Case Title: MO CANN Do, Inc. vs. Missouri Department of Health and Senior Services

Citation: 

Docket Number: SC100172

State: missouri

Court: Missouri Supreme Court

Date: 2024-04-02T00:00:00Z

Document:
SUPREME COURT OF MISSOURI 
en banc 
 
 
MO CANN DO, INC., 
) 
Opinion issued April 2, 2024 
 
) 
 
Appellant, 
) 
 
) 
v. 
) 
No. SC100172 
 
) 
MISSOURI DEPARTMENT OF HEALTH ) 
AND SENIOR SERVICES, 
) 
 
) 
 
Respondent. 
) 
  
APPEAL FROM THE CIRCUIT COURT OF ST. LOUIS COUNTY 
The Honorable Thomas C. Albus, Judge 
 
 
MO CANN Do, Inc. (“MCD”) appeals an administrative hearing commission 
(“AHC”) decision determining MCD was ineligible for a medical marijuana cultivation 
facility license.  Because MCD’s application for licensure did not include a certificate of 
good standing demonstrating its authorization to operate as a business in Missouri, the 
application failed to meet the minimum standards for licensure. The circuit court’s 
judgment affirming the AHC’s decision, therefore, is affirmed. 
 
 
2 
 
Background 
 
In 2018, Missouri voters amended the Missouri Constitution to legalize the 
possession and use of marijuana for medical purposes.1  The amendment gave the 
Department of Health and Senior Services (“DHSS”) the authority to promulgate rules 
necessary for the proper regulation and control of marijuana for medical use, including the 
authority to grant or refuse state licenses for the cultivation of marijuana for medical use.  
Pursuant to the constitutional amendment, DHSS promulgated rules and regulations 
including the minimum standards for cultivation licensure.2  These minimum standards 
required, among other things, an applicant for licensure to provide a certificate of good 
standing from the secretary of state to demonstrate the applicant’s authority to operate as a 
business in Missouri.  Once an applicant met the minimum standards, DHSS considered 
additional evaluation criteria under a numerical scoring system to rank applicants for the 
limited number of licenses DHSS was authorized to issue. 
In 2019, MCD applied for a medical marijuana cultivation license.  Included in its 
application was a document titled “CERT-OF-GOOD-STANDING” that was not in 
substance a certificate of good standing but, instead, MCD’s certificate of incorporation 
from the state of Missouri.  DHSS rejected the application as incomplete and sent MCD a 
                                              
1 In 2022, Missouri voters again amended the constitution legalizing recreational use of 
marijuana.  This opinion does not address the 2022 amendment or regulations promulgated 
thereunder. 
2 All references to DHSS regulations governing medical marijuana licensure are to those 
in effect in 2019.  These regulations were repealed following the 2022 constitutional 
amendment legalizing recreational use of marijuana in addition to medical use. 
 
3 
 
deficiency letter.  The letter notified MCD of several deficiencies in its application but 
failed to include the fact that MCD did not submit a certificate of good standing.  MCD 
resubmitted its application addressing the deficiencies referenced in the DHSS letter, but 
MCD’s resubmitted application again included its certificate of incorporation instead of a 
certificate of good standing.3  DHSS denied MCD’s application for failure to meet the 
minimum standards for licensing. 
 
MCD appealed to the AHC.  The AHC granted a summary decision in DHSS’ favor, 
concluding MCD was ineligible for a medical marijuana cultivation facility license based 
on its application.  The AHC found MCD failed to submit a certificate of good standing as 
required by DHSS regulation and, thereby, failed to meet the regulatory minimum 
standards for licensure.  The AHC rejected MCD’s argument that DHSS was equitably 
estopped from denying MCD’s application, finding it had no authority over equitable 
claims for relief.  
MCD petitioned the circuit court for judicial review of the AHC’s decision, which 
the circuit court affirmed.  MCD then appealed to the court of appeals.  After an opinion 
by the court of appeals, this Court granted transfer.4  On appeal, MCD argues the AHC’s 
decision finding MCD failed to meet the minimum standards for licensure is not supported 
by competent and substantial evidence, is arbitrary and capricious, and is unauthorized by 
law.  It asks this Court to vacate the AHC’s decision and remand to the AHC to determine 
                                              
