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Missouri’s big COVID relief recipients left tenants in a lurch

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Nine years ago, Ferguson’s Canfield Green Apartments gained international attention as the site where Michael Brown Jr. was killed.But more recently, the complex — now named Pleasant View Gardens Apartments — has become Exhibit A in a different story, this one about federal COVID-19 relief funds.Aria Legacy Group of Lakewood, New Jersey, bought the complex of 414 apartments in April 2021. Big changes soon followed.That August, the U.S. Supreme Court ended the federal COVID-19 eviction moratorium.A few weeks later, the new owners began taping notices to the doors of 80 tenants, informing them they had just three days to move out. The eviction notices touched off a scramble among Ferguson city officials and nonprofit groups to keep roofs over tenants’ heads.While that crisis was eventually averted, Aria Legacy Group wound up filing 265 eviction cases between September 2021 and the autumn of 2023, St. Louis County court records show.Yet those actions did not prevent the owners from raking in big money through a state-controlled, federally funded $600 million COVID-19 relief program called State Assistance For Housing Relief, or SAFHR.SAFHR provided financial aid for rent and utilities to tenants hurt financially by the pandemic. The Missouri Housing Development Commission, which oversaw SAFHR, estimates the program prevented the evictions of at least 86,000 Missourians.In most cases, SAFHR funds to help tenants went directly to landlords.Aria Legacy Group, through its Pleasant View subsidiary, received $1,140,065 in SAFHR funding — making it No. 5 on the list of top 10 SAFHR recipients, according to Missouri Housing Development Commission records.Larresha Henderson was on the SAFHR program until it ran out in January. She can’t believe Pleasant View Gardens received $1.1 million in federal tax dollars through SAFHR because none of it — at least from what she can tell — was put back into the apartment complex.“Nobody came to fix anything,” she recalls, citing a clogged sink and a hallway light that’s remained broken for months.“There was a lot of stuff going on there that didn’t add up,” she says. “Where’d the money go?”

Zachary Linhares

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Riverfront TimesThe Pleasant View Gardens apartment complex is the site of mass evictions, vacant apartments, and dilapidated infrastructure despite its owner receiving millions of federal dollars in COVID-19 relief funds. Residents at the apartments deal with bugs, stagnant water, and black mold.

Free moneyThe idea that a landlord could get federal funds to house tenants and then not only do nothing to improve living conditions, but also soon file to evict those tenants, may seem appalling. But it was all legal under Missouri’s administration of the SAFHR program.As the River City Journalism Fund previously reported, four of the St. Louis area’s five biggest evictors received significant SAFHR funds from the state. Nothing in the rules barred them from kicking tenants out or even using assembly-line-style tactics to do so. That was true even during the supposed eviction “moratorium,” which applied only to tenants who could show they were harmed directly by the COVID-19 pandemic (either too sick to work or affected by the slowing economy). Unlike Minnesota and other states, Missouri never imposed a statewide eviction ban. And after the U.S. Supreme Court struck down the eviction freeze in August 2021, the pace of evictions only accelerated.The River City Journalism Fund has continued to press the state for more records from the SAFHR program, using the state’s Sunshine Law to request lists, respectively, of the top 10 SAFHR funding recipients and the top 100 SAFHR funding recipients, broken out by name, address and ZIP code.Those records revealed that, technically, three of the top 10 overall SAFHR recipients were utilities: Spire, which received nearly $3.44 million; and Ameren Energy Assistance, which received almost $3.3 million, both of St. Louis; and Evergy, an electric utility based in Kansas City, which received $2.75 million, commission records show.Those companies did not apply directly for SAFHR funds, nor did they receive them directly from the government. Instead, as Spire’s spokesman Jason Merrill explains, “Local community agencies enter into agreements with the government to qualify people for the assistance, and those agencies then pledge dollars toward the customers’ utility bill, following up by sending in a payment on behalf of the customer.” Ameren’s spokesman issued a similar statement.If you take the utilities out, nine of the top ten recipients of SAFHR funds are privately owned property managers or landlords located in St. Louis County or the City of St. Louis. The tenth is located in St. Charles County, commission records show.

