The things we learned through the years and felt needed fixing or improvement. “Hopefully, we aren’t missing anything.”
By Rebecca Rivas, Missouri Independent
Missouri cannabis business owners who have had their license revoked for violating state rules could be prohibited from getting another license under proposed rules announced by state regulators last week.
Missouri Division of Cannabis Regulation published a draft of its massive overhaul of marijuana rules. The new version gives regulators the authority to tackle a wide range of problems, such as predatory practices with the social-equity licenses in the state, recalls of products containing hemp-derived THC, and owners who are not compliant obtaining licenses.
“We have found over the years that there’s really not a lot of structure or authority in rule…for us to address individuals in ownership or potential ownership who have been found to be either violating regulations themselves or responsible for those who are violating rules,” Amy Moore, director of the division, told The Independent Friday. “We found this gap.”
Moore stated that one of the rules revisions is to require businesses to implement mechanisms to remove their owners who violate state regulations.
Moore explained that the changes are so extensive because there haven’t been any rules alterations made by the division since 2022, when the constitutional amendment for recreational marijuana was passed.
She said that “it’s what we have learned through the years and found needed improvements or to be corrected.” Hope we aren’t missing anything.
A brand-new rule, released Thursday, would create an unlimited number research licenses in Missouri to study marijuana.
The public can submit the feedback on the division’s website until August 21, and regulators will then review them and decide if they want to formally submit the rules to the Secretary of State’s Office.
Moore told reporters that her team would move quickly if they decide to continue.
“If I thought, ‘Okay, we’ve solved everybody’s concern’…we could have it done in a couple weeks,” she said, “but we want to be sure that we are open to all the feedback and that we really consider it all.”
Delta Extraction case
Nearly a year after the state stripped Robertsville-based Delta Extraction of its license in November 2023, regulators approved one of the company’s co-owners—AJO LLC—to take over a cultivation and manufacturing facility in Waynesville in May 2024. The operation is much larger than Delta Extraction and involves multiple dispensaries.
Lisa Cox, spokeswoman for the division, told The Independent in May that the rules currently do not prohibit individuals who have had a license revoked from acquiring another license.
Moore stated Friday that new rules will give his division a “much better standing” in denying a license application to an owner for non-compliance.
It is her hope that it will give licensees a “fair warning” before choosing their future business partners.
She said that these rules were important because they would warn people about the risks. This rule lets them know that it’s unlikely to be a good investment, so they don’t have to make the commitment and risk being tied down with people who are not compliant.
The licenses are also subject to an annual check-up.
Delta’s appeal for its license to be reinstated was denied in February by Missouri’s Administrative Hearing Commission, which concluded that the company had “a corporate culture of lax regulatory compliance.”
The brutal 137 page report rulingMoore explained that the revisions made Thursday are based on the letter from Carole Iles.
Iles agreed that the practice by the company of adding hemp-derived THC from other states to Missouri-grown marijuana was in violation of the state’s law.
“What this is doing is clarifying what we believe has always been in our rules and I think the Delta Extraction order from AHC confirms that that is what our rules mean…” Moore said, “that all the THC and THCA and those types of compounds need to originate from cannabis grown in our licensed facilities.”
Microbusiness ‘fronts’
In order to give licenses only to those who are disadvantaged, the microbusiness program was written into Missouri’s constitutional amendment of 2022, legalizing marijuana. The criteria for eligibility include disabled veterans, people who have lower incomes, and those with nonviolent marijuana crimes.
The division, which began the program in 2023 has been working to stop what legal experts call “fronts,” that is, arrangements where profits and ownership are not going to those who regulators have certified as eligible.
Of the 96 microbusiness licenses issued so far, regulators have revoked 34.
For the last two years, The Independent has documented the pattern of well-connected groups and individuals flooding the microbusiness lottery by recruiting people to submit applications and then offering them contracts that limited their profit and control of the business. This pattern was followed by the majority of licenses revoked.
These kinds of agreements violate the constitutional requirement that the license be “majority owned and operated” by eligible individuals, Moore explained at a division town hall meeting in February.
She said that it was not feasible to continue to issue licenses and then have to revoke them. This market will never fully develop.
In December, the division released its first rule change for microbusiness licensing. In December, the division released its first rule changes for microbusiness licenses. draft Moore stated that the report released on Thursday included some feedback received by the Division this winter but kept the main elements.
It is still necessary that the designated contact of a microbusiness be an owner who has contributed to the ownership majority. Any entity that has been the designated contact on a previous license revocation for failing to adhere to the ownership requirements and operating conditions may not be permitted to participate in any capacity with a subsequent microbusiness application.
The division has proposed to alter the time of its intensive application-review process in order to avoid a number of revocations.
Moore stated that “These adjustments clarify exactly what we’re trying to achieve here, namely ensuring these licenses belong to eligible individuals.” “I think that everyone should really agree on that goal.” The language they use now seems to be more on target.
This story was first published by Missouri Independent.
Side Pocket Images. Photo by Chris Wallis.