker’s top deputy responded to assure the company it would have clarity in the coming days.
It was a familiar pattern for Tilley.
Hundreds of pages of emails obtained by The Star show Tilley in direct contact with Fraker and other state regulators throughout the months they were setting up the medical marijuana program, writing its rules and accepting applications.
In some cases he was simply passing along information. In others, he was asking specific questions — or making specific suggestions — about rules and regulations that would dictate who got a lucrative marijuana license.
Occasionally he was voicing concerns about department decisions, or setting up in-person meetings.
And each time, he got quick responses to his inquiries.
The department insists this is not unique to Tilley. Anyone could have reached out to Fraker with questions or concerns, and no one who chose to directly contact department leadership was ever given an advantage over others.
“The frequency of communications between Mr. Tilley and the department leadership was commensurate with other individuals who chose to reach out directly,” said Lisa Cox, spokeswoman for the department of health and senior services, later adding: “As Director Fraker has said many times, he believes he has never refused to meet with someone, represented or not, and the multiple avenues of making such a request have always been public information.”
Other applicants, both those who got a license and those who didn’t, aren’t so sure.
In interviews with The Star, applicants say the emails paint a picture of Tilley getting access few could have imagined as they were navigating the application process.
The emails don’t appear to represent illegal activity, they contend, but do raise ethical concerns about whether this level of access was a major advantage when thousands of applications were being filed for only 340 licenses.
“No regular applicant had any chance of having that kind of access,” said Leisa Stevens, whose application to open a marijuana cultivation facility near Kansas City International Airport was denied. Tilley’s emails were provided to Stevens as part of an open records request she filed in January, and she shared them with The Star.
Kansas City Attorney Christopher McHugh said his experience was that the state pushed away questions from applicants to an online FAQ page to ensure everyone had equal access to information.
Officials were very careful not to answer questions or communicate about specific applications, he said, so as to ensure a level playing field for all.
“We were told when we called or emailed that the department and its staff were not allowed to help individual applicants,” said McHugh, whose company won three separate licenses for marijuana cultivation, manufacturing and a dispensary in St. Joseph. “They couldn’t give us answers to our questions.”
Nathaniel Ruby, a Kansas City applicant who received licenses for five dispensaries and one for cultivation, said he submitted “generic questions” to the department about ownership forms because he thought the language was confusing.
“I don’t think they ever responded to it, actually,” Ruby said, adding that the department was helpful another time when the agency’s website made an error processing one of his applications by deadline.
Lowell Pearson, a Husch Blackwell attorney representing clients appealing denied licenses, said lobbying of executive branch agencies is allowed if a lobbyist is registered to do so, which Tilley is.
But of the various types of lobbying permitted in Missouri, he said executive branch lobbying is infrequent.
“I’ve been doing regulatory law in Jefferson City for 25 years,” Pearson said, “and it’s unusual but certainly not unheard of.”
State, federal scrutiny
The Missouri House launched an investigation into the marijuana program in February, with lawmakers questioning whether alleged conflicts of interest may have tainted the entire process. A House oversight committee asked for a trove of records last month documenting interactions with industry insiders and detailing how key decisions were made.
On top of the legislative investigation, more than 800 appeals of denied licenses have been filed with the state’s administrative hearing commission, with most pointing to inconsistencies in the scoring and changes to rules late in the process.
A federal grand jury issued a subpoena to the department of health and senior services late last year demanding records on four medical marijuana applicants. The identity of those applicants was redacted from the copy of the subpoena obtained by The Star.
Additionally, the state auditor’s office says over the last year it has received two whistleblower complaints specific to the operations and the application process of the medical marijuana program. The complaints were reviewed and then referred to law enforcement.
Tilley’s involvement with the industry has drawn particular scrutiny, in part because of his relationship with the governor, who served with Tilley in the legislature and for whom Tilley helped raise more than $1 million last year.
He has more than a dozen clients who are involved in some way in the medical marijuana industry. That includes the Missouri Medical Cannabis Trade Association, an industry group whose members have been awarded numerous licenses to grow, transport and sell marijuana.
Further complicating the situation is the fact that Tilley has been under FBI scrutiny for months — with questions ranging from his involvement in the medical marijuana industry to his connection to controversial utility contracts in Independence.
Tilley did not respond to a request for comment.
Weeks after voters approved medical marijuana in Missouri in November 2018, emails show Tilley had a face-to-face meeting with the leaders of the department of health and senior services.
Just days after the meeting, Fraker would be hired as the state’s medical marijuana czar, although the department says that hire was not discussed at the meeting.
Emails and meetings between Tilley, Fraker and his top deputy, Amy Moore, continued as the department began drafting the rules that would both govern the program and make up the application that determines who would win a license.
The same day the initial rules for the program were released, emails show Fraker met with leaders of the Missouri Medical Cannabis Trade Association. It’s unclear if Tilley was at this meeting, but he was included in subsequent emails where Fraker invited the group to forward their thoughts on draft rules directly to him.
A few days after the meeting, Tilley emailed Fraker calling the draft rules burdensome. He forwarded numerous questions about the rules and requested a redline copy of any changes the department ultimately made.
Fraker responded two days later, apologizing for the delay, which he attributed to moving offices. He promised to “get you some answers today to your questions concerning the draft rules.”
Cox, the department spokeswoman, said Tilley had the same opportunity to follow the changes to the draft rules that any other member of the public did when drafts and revised drafts were posted to the website.
