Missouri is now accepting applications for 77 microbusiness licenses, with about a third making up for revoked licenses due to disqualifying management or ownership agreements from the previous two sets of drawings.
The window for the third round of microbusiness license applications in Missouri opened this week and it will be the first to operate under rules intended to avoid the disqualification problems that plagued previous application rounds.
Missouri’s Department of Health and Senior Services (MODHSS) announced on June 22 that the third round of microbusiness licensing would open its application window on July 13, and it will last for two weeks, until July 27.
This third round will be the first conducted under new rules designed to avoid past problems with out-of-state backers that allegedly coerced local applicants to serve as figureheads who qualify for the state’s social equity guidelines.
Missouri lawmakers approved new rules in March that allowed regulators to scrutinize ownership structures and management agreements before issuing licenses to lottery winners, rather than doing so after the fact, which resulted in license revocations after the previous two lotteries for microbusiness licenses.
Along with the new added scrutiny, majority owners of applicant businesses will be required to complete training intended to help them avoid predatory contract deals with financiers.
“The department is committed to providing enhanced communications and educational opportunities ahead of the third round of microbusiness licenses,” said the unsigned June 22 press release from the Missouri Department of Health and Senior Services.
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.
Under the previous scheme, the state had 60 days after the license lottery to evaluate eligibility. This resulted in dozens of lottery winners having to return their licenses.
Originally the state planned three sets of lotteries to evenly distribute 144 licenses, with each round determining 48 recipients each. At the time, the application process involved confirming that applicants met the basic social equity requirements.
After the winners were selected, the state then took a second look at the applications to ensure that any financing, operating or management agreements did not interfere with the qualifying lottery winners from maintaining control of their business.
Basically, out-of-state operators financed dozens of applicants with deals that would allow them to control the license without technically qualifying for social equity status.
In the June advisory, the MODHSS reaffirmed that applicants may only seek a single license, and existing medical or adult-use operators were forbidden from seeking an additional microbusiness license.
The lottery is tentatively scheduled for Sept. 9 and will feature 16 drawings, which individual lotteries for aspiring wholesale or dispensary business owners split between the state’s eight congressional districts.
Missouri voters approved legal adult-use in 2022 through a ballot measure. Legalization in the Show Me State involved allowing the state’s vibrant medical market to convert to hybrid models while also creating a pathway for small business owners to enter the market through microbusiness licenses.
The state currently boasts 225 active retail licenses, 85 processors and 63 cultivators, according to the CRB Monitor database.
The state awarded the first 48 licenses in 2023, but they quickly ran into the state’s social equity requirements for license holders. The state revoked nine of those licenses in April 2024 based on management agreements that would have essentially allowed out-of-state backers to control licenses awarded to Missouri residents.
Three months later, in July 2024, the state awarded 57 licenses, which included nine vacancies from the previous lotteries.
“But we had no idea there would be problems to the extent that we saw,” Leslie Turek, chief equity officer for the state’s Division of Cannabis Regulation told the Missouri Independent.
Ultimately, that lottery would see 25 license revocations. With the addition of those vacancies, the next set of lotteries will feature 77 recipients.
