Heavy outside influence in Missouri cannabis micro licensing, report says

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A new state-issued report on Missouri’s cannabis industry provides new insights regarding the application process, approvals and disqualifications for newly created microbusiness licenses.

The microbusiness licenses were designed to allow “marginalized or under-represented individuals to participate in the legal marijuana market,” according to an April news release issued by the Missouri Department of Health & Senior Services (DHSS), the state’s cannabis regulator.

According to the “Chief Equity Officer 2023 Activity Report,” more than 40% of the 1,625 microbusiness applications filed between July 27 and Aug. 10 originated from out-of-staters, who are eligible for those licenses if they meet one of several criteria.

In October, the health department’s Division of Cannabis Regulation awarded 48 cannabis microbusiness licenses from that batch of applicants.

The Missouri findings were first reported by the Missouri Independent.

According to the annual report, three applicants accounted for roughly 42% of all applications filed during the eligibility window.

This scenario, which some critics contend undermines the true spirit of social equity, has played out in other markets across the country.

It’s especially prevalent in Arizona, where some existing retailers filed and funded hundreds of applications for social equity candidates willing to enter partnerships, according to the Arizona Center for Investigative Reporting.

The Missouri report also disclosed that the DHSS ruled that two microbusiness wholesale licenses and nine microbusiness retail licenses were ineligible to receive them in the first round.

Those licenses likely will be revoked and added to the next round of microbusiness licensing. That application period is tentatively scheduled for the end of March.

The third round of microbusiness licensing will begin in April 2025 at the earliest, according to the law Missouri voters approved in November 2022 legalizing adult-use sales.

Missouri’s microbusiness licensing process and qualifications drew criticism last year after social equity advocates questioned the validity of numerous ZIP codes submitted by law enforcement that would qualify residents to apply.

Leaders of the local and state NAACP blasted the inclusion of several ZIP codes that encompassed government buildings, post office boxes and affluent suburbs but omitted several others primarily in north St. Louis, where roughly half the city’s Black population resides.