Zachary Linhares

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Riverfront TimesTrash and debris cover the ground outside of a vacant apartment on Jan. 23 at Pleasant View Gardens in Ferguson. All around the apartment complex, trash cans and sewers overflow with trash.

The top housing recipients were St. Louis Leasing Co., which received $1.56 million, and BBW Homes LLC, which received $1.2 million. Both firms are based in St. Louis County and both specialize in handling rentals for single-family homes.Pleasant View Gardens — despite now-former owner Aria Legacy Group’s well-documented maintenance problems — is No. 4 on the list of SAFHR recipients.The funds that Aria Legacy Group received for Pleasant View were not the only money the company got through the SAFHR program. Aria received another nearly $417,000 through the subsidiary that owns the Fountains at Carondelet in south city, another notorious apartment complex that had for years, under Aria’s control, been the target of complaints about overly aggressive evictions and poor maintenance and repairs.This past June, ArchCity Defenders filed suit against Fountains Apartment Homes LLC, which bought the complex from Aria Legacy four months earlier.The new owners filed 44 rent and possession eviction cases over a five-week span, resulting in 36 eviction judgments, the lawsuit says, while an estimated 200 other residents lived in fear of being unlawfully removed from their homes.Aria Legacy Group’s success at attracting SAFHR funding illustrates one of the biggest flaws with the program: the fact that funds were awarded with almost zero strings attached, including no provisions to ensure that funded properties provided adequate living conditions.

Theo R. Welling

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River City Journalism FundElad Gross, pictured in November 2023, thinks Missouri cheapened out on SAFHR’s administrative costs — which led to big problems for tenants.

Since the program was voluntary, and the idea was to distribute it as quickly as possible, SAFHR’s federal and state supervisors attached hardly any strings, according to Elad Gross, an attorney who works with tenants facing eviction through the St. Louis Mediation Project.“So effectively, I think you saw people handed free money,” says Gross. “And that became a big problem.”The lack of accountability in federal housing programs is an issue that goes beyond SAFHR, Gross says.It’s a problem when landlords are taking money, and “they are not applying it to make sure the area is habitable,” he says, “that they’re not upholding their end of the bargain.”In one appalling example, the Riverfront Times recently reported that even a slumlord being sued by the city for running a series of “illegal rooming houses” was able to receive SAFHR funding, despite the fact the units she rented out were in condemned buildings.Brian Vollenweider, an MHDC spokesman, declined to respond directly to criticisms of the program.“The SAFHR program was a federal emergency rental assistance program by U.S. Treasury to respond to the COVID-19 pandemic,” Vollenweider wrote in an email to the River City Journalism Fund. “The program was administered according to federal guidelines as determined by the U.S. Treasury including eligible uses and program requirements.”

Brian Munoz

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St. Louis Public RadioOne of Dara Daugherty’s condemned rental homes on Jan. 24 in Tower Grove East.

