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Missouri cannabis regulations have now revoked roughly one-third of the microbusiness licenses that were designed to provide a pathway for individuals with high entry barriers to participate in the adult-use market.
The state’s Division of Cannabis Regulation (DCR) announced on April 14 that it rescinded 25 microbusiness licenses that the division awarded during a second licensing round in July 2024. These revocations are in addition to nine licenses the division rescinded in March 2024 from the first licensing round.
Overall, the DCR has revoked 34 of the 105 licenses awarded during the first two licensing rounds due to ineligibility, including 32 for individuals the division determined had failed to meet ownership qualifications and two for individuals who had disqualifying felony offenses.
The division intended to award 48 microbusiness licenses in each of the first two rounds but ended up awarding 57 licenses in the second round to make up for the nine initial revocations.
These microbusiness licenses are reserved for small-scale operations that are majority-owned by individuals who meet certain state eligibility requirements, such as those with a net worth of less than $250,000 or veterans with service-connected disabilities.
The licenses are to help establish an inclusive industry following Missouri’s February 2023 adult-use sales rollout. The state’s licensed retailers topped $1.1 billion in adult-use cannabis sales during the first 12 months of dispensary operations, according to the Missouri Department of Health and Senior Services.
Missouri’s microbusiness licensees—for dispensary operations and for cultivation and manufacturing operations—are limited to purchasing cannabis products from other microbusinesses and cannot transfer products to or from other licensees. In addition, they’re limited to cultivating up to 250 flowering plants at any given time versus a comprehensive licensee who can cultivate up to 30,000 square feet of flowering canopy space.
After the DCR revoked the first nine microbusiness licenses, it issued guidance in April 2024 for future applicants. At that time, state officials said they were aware of solicitation efforts by companies to apply for the licenses on behalf of qualified individuals with promises of future ownership, which the division considers a “predatory arrangement.”
“While owning and operating a license may include contracting for management services or consulting services, the lack of knowledge, control, agency or decision-making demonstrated by the individuals whose information was used to meet eligibility does not meet even the most generous interpretation of owning and operating a business,” DCR Director Amy Moore said last April. “These circumstances do not meet the intent or meaning of the requirement in Article XIV that microbusinesses are operated by eligible individuals.”
As the DCR continued to monitor microbusiness ownership arrangements to ensure the license holders remain compliant, the division initially issued 32 notices of pending revocation in October to second-round awardees following an eligibility review; however, regulators later determined that seven of the licensees satisfied ownership requirements before announcing the 25 revocations this week.
Michael Halow, an out-of-state cannabis investor, was connected to 16 of the revoked licenses from April 2025 and six of the revoked licenses from March 2024, the Missouri Independent reported.
“We provide assistance to marijuana dispensary applicants who need it most,” Halow told the media outlet. “These are often people without generational wealth or experience as an entrepreneur. They open businesses in neighborhoods in need of jobs and economic opportunity.”
Some examples of predatory arrangements provided by the DCR include:
- Applicants are promised a 51% ownership stake of the license and a fair market value buyout for that 51%.
- Applicants are promised a payment when the license is initially issued, then receive a salary for 3-5 years that is equal to the remaining 51% of the license value or some other payment arrangement.
- A solicitor does not ask for any payment and offers to pay for upfront application and business costs.
- A solicitor informs the potential applicant that if they want to actually own and operate an awarded license, they should apply on their own.
- Solicitors promise they will provide their own money, resources and time to run the day-to-day business operations so that the applicant owner does not need to invest their own money, resources or time.
Under current regulations, the DCR plans to issue a minimum of 144 microbusiness licenses awarded through three separate lotteries, including 48 for dispensaries and 96 for cultivation and manufacturing facilities. Through the first two licensing rounds, 71 awardees have met eligibility requirements, meaning 73 licenses will be available in the third round.
While the division remains in the planning stages for the third round, a fourth round could be needed if regulators revoke more licenses.
