Business
Missouri Revokes Nine Marijuana Business Licenses Over Social Equity Ineligibility
“We have not been provided with specific reasons or justifications for the revocation, leaving us in a position where we must take appropriate action.”
By Rebecca Rivas, Missouri Independent
Missouri cannabis regulators have revoked nine of the 48 social-equity cannabis licenses issued in October, after finding the companies that obtained them didn’t meet eligibility requirements.
Eight were dispensaries linked to out-of-state groups and one was a wholesale facility.
Among them is Canna Zoned, a Michigan company that secured two of the 16 dispensary cannabis licenses—in Columbia and Arnold. Both licenses were revoked.
State records show Canna Zoned was connected to 104 out of the 1,048 applications that were entered into a lottery selection for the dispensary licenses. An investigation by The Independent in October found applicants thought they were partnering with the Michigan investor but in reality signed agreements requiring them to relinquish all control and profits of the business.
Some Canna Zoned applicants were recruited through Craigslist ads from around the country.
In a statement to The Independent Wednesday night, representatives of the Columbia dispensary Frankenstein Enemy LLC called the state’s action a “drastic and unjustified penalty” that “lacked a clear basis or rationale.”
“We have not been provided with specific reasons or justifications for the revocation, leaving us in a position where we must take appropriate action,” according to the statement.
Another company that used the strategy of flooding Missouri’s lottery with applications was an Arizona-based consulting firm called Cannabis Business Advisors. It was connected to more than 400 dispensary applicants, including six winners. All six of the group’s licenses were revoked.
According to the Division of Cannabis Regulation, the “purported majority owners” of the eight revoked licenses lacked knowledge of agreements or operations of the license—and in some cases did not know the person who applied for the license on their behalf.
“…the lack of knowledge, control, agency or decision-making demonstrated by the individuals whose information was used to meet eligibility does not meet even the most generous interpretation of owning and operating a business,” said Amy Moore, director of the Division of Cannabis Regulation, in a press release. The revocations took effect on Wednesday.
A wholesale license in Kansas City was revoked on March 11 because the owner had a disqualifying felony offense.
A Missouri firm, Amendment 2 Consultants, was listed as the designated contact to more than 80 dispensary applicants and two winners. A dispensary license connected to the group was initially deemed ineligible as well on December 15, but the applicant was able to provide evidence that satisfied the eligibility requirements.
“The department had questions about this licensee’s ownership and management,” said John Payne, managing member for the firm, “and we demonstrated that the license is and will be owned and operated by qualifying individuals.”
Payne said the licensee made “some minor revisions in the operating documents to make these points more explicit.”
The microbusiness program is meant to boost opportunities in the industry for businesses in disadvantaged communities, and it was part of the constitutional amendment to legalize recreational marijuana that voters passed in November.
The program is designed to provide a path to larger facility ownership for individuals who might not otherwise easily access that opportunity, such as having a net worth of less than $250,000 or veterans with a service-connected disability.
The microbusiness license must always be majority owned and operated by individuals who meet these eligibility criteria.
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Following The Independent’s October report, Democratic state Sen. Karla May of St. Louis demanded the state investigate what she called an “egregious exploitation” of social-equity marijuana licenses.
Moore responded to May in a letter, saying the division shares the senator’s desire that the program be “implemented exactly as designed and that no unscrupulous actors be allowed to subvert the law.”
On Wednesday, May told The Independent regarding the revocations: “I’m proud to stand up for constituents who have been taken advantage of, and I appreciate the hard work of the department to help these individuals.”
On March 5, the division announced that the state will accept the second round of microbusiness license applications through the online registry portal from April 15 to 29.
In light of the revocations, the state will add nine more licenses to this round, which means there will be 57 licenses—24 being dispensary licenses—available instead of 48.
The licenses are expected to be issued in July.
This story was first published by Missouri Independent.
Photo courtesy of Mike Latimer.
