Missouri Regulators Find 11 Social Equity License Recipients Ineligible

Most of the affected applicants had partnerships with out-of-state consultancies.

Nearly one-quarter of the 48 social equity marijuana microbusiness permits awarded in October have been deemed ineligible for various reasons, and the 11 applicants – which include permits for nine dispensaries and two wholesalers – are poised to lose those licenses.

The Department of Health and Senior Services identified the applicants after completely the state-mandated eligibility review after the permit winners were named in October, according to a statement from the agency, which oversees the state cannabis program.

Specifically, the DHSS said the 11 demonstrated either a “failure to provide documentation that the facility would be operated by eligible individuals” or did not provide documentation proving that the applicant had a qualifying criminal record, the Missouri Independent reported.

The outlet said the ineligible applications included:

Two applications from Michigan-based Canna Zoned
Six from Arizona-based Cannabis Business Advisors
One from Missouri-based Amendment 2 Consultants.

Some of Canna Zoned applications were found by the Independent to have been predatory and deceptive to social equity partners, while Cannabis Business Advisors was one of several companies that tried “flooding” the state with social equity applications.

Those developments led to at least one state lawmaker calling the situation an “egregious exploitation” of the social equity program, the Independent reported.

The DHSS review of the social equity eligibility for the licensees was finished on Dec. 1, and licenses that are slated to be revoked have a 30-day response period before the process is completed.

The state will issue at least 96 additional social equity marijuana microbusiness permits, with two more license lotteries scheduled to start in March.

The situation is somewhat typical of many social equity programs, in which markets that have limited licenses attract entrepreneurs willing to game the system by either paying off straw men as fronts for the applications or by hoodwinking eligible partners into giving up majority control of the license.

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