3 MCD’s second submission retitled the certificate of incorporation document as 
“MCDO0001 Certificate of Good Standing.”  
4 This Court has jurisdiction under article V, section 10 of the Missouri Constitution.  
4 
 
if MCD is otherwise eligible to receive a medical marijuana cultivation license. 
Standard of Review 
“Article V, section 18 of the Missouri Constitution articulates the standard of 
judicial review of administrative actions.”  Albanna v. State Bd. of Registration for Healing 
Arts, 293 S.W.3d 423, 428 (Mo. banc 2009).  “On appeal, this Court is charged with 
determining whether the agency actions ‘are authorized by law, and in cases in which a 
hearing is required by law, whether the same are supported by competent and substantial 
evidence upon the whole record.’”  Id. (quoting Mo. Const. art. V, sec. 18).   
Moreover, “all final decisions of the administrative hearing commission shall be 
subject to judicial review as provided in and subject to the provisions of sections 536.100 
to 536.140[.]” Section 621.145.5  “Section 536.140.2 lists several criteria for judicial 
review of an agency decision.”  Stone v. Mo. Dep’t of Health & Senior Servs., 350 S.W.3d 
14, 19 (Mo. banc 2011).  This Court reviews whether the agency action: 
(1) Is in violation of constitutional provisions; 
(2) Is in excess of the statutory authority or jurisdiction of the agency; 
(3) Is unsupported by competent and substantial evidence upon the whole record; 
(4) Is, for any other reason, unauthorized by law; 
(5) Is made upon unlawful procedure or without a fair trial; 
(6) Is arbitrary, capricious or unreasonable; 
(7) Involves an abuse of discretion. 
                                              
5 All statutory references are to RSMo 2016 unless otherwise indicated. 
5 
 
Section 536.140.2.   
“Consistent with the constitutional standard, section 536.140.2 provides for 
appellate review of the administrative ruling, not that of the circuit court[.]”  Lagud v. Kan. 
City Bd. of Police Comm’rs, 136 S.W.3d 786, 791 (Mo. banc 2004); see also Stone, 350 
S.W.3d at 19 (citing section 536.140.2) (“An appellate court reviews the decision of the 
agency rather than the decision of the circuit court.” ).  “For purposes of review, the action 
of the commission and the order, if any, of the agency shall be treated as one decision.”  
Section 621.145.  “Under article V, section 18 and section 536.140.2, the standard of 
review for administrative decisions is ‘whether, considering the whole record, there is 
sufficient competent and substantial evidence to support the agency’s decision.’”  Stone, 
350 S.W.3d at 20 (alteration omitted) (quoting Albanna, 293 S.W.3d at 428). 
The record contains competent and substantial evidence MCD’s application failed 
to meet a minimum standard for licensure 
 
In its first point relied on, MCD argues the AHC’s conclusion finding it failed to 
meet a minimum standard for licensure is not supported by competent and substantial 
evidence.  DHSS regulation provided the “minimum standards” for obtaining a medical 
marijuana cultivation facility license.  19 C.S.R. 30-95.025(4).  One such minimum 
standard was an applicant’s “[a]uthorization to operate as a business in Missouri[.]”  19 
C.S.R. 30-95.025(4)(A)1.  DHSS regulation provided this minimum standard “can be met 
by providing all material required by 19 CSR 30-95.040(2)[.]”  19 C.S.R. 30-95.025(4)(A).  
19 C.S.R. 30-95.040(2) provided the application “shall include at least the following 
6 
 
information … a certificate of good standing from the Missouri Office of the Secretary of 
State[.]”   
It is undisputed in this case that MCD’s application failed to include a certificate of 
good standing.  MCD contends 19 C.S.R. 30-95.025(4)(A)1 implied the minimum standard 
may have been met in other ways.  It notes 19 C.S.R. 30-95.025(4)(A)1 merely provided 
an applicant’s authorization to operate as a business in Missouri “can” be met by providing 
all material required by 19 C.S.R. 30-95.040(2) (i.e. the certificate of good standing).  MCD 
argues its application, by providing its certificate of incorporation, satisfied the standard 
requiring proof of authorization to operate as a business in Missouri.  
Regardless if a certificate of incorporation is proof of authorization to do business 
as MCD contends,6 MO CANN Do’s “can” argument lacks merit.  19 C.S.R.  
30-95.025(4)(A)1 simply cross-referenced 19 C.S.R. 30-95.040(2) to provide the applicant 
with the information necessary to submit a complete application meeting the minimum 
standards for licensure.  The former provided minimum standards pertaining to business 
authorization, ownership, and location of a proposed facility; the latter delineated 
documentation corresponding to these requirements.  Dispositive here, 19 C.S.R.  
                                              
6 Multiple cases have remarked “the final determination of a corporation’s right to do 
business is made when the Secretary of State issues a certificate of incorporation[.]” 
Beavers v. Recreation Ass’n of Lake Shore Est., Inc., 130 S.W.3d 702, 709 (Mo. App. 
2004); see also Levey v. Roosevelt Fed. Sav. & Loan Ass’n of St. Louis, 504 S.W.2d 241, 
245 (Mo. App. 1973); A.W. Mendenhall Co. v. Booher, 48 S.W.2d 120, 122 (Mo. App. 
1932); Boatmen’s Bank v. Gillespie, 108 S.W. 74, 86 (Mo. 1907).  And section 351.385 
provides that “[e]ach corporation shall have power … [t]o conduct its business … within 
and without this state[.]”  But section 351.076 differentiates between a corporation’s mere 
existence and its authority to transact business in Missouri and provides the certificate of 
good standing is prima facie evidence of both. 
7 
 