A lack of accountabilityA review of MHDC records show that it awarded SAFHR dollars in a way that lopsidedly favored St. Louis-area landlords. In addition to boasting all of the top 10 SAFHR recipients, 65 of the top 100 are located in the St. Louis metro area.This funding disparity became the topic of a Missouri House Appropriations subcommittee hearing in early December on MHDC’s budget for the upcoming year.Representative Ingrid Burnett, D-Kansas City, asked Kip Stetzler, MHDC’s executive director, to explain why St. Louis received so much in SAFHR funding while Kansas City had not.“Can you explain why St. Louis area got … a disproportionate amount of those funds?” Burnett asked. “It seems like St. Louis got a good majority, if not more.”“If you look at a report and you attempt to determine how much money, how much of this funding went into St. Louis and went into Kansas City by the address of the landlord recipient, it is going to weigh heavily in favor of St. Louis,” Stetzler acknowledged.“Because the landlords live in St. Louis, but the property is somewhere else in the state?” Burnett asked.“Exactly right,” Stetzler said. “That’s exactly right.”But MHDC’s records show that Stetzler’s explanation is not true.SAFHR funds were disbursed according to the location of the apartment complex, not the address of the company that owned it, commission records show. So Pleasant View, for example, is listed in Ferguson even though its owners at the time were based in New Jersey.Stetzler declined to respond to questions about this matter.Vollenweider, the MHDC spokesman, has also declined to answer questions about SAFHR’s geographical disparities.The disparities could perhaps be partly explained in terms of population differences.St. Louis County, with nearly 1 million residents, is the largest Missouri county. Combined with the 300,000 people in the City of St. Louis, the St. Louis region is the largest-population region in the entire state, comprising more than 20% of the total.In contrast, Jackson County, where Kansas City is located, has only 700,000 residents.Even so, Glenn Burleigh, a housing specialist with the Metropolitan St. Louis Equal Housing and Opportunity Council, calls the distribution of SAFHR funds “odd.” He attributes the pattern at least in part to St. Louis County setting up “a pipeline they sort of worked out with landlords to expedite filing on some things.”

Zachary Linhares

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Riverfront TimesDishes and food items are placed on Debra Martin’s countertops on Jan. 23 at Pleasant View Gardens in Ferguson. Martin has moved all of her food and dishes out of her cabinets due to a cockroach infestation in her apartment.

Zachary Linhares

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Riverfront TimesAngelene Morgan points to a bucket of dirty water that leaked from her sink on Jan. 23 at Pleasant View Gardens in Ferguson. Morgan said that her sink leaks water anytime her neighbors flush their toilets, take a shower, or use the sink.

Kennard Williams, the organizing manager for Action St. Louis, one of the region’s leading tenant rights groups, says some of St. Louis landlords’ success getting funds from the program could be credited to door-to-door outreach conducted by his group in apartment complexes where large numbers of people faced eviction.“We were doing outreach to the doors of people getting evicted,” Williams says. “So we followed up. And we were like, ‘Did you get rental assistance?’ And a large number of people did not.”As for Gross, he blames the geographic disparities on the fact that SAFHR funding decisions were not part of a centralized process and did not feature a uniform navigation system to help tenants apply for help. Even though SAFHR money went to the landlords, tenants were responsible for starting the process by filling out online applications and providing supporting documents, such as lease agreements.“Each region was essentially dependent on whatever individual nonprofits signed up,” Gross says. “You may have, as a result of that setup, have different geographical results than you would expect.”Nonetheless, a big flaw in the SAFHR program was the lack of accountability in 2020 and 2021, at the height of the pandemic, according to Williams.“And the way they did it,” Williams says, “it left room for super discriminatory practices that were not investigated or followed up on because everybody was facing eviction at that point. And that’s what they were focused on.”Burnett said after the hearing that she doesn’t believe that Stetzler gave the whole story about SAFHR funding.“I don’t think we’re going to get a straight answer,” Burnett said. “I don’t know that there was an accountability structure in place that went to the end use. … From their perspective, they’re done at their end. They’re not responsible for the rest.”

Zachary Linhares

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Riverfront TimesMold and grim peel caulk off the bathtub inside of Angelene Morgan and Gary Jones’ apartment on Jan. 23 at Pleasant View Gardens in Ferguson. The two have dealt with bugs, black mold, and an unresponsive landlord, while living at the apartment complex.