Tilley then emailed Fraker a “time sensitive issue we discussed” that pertained to questions about ownership structure. Fraker responded 20 minutes later that he would forward Tilley’s email to rulemakers.
When he didn’t get an answer, Tilley emailed Fraker again days later.
“Can you please follow up with staff. No one has contacted me on the substantial ownership definition.”
Fraker apologized and said he had been assured there will be clarification in the coming days.
In mid-May, Tilley emailed Fraker asking for clarification on how the department will handle open records requests. Fraker said, “I will let you know on this follow up in the morning.”
Later, Fraker met with Tilley and his “team” to address concerns they raised about what constituted majority ownership. In a follow up email, Fraker said the department changed its definition from 51 percent to 50.0001 percent.
Weeks later, Tilley emailed to request a meeting with Fraker and his staff to discuss concerns that “draft rules were changed in an unfavorable way to my client.” The meeting took place three days later.
The rules for the program were finalized in early June. A few days before, Tilley emailed Fraker asking if the department would confirm it “would not have any issues” with the business plan of one of his clients. Fraker responded that the arrangement “should be acceptable.”
In mid-June, Tilley forwarded an email to Fraker from a client requesting clarification on one of the questions on the application for a license.
Fraker passed the question along to his deputy, Amy Moore, who responded that “at this point, now that people are actively working on their applications, we have to be careful to give everyone the same information.”
Over the next few days, Tilley sent Fraker and Moore several emails with specific questions from his clients about the application process. Moore quickly responded to most saying the issues will be addressed in the program’s FAQs. One email was answered by Fraker regarding residency requirements for testing facilities.
Communication between Tilley and department leadership continued throughout July and August, when the state began accepting applications for medical marijuana licenses.
At different times during the program formation and application process, Cox said the department placed communication restrictions on certain staff.
Once application forms and instructions were published, she said, the department directed staff not to answer individual questions regarding the substance of applications. Questions were taken as suggestions for FAQs and answered through the FAQ process, Cox said.
If answers were provided, she said, it was because those answers were already available to the public.
“A quick search of email records shows Mr. Tilley’s questions received this treatment during this time period,” Cox said, noting Fraker and Moore responded to over 800 questions, suggestions, or comments regarding program implementation in 2019.
Jack Cardetti, spokesman for the trade association, said department leadership has “gone out of their way to be open and accessible to all stakeholders.”
“In talking with other trade associations across the country,” Cardetti said, “this level of regulator accessibility and stakeholder engagement is unprecedented.”
‘The jig was up’
Long before Richard Rodriguez began compiling his application for a St. Louis marijuana dispensary, he began hearing rumors about Tilley’s involvement in the industry.
“People kept bringing up Steve Tilley’s name,” he said. “People were hearing about this. This wasn’t some kind of a secret.”
Rodgriguez was denied a license by the state, a decision he is now appealing. But he said the apparent influence Tilley had has soured him on the entire process.
Rodriguez operates two restaurants in the Cherokee Street neighborhood of St. Louis and hoped to open a dispensary nearby. He saw the arrival of medical marijuana as his family’s first chance at building generational wealth.
Ultimately, two other companies won licenses for dispensaries in that area, including BeLeaf Medical, which Tilley counts as a client.
“I just think the jig was up from the get go,” he said. “It wasn’t on the up and up. I was so stupidly naive. I’m mad at myself and I’m ashamed at myself that I would be so stupid and spend all our money. It was a rigged game from the beginning.”
After Leisa Stevens’ Prairie Land Farms was denied a marijuana cultivation license, she appealed the state’s decision and launched the Missouri Marijuana Alliance, a group of similar businesses pushing the state to award more licenses .
She spent more than $160,000 hiring the outside experts needed to complete her application. In retrospect, Stevens wonders if some of that money would have been better spent by making political donations to people like the governor, or hiring a well-connected lobbyist.
“Looking back now, I wish we had done it,” she said.
McHugh, who serves on the board of the Missouri Medical Cannabis Trade Association, said he believes state officials have generally acted in good faith in rolling out Missouri’s marijuana program.
But he agrees with those who see inconsistencies and irregularities in the way applications were scored by Wise Health Solutions, the private company hired by the state to score bids. He’s representing 45 denied applicants appealing state decisions on licensure.
“I think they fell down on the job,” he said. “From what I’ve seen, the quality of the grading is poor. It was inconsistent. It just wasn’t up to industry standards. To put it in layman’s terms it was just bad. They did a bad job. And that’s coming from someone who won seven licenses.”
The emails don’t necessarily show anything illegal occurred, but like other moves the state has made, they add to the questions about the way Missouri has rolled out its marijuana program, said Josh Hardin, a partner in Prairie Land Farms and a Kansas City attorney.
“Everything may have been totally justified,” he said. “But it’s really the lack of transparency in this thing. And when you have a lack of transparency, it breeds suspicion.”
Craig Holman, a lobbyist with the Washington, D.C., government watchdog Public Citizen, said there is nothing inherently wrong with a lobbyist interacting with government regulators.
But that is only true, Holman said, if the lobbying activity is part of the public record.
If it’s not, he said, “then regulators could well be practicing unfair favoritism in promulgating the final public policy.”
An earlier version of this article misidentified the year medical marijuana applications were submitted. It was 2019.
This story was originally published June 7, 2020 at 5:00 AM.
