Nine of the 48 social equity cannabis licenses that Missouri dished out last fall have been revoked following claims that out-of-state actors were improperly backing local social equity candidates.
Eight of those licenses did not meet ownership rules for microbusinesses. In a March 27 statement, the Missouri Department of Health and Human Services said the purported majority owners had “limited to no knowledge or understanding of agreements or operations.” In some cases, the social equity owner did not even know the person who applied for the license on their behalf.
“While owning and operating a license may include contracting for management services or consulting services, 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 the statement.
According to department regulations, microbusinesses must be majority owned by applicants who meet at least one of five social equity criteria: having a net worth of less than $250,000 and an income below 250% of the federal poverty level for at least three of the last 10 years prior to applying; being a service-disabled veteran; having a prior cannabis conviction or being closely related to someone with such a conviction; residing in a zip code with at least 30% of residents below the federal poverty level, 50% unemployment or 50% rate for cannabis-related incarcerations; and having graduated from a school district with an unaccredited school.
The state announced on Dec. 15, 2023, that 11 of the 48 lottery winners in Missouri’s first round of social equity licensing were flagged as potentially being ineligible. Of those, two were able to prove that they were qualified applicants. Another one was found to have a disqualifying felony, while the remaining eight were deemed ineligible due to their ownership structure. The March announcement explained the violations but did not directly attribute them to specific license holders or identify any of the owners.
As part of the state’s process for verifying eligibility, all applicants were required to divulge every individual with any ownership stake in the license. No individual is allowed to own stakes in more than one company, whether they be a microbusiness or an existing facility.
The revoked licenses were for Frankenstein Enemy and SeaShore Rhythm, both of which list Amanda Kilroe as senior manager, according to CRB Monitor’s license database. According to her LinkedIn profile, she is also the deputy general counsel for Canna Zoned MLS. Canna Zoned is a Michigan-based company that came under scrutiny last year when it advertised those two licenses for sale in the weeks after the first lottery, the Kansas City Star reported. Canna Zoned was associated with more than 100 license applications, according to the Missouri Independent.
Licenses were also revoked for Potluck THC, The Joke Smoke and CannaRooted, which all list Sara Gullickson as its senior manager. Maxime Kot is senior manager for The Herbal Home, High Aroma and Ever Eco, which also had their licenses pulled. Gullickson and Kot are respectively the CEO and president of Phoenix-based Cannabis Business Advisors, which was associated with more than 400 applications, the Missouri Independent reported. Gullickson is also listed as an investor, executive or manager of additional cannabis licenses in Michigan, Nevada and Ohio, according to CRB Monitor data.
Higher Love KC in Kansas City is the ninth company to have its license revoked.
Cannabis microbusinesses in Missouri may function as either dispensaries or wholesalers. Dispensaries may obtain, process, package, sell and deliver cannabis products. Wholesalers may cultivate up to 250 plants and process, package and deliver to other cannabis businesses before those products are available to consumers.
Missouri is planning to award 48 additional mircobusiness licenses for social equity candidates as the second of three planned sets of lotteries. The state’s announcement stressed that individuals are only eligible for a single application and potentially just one license. Applicants are also barred from having any ownership stake in businesses that are currently licensed in the state’s cannabis industry. The application period for the second round will be open from April 15 to April 29.