For Missouri Representative Bill Owen, R-Springfield, the disparity in access to high-speed Internet helps explain why SAFHR recipients in urban areas like St. Louis fared better than rural Missouri landlords and tenants.“Let’s face it, when you’re having to [fill out SAFHR applications] on the internet, you basically ruled out a big chunk of outstate Missouri,” Owen says. “Because there’s no internet service.”Another big problem with SAFHR was a lack of flexibility, Owen says.Owen recalls the plight of a disabled woman who lives in a duplex apartment that he owns. The woman suffered from severe health issues and was confined to a Stryker bed, Owen says.Owen says he tried to help the woman apply for a SAFHR grant, but hit a wall when he called the MHDC help line to try to ask how to submit requested documents.Owen asked if he could fax the documents. “We don’t have a fax,” came the reply.“Do you have someone who can go out to her residence and take the application in person?”“No, we don’t have that,” came the reply. “But she can come down to one of our affiliates.”“I go, ‘She’s in a frickin’ Stryker bed,’” Owens recalls.Owen says he believes state leaders should convene a meeting regarding the future of emergency housing aid, with the aim of discussing, in his words, “Who is it that we’re trying to serve here, and what are their needs, and what do we need to make arrangements for to make sure these people can access this program?”Next, Owen says, state leaders should figure out how to make sure the distribution of programs like SAFHR are “spread out through the state and just aren’t allowed to be concentrated in Kansas City and St. Louis.”

Zachary Linhares

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Riverfront TimesGary Jones sits for a portrait inside of his Pleasant View Gardens apartment that he has lived at for 13 years on Jan. 23 in Ferguson. Jones suffers from chronic obstructive pulmonary disease, diabetes, high blood pressure, and heart problems. He said that his health problems have been exacerbated by a dilapidated apartment next door that was once full of stagnant water and black mold.

‘We just can’t up and move’Even before Michael Brown’s death put what is now Pleasant View Gardens in the national spotlight, repairs and upkeep at the complex had been a problem. But both went noticeably downhill during Aria’s two years of ownership, according to tenants.Back in 2021, Aria Managing Principal Joseph Novoseller had told the St. Louis Post-Dispatch his company had intended to invest $2 million into the apartment complex, with plans to rehab up to 150 units and to spend “hundreds of thousands of dollars” on new roofs.Those ambitious plans, however, never came to fruition over the next two years, as even the most basic work orders were met with silence.Gary Jones, 62, has lived in a Pleasant View ground floor apartment for the past 13 years. He suffers from chronic obstructive pulmonary disease, diabetes, high blood pressure and heart problems.Jones says his health problems have only gotten worse in recent years, and he blames the vacant apartment next door, which is marred by standing water and what appears to be black mold, while a foul sewer stench is impossible to escape.“They won’t clean it up and they won’t do nothing,” Jones says.Angelene Morgan, who lives with Jones, cites water leaks from their apartment tub and underneath the bathroom sink, as well as mold around parts of the floor and ceiling.“She goes to the office to put in work orders,” Jones says of Morgan, “and it’s like in one ear and out the other.”With monthly rent set to rise to more than $700, Jones and Morgan would like a healthier place to live.“But we just can’t up and move,” he says. “We need money to move. The first and last month’s rent. We need help moving. We don’t drive.”

Zachary Linhares

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Riverfront TimesAngelene Morgan stands for a portrait on Jan. 23 at Pleasant View Gardens in Ferguson. Morgan shares an apartment with Gary Jones, the two have dealt continual problems with black mold and water leaks despite placing numerous work orders.

Yet despite those poor living conditions, Pleasant View’s owners have been quick to file evictions. Among those it sought to remove from the complex was Henderson, who was approved for SAFHR funds to subsidize her $640 monthly rent and was on the program until it ran out last January.Many tenants have told the River City Journalism Fund that they were confused by program rules and encountered problems complying with the application process, which some struggled to navigate on their cell phones. Once approved, they had a hard time keeping track of what the program paid for and what they were still obligated to pay as part of their lease agreements, according to tenants.That was the case for Henderson as well. She admits to being confused by the program and says she believes she was forced to overpay her rent.In September 2023, Pleasant View filed an eviction notice against Henderson seeking $1,700 in unpaid rent and other fees. They dismissed the case nearly two months later, St. Louis County court records show.Many of her neighbors weren’t so lucky. By the time Aria Legacy Group sold the apartment complex to a new owner in August 2023, at least 190 of 414 units were vacant — the result of aggressive eviction tactics and poor maintenance that forced many tenants to leave.(Novoseller, Aria’s managing principal, defended his company’s stewardship of the apartment complex during its two years of ownership. “I think the property was maintained very well when we owned it,” he said. “We fixed any issues that came up.”)But Gerard Gips says a new day is dawning for Pleasant View Gardens’ beleaguered tenants. Gips is the regional manager of 2974 Coppercreek Road LLC, the New Jersey-based firm that bought the complex in August. He promises to turn the apartment complex around as part of a massive renovation worth at least several million dollars. Plans call for the installation of new floors, toilets, countertops, water heaters, kitchen appliances and other amenities. As many as eight crews at a time are rehabbing the complex, according to Gips.“We’re pumping in our own equity,” Gips says. “Our goal is really to make it a safer and more enjoyable place for the residents.”