30-95.040(2) required that an application “shall include at least” a certificate of good 
standing. (Emphasis added).  When the language of a regulation is unambiguous, there is 
nothing to construe and courts will give effect to the language as written.  See Doe v.  
St. Louis Cmty. Coll., 526 S.W.3d 329, 336 (Mo. App. 2017).  Because MCD did not 
include a certificate of good standing in its application as was required by regulation to 
demonstrate its authority to operate as a business in Missouri, MCD failed to meet the 
minimum standards for licensure.  Point one is denied. 
The AHC’s decision was not arbitrary, capricious, or unreasonable in finding DHSS 
did not waive the certificate of good standing requirement 
 
In its second point relied on, MCD argues the AHC’s decision was arbitrary, 
capricious, and unreasonable in finding DHSS did not waive the certificate of good 
standing requirement given DHSS notified MCD of several deficiencies in its application 
but failed to include the fact that MCD did not submit a certificate of good standing.  MCD 
contends that, because the AHC’s decision was arbitrary, capricious, and unreasonable, 
this Court should vacate the decision finding MCD did not meet the minimum standards 
for a cultivation license.   
DHSS regulations provided DHSS “will notify an applicant if an application is 
incomplete and will specify in that notification what information is missing.”  19 C.S.R. 
30-95.040(1)(B)4.  DHSS regulations also provided DHSS may “waive, for good cause, 
provisions of this chapter on its own initiative or by request.”  19 C.S.R. 30-95.025(2)(A).  
MCD reads these regulations in tandem to argue DHSS waived the certificate of good 
8 
 
standing requirement by failing to specify that MCD failed to submit a certificate of good 
standing with its application. 
MCD’s argument is creative, but 19 C.S.R. 30-95.025(2)(A) did not suggest DHSS 
could implicitly waive an application requirement, much less waive that requirement by 
failing to notify an applicant with specificity regarding information missing from its 
application.  Rather, 19 C.S.R. 30-95.025(2)(A) contemplated affirmative waiver in which 
DHSS waived requirements “on its own initiative or by request.”  This did not happen, as 
DHSS denied MCD’s application and never affirmatively waived the deficiencies therein. 
Regardless, MCD is not entitled to its requested relief.  MCD requests this Court 
vacate the AHC’s decision finding MCD failed to meet a minimum standard for licensure.  
But, as explained more thoroughly above, MCD failed to submit a certificate of good 
standing and, therefore, did not meet the minimum standards. DHSS properly denied 
MCD’s application for licensure.  Point two is denied. 
DHSS is not estopped from denying MCD’s application 
 
 
In its third and final point relied on, MCD argues DHSS, by failing to notify MCD 
that a certificate of good standing was missing from its initial application, was estopped 
from denying MCD’s final application on that basis.  “A party asserting estoppel [against 
a governmental agency] must prove all required elements of estoppel [ … ] to prevail.”  
Twelve Oaks Motor Inn, Inc. v. Strahan, 110 S.W.3d 404, 408 (Mo. App. 2003) (internal 
quotations omitted).  “These elements are: 1) a statement or act by the government entity 
inconsistent with the subsequent government act; 2) the citizen relied on the act; and 3) 
injury to the citizen.”  Id. (internal quotations omitted); see Peerless Supply Co. v. Indus. 
9 
 
Plumbing & Heating Co., 460 S.W.2d 651, 665-66 (Mo. 1970) (setting forth three elements 
of estoppel).  “In addition, the governmental conduct complained of must amount to 
affirmative misconduct.”  Twelve Oaks, 110 S.W.3d at 408 (internal quotations omitted). 
However, “[t]he doctrine of equitable estoppel is rarely applied in cases involving a 
governmental entity, and then only to avoid manifest injustice.”  Lynn v. Dir. of Revenue, 
689 S.W.2d 45, 48 (Mo. banc 1985); see Twelve Oaks, 110 S.W.3d at 408 (“Equitable 
estoppel may run against the state, but only whe[n] there are exceptional circumstances 
and a manifest injustice will result.” (internal quotations omitted)).  “Equitable estoppel is 
not applicable if it will interfere with the proper discharge of governmental duties, curtail 
the exercise of the state’s police power or thwart public policy, and is limited to those 
situations where public rights have to yield when private parties have greater equitable 
rights.”  Twelve Oaks, 110 S.W.3d at 408 (internal quotations omitted).7 
                                              
7 The AHC found it had no authority over equitable claims for relief including equitable 
estoppel, citing Soars v. Soars-Lovelace, Inc., 142 S.W.2d 866, 871 (Mo. 1940).  This 
Court in Soars addressed an attempt by the Workmen’s Compensation Commission to 
make an award to a person excluded by the Workmen’s Compensation Act.  In holding 
such an award outside the authority of the Workmen’s Compensation Commission, the 
Court stated an administrative tribunal “is a creature of the Legislature and does not have 
any jurisdiction or authority except that which the Legislature has conferred upon it.”  Id.  
The Court held, “If the authority conferred could be enlarged by its own holdings of wavier, 
estoppel, or even by contract, the Commission could itself add to its own powers and create 
rights and duties beyond what the Legislature provided or intended.”  Id. 
 
