Missouri Takes Steps to Improve Cannabis Industry Oversight
A Missouri panel has approved new rules aimed at curbing abuse in the state’s microbusiness licensing program, which was designed to boost opportunities in the cannabis industry for individuals from disadvantaged communities. The Joint Committee on Administrative Rules approved the changes, which will move regulators’ ownership reviews from after licenses are issued to before, in an effort to prevent another wave of revocations.
The microbusiness program, also known as the social-equity cannabis program, was established in 2023 as part of the constitutional amendment legalizing recreational marijuana in 2022. However, the program has faced issues, including a pattern of well-connected groups and individuals flooding the lottery by recruiting people to submit applications and then offering them contracts that limit their profit and control of the business.
As a result, 35 of the 105 microbusiness licenses issued so far have been revoked. The Missouri Division of Cannabis Regulation has proposed adjusting the application-review period to prevent further revocations. The new rules will require regulators to review questionable contracts before licenses are issued, rather than after.
The proposed rules also define “majority owned and operated” as requiring eligible individuals to have a level of operational control expected of an owner. Additionally, the designated-contact role will be redefined to ensure clear communication between the state and licensees.
However, the committee rejected a proposed rule that would have barred individuals tied to denied or revoked licenses from holding interests in future microbusinesses. Republican state Rep. Ben Keathley argued that the language was too broad and needed to be more specific.
The division plans to file a new draft of the rules with the Missouri Secretary of State, which will be published twice before being enacted in late May or early June. The division also plans to revisit the issue of ownership in a separate set of cannabis rules later this year.