Zachary Linhares

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aRiverfront TimesA stuffed animal is tied to a street light near the site of Michael Brown Jr.’s death on Jan. 23 at Pleasant View Gardens in Ferguson. Brown was killed by a Ferguson police officer in 2014.

Gips declined to comment on Aria Legacy’s management of Pleasant View, but he acknowledges the apartment complex was in rough shape when his company took over in August.“We’ve been essentially turning units that were down-to-the-studs vacant, that were in terrible condition,” he says.Yet maintenance and repair problems still persist, despite the new ownership group’s promises.In December, the apartment complex’s owners replaced a toilet in Gary Jones’ ground floor apartment. One month later, the stench from the vacant apartment next door continues to permeate their apartment, while nothing’s been done about the bathroom sink that’s been leaking for more than a month, Turner says.“They haven’t done nothing except come in and put that toilet in,” he says. “That was it.”Work crews have tried to fix the standing water and stench problem in the apartment, says Gips.“It may have returned,” Gips said to a reporter a month after their initial conversation in early December. “At one point after our conversation it was definitely handled.”Gips says up to 20 workers a day are trying to repair things at Pleasant View and are making progress.“But we’re dealing with so many fires to put out.”For more on the River City Journalism Fund, which provided funding for this story and seeks to advance local journalism in St. Louis, please see rcjf.org.

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Poll: Support for Missouri abortion rights amendment growing

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A proposed constitutional amendment legalizing abortion in Missouri received support from more than half of respondents in a new poll from St. Louis University and YouGov.That’s a boost from a poll earlier this year, which could mean what’s known as Amendment 3 is in a solid position to pass in November.SLU/YouGov’s poll of 900 likely Missouri voters from Aug. 8-16 found that 52% of respondents would vote for Amendment 3, which would place constitutional protections for abortion up to fetal viability. Thirty-four percent would vote against the measure, while 14% aren’t sure.By comparison, the SLU/YouGov poll from February found that 44% of voters would back the abortion legalization amendment.St. Louis University political science professor Steven Rogers said 32% of Republicans and 53% of independents would vote for the amendment. That’s in addition to nearly 80% of Democratic respondents who would approve the measure. In the previous poll, 24% of Republicans supported the amendment.Rogers noted that neither Amendment 3 nor a separate ballot item raising the state’s minimum wage is helping Democratic candidates. GOP contenders for U.S. Senate, governor, lieutenant governor, treasurer and secretary of state all hold comfortable leads.“We are seeing this kind of crossover voting, a little bit, where there are voters who are basically saying, ‘I am going to the polls and I’m going to support a Republican candidate, but I’m also going to go to the polls and then I’m also going to try to expand abortion access and then raise the minimum wage,’” Rogers said.Republican gubernatorial nominee Mike Kehoe has a 51%-41% lead over Democrat Crystal Quade. And U.S. Sen. Josh Hawley is leading Democrat Lucas Kunce by 53% to 42%. Some GOP candidates for attorney general, secretary of state and treasurer have even larger leads over their Democratic rivals.