Soars remains good law, but is inapposite to MCD’s claim on appeal.  The issue 
here is not the AHC’s power in equity or lack thereof.  Appellate cases, including from this 
Court, hold the courts retain powers in equity including to grant equitable estoppel on 
appeal from an agency decision.  See Lynn, 689 S.W.2d at 48-49 (addressing equitable 
estoppel on appeal from an AHC’s decision); Twelve Oaks, 110 S.W.3d at 408 (addressing 
equitable estoppel in review of a tax commission decision); State ex rel. Capital City Water 
Co. v. Mo. Pub. Serv. Comm’n, 850 S.W.2d 903, 910 (Mo. App. 1993) (addressing an 
 
10 
 
 
MCD contends DHSS initially represented that MCD’s application was satisfactory 
as it pertained to the inclusion of the certificate of good standing, which MCD asserts was 
inconsistent with DHSS’ subsequent denial of MCD’s application for failure to include 
said certificate.  MCD claims it relied on these representations to its detriment.  
Accordingly, MCD claims DHSS is estopped from denying its application for failure to 
include a certificate of good standing and asks this Court to remand for the AHC to 
determine if MCD is otherwise eligible for a medical marijuana cultivation license.  
 
This argument fails because it is generally inappropriate to estop governmental 
agencies tasked with administrating licensure in highly regulated industries.  See, e.g., State 
ex rel. Letz v. Riley, 559 S.W.2d 631 (Mo. App. 1977) (making permanent a writ 
prohibiting the circuit court from estopping a supervisor of liquor control from suspending 
or revoking certain liquor licenses); Twelve Oaks, 110 S.W.3d at 408 (“Equitable estoppel 
is not applicable if it will interfere with the proper discharge of governmental duties[.]” 
(internal quotation omitted)).  Marijuana is a Schedule I controlled substance under both 
state and federal law.  Section 195.017.2(5)(ff), RSMo Supp. 2023; 21 U.S.C. § 812, 
Schedule I (c)(10).  According to state and federal law, controlled substances listed under 
Schedule I have a high potential for abuse, no accepted medical use in treatment and/or 
lack accepted safety for use in treatment under medical supervision.  Section 195.017.1, 
                                              
equitable estoppel claim in review of a public service commission decision); see also State 
ex rel. Leonardi v. Sherry, 137 S.W.3d 462, 471-72 (Mo. banc 2004) (holding the Missouri 
Constitution vests legal and equitable jurisdiction in the courts).  When the elements of 
equitable estoppel are met, a court may determine an AHC’s decision is unauthorized by 
law. 
11 
 
RSMo Supp. 2023; 21 U.S.C. § 812(b)(1).  Because both state and federal law deem 
Schedule I substances susceptible to dependency and abuse, such drugs are highly 
regulated to protect the public health.  The marijuana industry, therefore, is certainly an 
industry that must be highly regulated.   
Even if DHSS did not provide specific notice to MCD of the deficiency in its 
application, the State cannot be thwarted in its effort to enforce public policy and protect 
the public interest as it pertains to regulating the cultivation and use of marijuana.  C.f. 
Twelve Oaks, 110 S.W.3d at 408 (“Equitable estoppel is not applicable if it will … thwart 
public policy[.]” (internal quotation omitted)); Mahoney v. Doerhoff Surgical Servs., 807 
S.W.2d 503, 507 (Mo. banc 1991) (“The preservation of the public health is a paramount 
end of the exercise of the police power of the state.”).  It is incumbent on DHSS to ensure 
MCD or other entities entering the marijuana industry follow the laws and regulations 
related to the industry so the public can remain safe.  This includes ensuring entities seeking 
to cultivate marijuana in this state are authorized to do business in this state and comply 
with the regulations requiring a certificate of good standing be submitted with an 
application for licensure.  Point three is denied. 
 
 
12 
 
Conclusion 
 
The AHC’s decision finding MCD failed to meet a minimum standard for licensure 
is supported by competent and substantial evidence.  This Court affirms the circuit court’s 
judgment. 
 
___________________ 
W. Brent Powell, Judge 
 
 
Russell, C.J., Fischer, Ransom, Wilson and  
Gooch, JJ., concur.  Broniec, J., not participating.