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Clovr CEO Josh Mitchem Lies About License Caps & Oklahoma's Successful Free Market Marijuana Program

Updated: May 17, 2021

In an interview recently, Clovr CEO Josh Mitchem claimed that without licensing caps, Missouri's marijuana black market would explode, as overproduction by licensed producers led to diversion to the black market. Mitchem further cites Oklahoma's free market medical marijuana system as a "disaster" (as of Dec. 7, 2020, there were 6,277 commercial growers and 1996 commercial dispensaries licensed in Oklahoma).

These claims do not, however, stand up to scrutiny. Oklahoma, like Missouri, has a seed-to-sale verification program to monitor legal sales and prevent illegal diversion; in fact, the company Oklahoma contracted with to provide this monitoring is the same as Missouri's. This seed-to-sale tracking is actually Constitutionally mandated by the Missouri initiative petition that Mitchem claims to have spent "over $600,000" to pass.

Mitchem can't have it both ways. Either the Constitutional mandate that he fought to pass mandating seed-to-sale tracking works and prevents illegal diversion, which guts his argument for enforcing a license cap, or it doesn't -- in which case it's an example of a failed regulatory system Mitchem and the rest of the New Approach Missouri/MoCannTrade cartel are responsible for.

It's worth noting that Oklahoma has been getting praise from national media outlets, most notably this Politico article "How One of the Reddest States Became the Nation's Hottest Weed Market":

But lax as it might seem, Oklahoma’s program has generated a hefty amount of tax revenue while avoiding some of the pitfalls of more intensely regulated programs. Through the first 10 months of this year, the industry generated more than $105 million in state and local taxes. That’s more than the $73 million expected to be produced by the state lottery this fiscal year, though still a pittance in comparison to the overall state budget of nearly $8 billion. In addition, Oklahoma has largely escaped the biggest problems that have plagued many other state markets: Illegal sales are relatively rare and the low cost to entry has made corruption all but unnecessary....

Indeed, Oklahoma has established arguably the only free-market marijuana industry in the country. Unlike almost every other state, there are no limits on how many business licenses can be issued and cities can’t ban marijuana businesses from operating within their borders. In addition, the cost of entry is far lower than in most states: a license costs just $2,500. In other words, anyone with a credit card and a dream can take a crack at becoming a marijuana millionaire.

Missouri's license caps, which led to enormous public controversy when some 1800 out of 2200 applications for commercial marijuana licenses were denied, are anything but reasonable. Furthermore, medical marijuana program director Lyndall Fraker recently claimed that an FBI investigation into the allocation of licenses had resulted in a grand jury subpoena sent to the Missouri Department of Health & Senior Services.

It's also notable that the Politico article refutes Mitchem's claim on its face: "Illegal sales are relatively rare...", and furthermore should be easily identified through seed-to-sale monitoring for enforcement action. Mitchem also serves on the Government Relations board of the Missouri Cannabis Trade Association (MOCannTrade), which gives him a powerful and well-funded platform to spread these lies to our elected representatives.

We rate Josh Mitchem's claims that license caps are necessary to protect against illegal diversion false.

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