Brian Munoz

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St. Louis Public RadioHundreds of demonstrators pack into a parking lot at Planned Parenthood of St. Louis and Southwest Missouri on June 24, 2022, during a demonstration following the Supreme Court’s reversal of a case that guaranteed the constitutional right to an abortion.

One of the biggest challenges for foes of Amendment 3 could be financial.Typically, Missouri ballot initiatives with well-funded and well-organized campaigns have a better chance of passing — especially if the opposition is underfunded and disorganized. Since the end of July, the campaign committee formed to pass Amendment 3 received more than $3 million in donations of $5,000 or more.That money could be used for television advertisements to improve the proposal’s standing further, Rogers said, as well as point out that Missouri’s current abortion ban doesn’t allow the procedure in the case of rape or incest.“Meanwhile, the anti side won’t have those resources to kind of try to make that counter argument as strongly, and they don’t have public opinion as strongly on their side,” Rogers said.There is precedent of a well-funded initiative almost failing due to opposition from socially conservative voters.In 2006, a measure providing constitutional protections for embryonic stem cell research nearly failed — even though a campaign committee aimed at passing it had a commanding financial advantage.Former state Sen. Bob Onder was part of the opposition campaign to that measure. He said earlier this month it is possible to create a similar dynamic in 2024 against Amendment 3, if social conservatives who oppose abortion rights can band together.“This is not about reproductive rights or care for miscarriages or IVF or anything else,” said Onder, the GOP nominee for Missouri’s 3rd Congressional District seat. “Missourians will learn that out-of-state special interests and dark money from out of state is lying to them and they will reject this amendment.”Quade said earlier this month that Missourians of all political ideologies are ready to roll back the state’s abortion ban.“Regardless of political party, we hear from folks who are tired of politicians being in their doctor’s offices,” Quade said. “They want politicians to mind their own business. So this is going to excite folks all across the political spectrum.”

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Democrat Mark Osmack makes his case for Missouri treasurer

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Mark Osmack has been out of the electoral fray for awhile, but he never completely abandoned his passion for Missouri politics.Osmack, a Valley Park native and U.S. Army veteran, previously ran for Missouri’s 2nd Congressional District seat and for state Senate. Now he’s the Democratic nominee for state treasurer after receiving a phone call from Missouri Democratic Party Chairman Russ Carnahan asking him to run.“There’s a lot of decision making and processing and evaluation that goes into it, which is something I am very passionate and interested in,” Osmack said this week on an episode of Politically Speaking.Osmack is squaring off against state Treasurer Vivek Malek, who was able to easily win a crowded GOP primary against several veteran lawmakers including House Budget Chairman Cody Smith and state Sen. Andrew Koenig.While Malek was able to attract big donations to his political action committee and pour his own money into the campaign, Osmack isn’t worried that he won’t be able to compete in November. Since Malek was appointed to his post, Osmack contends he hasn’t proven that he’s a formidable opponent in a general election.“His actions and his decision making so far in his roughly two year tenure in that office have been questionable,” Osmack said.Among other things, Osmack was critical of Malek for placing unclaimed property notices on video gaming machines which are usually found in gas stations or convenience stores. The legality of the machines has been questioned for some time.As Malek explained on his own episode of Politically Speaking, he wanted to make sure the unclaimed property program was as widely advertised as possible. But he acknowledged it was a mistake to put the decals close to the machines and ultimately decided to remove them.Osmack said: “This doesn’t even pass the common sense sniff test of, ‘Hey, should I put state stickers claiming you might have a billion dollars on a gambling machine that is not registered with the state of Missouri?’ If we’re gonna give kudos for him acknowledging the wrong thing, it never should have been done in the first place.”Osmack’s platform includes supporting programs providing school meals using Missouri agriculture products and making child care more accessible for the working class.He said the fact that Missouri has such a large surplus shows that it’s possible to create programs to make child care within reach for parents.“It is quite audacious for [Republicans] to brag about $8 billion, with a B, dollars in state surplus, while we offer next to no social services to include pre-K, daycare, or child care,” Osmack said.Here’s are some other topics Osmack discussed on the show:How he would handle managing the state’s pension systems and approving low-income housing tax credits. The state treasurer’s office is on boards overseeing both of those programs.Malek’s decision to cut off investments from Chinese companies. Osmack said that Missouri needs to be cautious about abandoning China as a business partner, especially since they’re a major consumer of the state’s agriculture products. “There’s a way to make this work where we are not supporting communist nations to the detriment of the United States or our allies, while also maintaining strong economic ties that benefit Missouri farmers,” he said.What it was like to witness the skirmish at the Missouri State Fair between U.S. Sen. Josh Hawley and Democratic challenger Lucas Kunce.Whether Kunce can get the support of influential groups like the Democratic Senatorial Campaign Committee, which often channels money and staff to states with competitive Senate elections.

