Missouri has once again eliminated a portion of the social equity microbusiness licenses it selected during last summer’s lottery due to ownership concerns.
The Missouri Department of Cannabis Regulation revoked 25 of the 57 microbusiness licenses it awarded in July, or 43%. All but one of the rejected businesses failed to show they were majority owned by social equity-eligible individuals. The remaining revocation was for a disqualifying felony. Another seven applicants were issued a Notice of Pending Revocation.
The 57 winners included 24 dispensaries and 33 wholesalers. Of those, 16 dispensary and nine wholesaler licenses were revoked, according to an April 14 press release from DCR.
The revocations came almost a year after the licenses were originally awarded and six months after the department initially warned that 32 applicants may be ineligible. A third lottery has yet to be scheduled. Current regulations require vetting to take place after the lottery, so ownership concerns could lead to additional revocations.
“DCR must continue to monitor the details of microbusiness ownership arrangements, even if they later change, to ensure these licenses remain in compliance,” the press release said.
Eligibility for social equity status in Missouri includes an annual income of less than $250,000, disability status as a veteran, having or being related to someone with a previous cannabis-related conviction, or living in or having graduated from a census tract with high unemployment.
Within 60 days of license issuance, the chief equity officer is required to review and certify the winning applications.
“The lottery selection process provisioned in Article XIV and regulation allows for applicants who have applied and paid the associated fee to be entered into the lottery,” said DCR spokesperson Lisa Cox. “Application review of top-drawn applicants occurs after the lottery drawing.”
The state originally planned to hold three separate lotteries for 48 microbusiness licenses in each round. The second round included 57 picks, to make up for the nine revocations from the first round. After the 25 revocations from round two, the third lottery will have 73 slots to fill.
Cox said the department will post the date for the third microbusiness lottery to its website once it’s determined.
DCR director wants application rules changed
DCR Director Amy Moore called for updates to the state’s regulations to prevent further roadblocks from revocations during a virtual town hall meeting with dozens of individuals involved with the microbusiness licenses, according to reports from the Missouri Independent.
“It is not sustainable to keep going through rounds of license issuance and then having to do rounds of revocations. We’re never going to get this market fully built out,” Moore reportedly told the attendees.
In the first lottery, ownership and residency concerns frequently involved applicants who were possibly being taken advantage of by investors who were unable to qualify for social equity status themselves.
Missouri held its first round of social equity microbusiness license lotteries last fall, with 48 winners selected. Of that total, nine were revoked four months after they were flagged. Eight of the revoked licenses were for dispensaries while the ninth was for wholesale.
At the time, Moore mentioned ownership agreements where it was not clear if the nominal applicant would actually retain control of their company after licensure. When the DCR began accepting applications for the second round in April, it warned applicants of “predatory practices.”
Missouri is already home to 215 active retail and 60 active cultivation licenses, according to the CRB Monitor licensing database. However, none of the awarded microbusiness licenses from either of the two lotteries have opened yet.
