We have seen situations in which someone listed as the license owner tells us they do not own anything.
By Rebecca Rivas, Missouri Independent
Missouri’s Microbusiness Cannabis Program will not get off to the right start if the regulators continue to withdraw licenses because of concerns about predatory illegal practices. This was the message from the director of Missouri’s Marijuana Division at Wednesday’s town-hall meeting.
Amy Moore is the director of Missouri Division of Cannabis Regulation. She said that the new rules are necessary to eradicate these practices.
Moore said to the audience that it was not feasible to continue to go through multiple rounds of licensing and then have to go through several rounds of revocations. Moore told the attendees, “We will never get this market built up.”
The Division hosted a virtual town hall Wednesday, for people who are connected with more than 90 licenses to microbusinesses that have been issued since 2023.
Microbusiness owners must fulfill certain requirements, such as having a small income, an unviolent marijuana conviction on their records, or being disabled.
Out of the 96 licences so far issued, at least 41 were either revoked (or are in danger of being) or currently under investigation. Three more are being investigated.
The majority of these 44 licenses that are facing revocation were issued to individuals or groups who had flooded the lottery with applications by enticing people to apply and offering contracts which limited the profit of their business and restricted control.
Moore said Wednesday that these agreements are in violation of the Constitutional requirement for the license to be owned by and operated “majority” by individuals eligible, as Moore explained.
Missouri already has two lotterys.
The division has announced new rules for the microbusiness application process in December to “address the trend of predatory agreements” and to make sure that only eligible applicants receive microbusiness licences.
These revisions include defining the meaning of majority-owned and operated.
Moore stated that “owners should really be called owners, in their most common form.” You may hear that the phrase “owned and operated” is an unreasonably high standard. I ask that you think hard about your interpretation.
Moore said that there are “a lot” of variations in the ownership structure among microbusiness licences.
Moore explained, “We often see that someone listed on a license will tell us they own nothing. They never intended to own anything. Perhaps they were offered a specific amount of cash to use their names, or promised a new job once the licence was transferred.
She said that they also see “great situations” where investors partner with friends within the limit of ownership.
They are bringing their friends and family around to start their own business without signing agreements which will strip them off all future benefits of the license,” said the woman.
Moore answered questions from those who had received 32 notices in October of possible revocation. They asked her why the investigation of these cases was taking so long.
Moore said that after the 2023 lottery, there were four times more notices sent out.
Kimberly Vincent said that she was thrilled to be able to get a microbusiness licence as an eligible social equity applicant. However, she had to spend about $3,000 on an attorney to deal with the state’s concerns that were cited by the notice of potential revocation.
My question then is: If DCR wants to protect me against a predatory act, could you please describe in more detail the way that this will help me, and how it will benefit my micro-license? She said.
Moore stated that protecting someone from an abusive relationship was “a worthwhile thing to do,” however, it wasn’t their “primary motivation.”
She said, “Here at DCR we must follow the law.” If you have received an notice of pending cancellation, it is because something was found in the documents that were submitted that made us think that we wouldn’t be following law if that wasn’t investigated further.
Moore addressed the question of cannabis investor David Brodsky.
The division sent notices in October that four out of seven Brodsky-related licensees were facing revocation, as their contracts contained “false and misleading information.”
The letters state that “the licensee has entered into an arrangement which transfers ownership and control of operations to another entity.”
A notice of investigation was issued in July pertaining to the other three Brodsky licenses, with regulators stating they wanted to “ensure the businesses are majority owned by and operated be eligible individuals.”
Brodsky told the audience at the Wednesday town hall meeting that the notes he’s received so far this year aren’t clear about what Brodsky can do to “cure”, or fix, the issues.
He said that “it’s sort of misleading” and “we have many people who have offered many times to solve any problems, but it has been met with silence.”
Moore replied that there is “a way to become compliant”, but it depends on circumstances. This includes the agreement details and applicants.
Moore said that the law requires the state to give licensees a reasonable amount of time to respond to or cure the notices. However, this does not mean they have a right to an unlimited second chance.
It has to be specific, she says. “And I think that’s exactly what we’ve done.”
She cited a ruling issued on Tuesday regarding the license revocation of a micro-business producer, Delta Extraction. This company is at the heart of an upcoming massive recall of cannabis products in 2023.
Delta asserted that it has the right to correct all violations, no matter how many, or what type they are, in the opinion of commissioner Carole Iles.
Iles concludes that state law doesn’t grant Delta an absolute rights to correct regulatory violations.
She said that the law of her state did not indicate that the voters were intending to give a “second chance” to the licensee whose past actions have shown that they lack the good moral character necessary to operate legally, with respect for public safety, and in a reputable manner.
Moore added that in future the division would be happy to look over any contract if licensees were unsure if it was compliant.
“I know that we have to earn your trust,” Moore said, “but what I would like is for you to give us a chance to get to know us — get to know our expectations directly from us.”
First published in Missouri Independent.
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