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As Illinois receives praise for its cannabis equity efforts, stakeholders work on system’s flaws

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Medical marijuana patients can now purchase cannabis grown by small businesses as part of their allotment, Illinois’ top cannabis regulator said, but smaller, newly licensed cannabis growers are still seeking greater access to the state’s medical marijuana customers.Illinois legalized medicinal marijuana beginning in 2014, then legalized it for recreational use in 2020. While the 2020 law legalized cannabis use for any adult age 21 or older, it did not expand licensing for medical dispensaries.Patients can purchase marijuana as part of the medical cannabis program at dual-purpose dispensaries, which are licensed to serve both medical and recreational customers. But dual-purpose dispensaries are greatly outnumbered by dispensaries only licensed to sell recreationally, and there are no medical-only dispensaries in the state.As another part of the adult-use legalization law, lawmakers created a “craft grow” license category that was designed to give more opportunities to Illinoisans hoping to legally grow and sell marijuana. The smaller-scale grow operations were part of the 2020 law’s efforts to diversify the cannabis industry in Illinois.Prior to that, all cultivation centers in Illinois were large-scale operations dominated by large multi-state operators. The existing cultivators, mostly in operation since 2014, were allowed to grow recreational cannabis beginning in 2019.Until recently, dual-purpose dispensaries have been unsure as to whether craft-grown products, made by social equity licensees — those who have lived in a disproportionately impacted area or have been historically impacted by the war on drugs — can be sold medicinally as part of a patient’s medical allotment.Erin Johnson, the state’s cannabis regulation oversight officer, told Capitol News Illinois last month that her office has “been telling dispensaries, as they have been asking us” they can now sell craft-grown products to medical patients.“There was just a track and trace issue on our end, but never anything statutorily,” she said.

Dilpreet Raju

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Capitol News IllinoisThe graphic shows how cannabis grown in Illinois gets from cultivation centers to customers.

