Missouri revokes 25 cannabis licenses in social equity program crackdown

Missouri cannabis regulators revoked 25 more microbusiness licenses after concluding the operations wouldn’t be genuinely controlled by the disadvantaged entrepreneurs the program was designed to help, the Missouri Independent reported.

The action brings to 34 the number of licenses canceled by the state since the social equity program launched in 2023, representing more than a third of the 96 permits issued through the lottery system, according to a news release from the Missouri Division of Cannabis Regulation on Monday.

The microbusiness program was created to provide cannabis business opportunities for individuals who might otherwise lack access to the industry. However, regulators found evidence that well-connected investors and consultants were recruiting eligible individuals to apply but then arranging deals that limited their control and profits.

“It is not sustainable to keep going through rounds of license issuance and then having to do rounds of revocations,” Amy Moore, director of the state’s cannabis regulatory division, said at a February town hall meeting, according to the Independent. “We’re never going to get this market fully built out.”

The Independent, which has investigated the program for more than a year, reports that Arizona-based cannabis investor Michael Halow is connected to 22 of the revoked licenses, including 16 canceled Monday. Halow reportedly was associated with more than 700 of the approximately 3,600 applications submitted since the program began.

In an email to the outlet, Halow disputed the state’s decision and plans to appeal. He defended his company’s approach, saying they help “people without generational wealth or experience as an entrepreneur” who open “businesses in neighborhoods in need of jobs and economic opportunity.”

Four licenses connected to cannabis consultants David Brodsky and Scott Wootton were also revoked Monday. Regulators cited “false or misleading information” in their agreements that effectively transferred “ownership and operational control to another entity,” according to division documents referenced by the Independent. Brodsky and Wootton declined to comment to the outlet.

The division announced new proposed rules in December aimed at preventing what it called “predatory arrangements in microbusiness licensing.” The state is currently reviewing public comments on these draft regulations before deciding when to submit finalized rules to the Missouri Secretary of State.