Missouri gave one of few small-business marijuana licenses to a New Jersey company. Why?
Missouri's Cannabis Equity Program Draws Scrutiny as Out-of-State Businesses Secure Licenses.
One of the businesses awarded a license intended to help small and minority-owned businesses break into Missouri’s lucrative marijuana market is based more than a thousand miles away in New Jersey. The Missouri Department of Health and Senior Services this month awarded 48 marijuana micro-licenses divided across the state’s eight congressional districts after the agency conducted a random lottery.
The licensing program was aimed at helping small businesses and marginalized communities join the industry, which has been dominated by large industry players. But a review by The Star found that while more than 1,500 applicants were denied, some of the winners of the coveted licenses were hard to track down. Some business names released by the state were limited liability companies or appeared to be individual’s names. Other applicants used identical proposed addresses for their facilities on multiple applications.
At least one micro-license winner in Kansas City, Potluck THC LLC, does not appear to be registered as a business in Missouri. And another, Independence Dispensary LLC, lists its principal address as a residence in New Jersey, according to the Missouri Secretary of State’s website. For Andrew McDowell, it seems like the state of Missouri missed the mark when rolling out the program. McDowell, who co-owns Funky Skunk, a Black-owned smoke shop in Raytown, was one of the applicants denied a micro-license.
“We won’t truly know until folks start building out,” he said. “Right now it just doesn’t look good.” Lisa Cox, a spokesperson for DHSS, said in an email to The Star that the state did not require entities to register as businesses during the application period. She said that while a person or business could not use the same individual identity on multiple applications, using the same “proposed address” on different applications was not against the rules.
Asked about the business that was based in New Jersey, Cox said that DHSS could not require that recipients of the micro-licenses be Missouri residents. In 2021, a federal judge barred Missouri from requiring that medical marijuana licenses go to businesses owned by residents of the state. Missouri voters approved the micro-license program when they voted to legalize recreational marijuana last November.
The licenses, among other criteria, are geared toward lower income individuals, those who live in high poverty areas and those who have been previously arrested for nonviolent marijuana offenses. Since its inception, the program’s rollout has faced criticism from groups such as the Missouri NAACP, which previously said the areas the state considered to have high rates of marijuana incarceration were disproportionately white and rural and skewed away from the state’s two biggest and most diverse cities: Kansas City and St. Louis.
In response to the criticism, the state health department tweaked the program allowing prospective applicants to provide documents showing that while they may not meet the requirements, they should still qualify for a micro-license. Others have criticized the program itself, saying it creates a separate and unequal category of marijuana businesses that have to compete with large, established companies.
Micro-license holders also can’t sell or buy products from larger players. Of the six licenses in each congressional district, two are for dispensaries while the other four are for wholesale (cultivation and distribution) facilities. An additional 48 licenses will be awarded in 2024 and another 48 in 2025. The two entities awarded dispensary micro-licenses in the 5th Congressional District, which includes Kansas City’s urban core, were Potluck THC LLC and Independence Dispensary LLC, according to the results of the lottery released by DHSS. Potluck THC lists its proposed address at a spot along Archibald Avenue in Westport, the same address that more than 60 other entities used on applications that were denied, according to the DHSS results. The business name does not show up on the Secretary of State’s database of businesses. Independence Dispensary lists its proposed address in Independence because its operators want to open a dispensary there.
The company name is registered with the Secretary of State’s Office, but the company’s principal address is listed in New Jersey. Shavon Wright, a television producer from New Jersey, and her niece, Ashanti Sullivan from North Carolina, said in a phone interview that the two Black women plan to operate the business as partners. Wright said she talked with Sullivan and they decided to take a shot at getting a micro-license in Missouri, a state she has fond memories of visiting as a child when her brother was in the Army. Sullivan, who Wright described as the majority partner of the business, qualified for the micro-license because of a past marijuana possession charge, she said.
Wright said this charge occurred in North Carolina. “We love, we respect Missouri, and we want to employ and work with as many Missourians as possible. We don’t want to take anything away from what’s already there, we want to just enhance and work with,” Wright said when asked about concerns regarding an out-of-state operator getting a license in Missouri intended for small businesses and marginalized communities. “I know some people, again, they may be a little concerned that we’re from New Jersey, we’re from North Carolina, but whatever we can do to open doors for people in Missouri, whatever we can do to give back to the community, that’s a priority for us,” she said.
Wright said the business was going to put down a base as full-time operators in Missouri. The Star also contacted several of the winners of wholesale micro-licenses in the Kansas City area who detailed their plans to open up new facilities. One of them was Joshua Ross who plans to operate a facility in the West Bottoms. Ross said he wasn’t surprised that businesses from outside of Missouri were allowed to break into the state’s market. “It is kind of a bummer, because, you know, we can really create a new industry here in Missouri because we have a lot of local farmers, we have a lot of people who have a natural knack with farming goods and different things like that,” he said. “It sucks but it doesn’t really scare me in a way.”
Mitch Alexander’s business Tango Hotel Charlie was also awarded a micro-license wholesale license and said he plans to operate his facility in Kansas City. He told The Star that being able to finally break into the industry was overwhelming. Alexander said his company reviewed all of the micro-license applications and found “dozens upon dozens” of applicants who used the same address and the same point of contact. He said he thought that these were companies that used a consulting firm to apply. He painted this as a positive for the smaller micro-license market and an indication of investors that could help the market succeed. “Seeing those consultants, I don’t necessarily see it as a bad thing myself, but, you know, there are downsides to having multiple licenses under the same name,” he said.
After the lottery, DHSS reviewed the drawn applicants to determine whether they were eligible, Cox said. This included ensuring the applicant did not apply for more than one license and that the applicant was not already an owner of an existing facility. The agency’s Division of Cannabis Regulation will then review all documents and information an applicant submitted.
Abigail Vivas, the state’s chief equity officer for the cannabis program, will also perform a final review to verify that the micro-licenses were issued to eligible individuals and submit a report that will be made public, she said. For now, McDowell with Funky Skunk said he’s focused on getting a refund on his $1,500 application fee. “Getting my money back,” he said when asked about his next steps. Then, he said, he’ll decide whether to apply for the second lottery round.