No notice has been posted, but Johnson’s verbal guidance comes almost two years after the first craft grow business went online in Illinois.It allows roughly 150,000 medical patients, who dispensary owners say are the most consistent purchasers of marijuana, to buy products made by social equity businesses without paying recreational taxes. However — even as more dispensaries open — the number available to medical patients has not increased since 2018, something the Cannabis Regulation Oversight Office “desperately” wants to see changed. Johnson said Illinois is a limited license state, meaning “there are caps on everything” to help control the relatively new market.Berwyn Thompkins, who operates two cannabis businesses, said the rules limited options for patients and small businesses.“It’s about access,” Thompkins said. “Why wouldn’t we want all the patients — which the (adult-use) program was initially built around — why wouldn’t we want them to have access? They should have access to any dispensary.”Customers with a medical marijuana card pay a 1% tax on all marijuana products, whereas recreational customers pay retail taxes between roughly 20 and 40% on a given cannabis product, when accounting for local taxes.While Illinois has received praise for its equity-focused cannabis law, including through an independent study that showed more people of color own cannabis licenses than in any other state, some industry operators say they’ve experienced many unnecessary hurdles getting their businesses up and running.The state, in fact, announced last month that it had opened its 100th social equity dispensary.But Steve Olson, purchasing manager at a pair of dispensaries (including one dual-purpose dispensary) near Rockford, said small specialty license holders have been left in the lurch since the first craft grower opened in October 2022.“You would think that this would be something they’re (the government) trying to help out these social equity companies with, but they’re putting handcuffs on them in so many different spots,” he said. “One of them being this medical thing.”Olson said he contacted state agencies, including the Department of Financial and Professional Regulation, months ago about whether craft products can be sold to medical patients at their retail tax rate, but only heard one response: “They all say it was an oversight.”This potentially hurt social equity companies because they sell wholesale to dispensaries and may have been missing out on a consistent customer base through those medical dispensaries.Olson said the state’s attempts to provide licensees with a path to a successful business over the years, such as with corrective lotteries that granted more social equity licenses, have come up short.“It’s like they almost set up the social equity thing to fail so the big guys could come in and swoop up all these licenses,” Olson said. “I hate to feel like that but, if you look at it, it’s pretty black and white.”Olson said craft companies benefit from any type of retail sale.“If we sell it to medical patients or not, it’s a matter of, ‘Are we collecting the proper taxes?’ That’s all it is,” he said.State revenue from cannabis taxes, licensing costs and other fees goes into the Cannabis Regulation Fund, which is used to fund a host of programs, including cannabis offense expungement, the general revenue fund, and the R3 campaign aiming to uplift disinvested communities.For fiscal year 2024, nearly $256 million was paid out from Cannabis Regulation Fund for related initiatives, which includes almost $89 million transferred to the state’s general revenue fund and more than $20 million distributed to local governments, according to the Illinois Department of Revenue.Medical access still limitedThe state’s 55 medical dispensaries that predate the 2020 legalization law, mostly owned by publicly traded multistate operators that had been operating in Illinois since 2014 under the state’s medical marijuana program, were automatically granted a right to licenses to sell recreationally in January 2020. That gave them a dual-purpose license that no new entrants into the market can receive under current law.Since expanding their clientele in 2020, Illinois dispensaries have sold more than $6 billion worth of cannabis products through recreational transactions alone.Nearly two-thirds of dispensaries licensed to sell to medical patients are in the northeast counties of Cook, DuPage, Kane, Lake and Will. Dual-purpose dispensaries only represent about 20 percent of the state’s dispensaries.While the state began offering recreational dispensary licenses since the adult-use legalization law passed, it has not granted a new medical dispensary license since 2018. That has allowed the established players to continue to corner the market on the state’s nearly 150,000 medical marijuana patients.But social equity licensees and advocates say there are more ways to level the playing field, including expanding access to medical sales.Johnson, who became the state’s top cannabis regulator in late 2022, expressed hope for movement during the fall veto session on House Bill 2911, which would expand medical access to all Illinois dispensaries.“We would like every single dispensary in Illinois to be able to serve medical patients,” Johnson said. “It’s something that medical patients have been asking for, for years.”Johnson said the bill would benefit patients and small businesses.“It’s something we desperately want to happen as a state system, because we want to make sure that medical patients are able to easily access what they need,” she said. “We also think it’s good for our social equity dispensaries, as they’re opening, to be able to serve medical patients.”Rep. Bob Morgan, D-Deerfield, who was the first statewide project coordinator for Illinois’ medical cannabis program prior to joining the legislature, wrote in an email to Capitol News Illinois that the state needs to be doing more for its patients.“Illinois is failing the state’s 150,000 medical cannabis patients with debilitating conditions. Too many are still denied the patient protections they deserve, including access to their medicine,” Morgan wrote, adding he would continue to work with stakeholders on further legislation.Capitol News Illinois is a nonprofit, nonpartisan news service covering state government. It is distributed to hundreds of newspapers, radio and TV stations statewide. It is funded primarily by the Illinois Press Foundation and the Robert R. McCormick Foundation, along with major contributions from the Illinois Broadcasters Foundation and Southern Illinois Editorial Association.

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