MO rolls out marijuana micro-license program. But will it help minority-owned companies?

As the Missouri marijuana industry rakes in millions from recreational weed, state regulators have slowly started to roll out a program intended to help small and minority-owned businesses break into the lucrative market.

After voters approved an amendment to legalize adult use last year, only well-established marijuana businesses have been able to cash in while small companies have been left in limbo.

A smaller micro-license program, overseen by the Missouri Department of Health and Senior Services, is supposed to be geared towards minority groups, lower income individuals and those who have been previously arrested for nonviolent marijuana offenses.

One of the requirements to apply for the program was intended to give marijuana licenses to owners who live in areas that have faced high rates of marijuana criminalization, which are predominantly Black or other marginalized communities.

But the program’s rollout has faced intense criticism from groups such as the Missouri NAACP on the grounds that some of the ZIP codes listed for areas with high rates of marijuana incarceration are heavily skewed away from the state’s two most diverse cities in Kansas City and St. Louis and towards rural parts of the state.

More conservative and rural parts of the state are less diverse but are also where marijuana crimes are typically pursued more aggressively.

“It seems like it is excluding the very people that were supposed to have been impacted by the law,” Nimrod Chapel, the president of the Missouri State Conference of the NAACP, told The Star.

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.

In the face of criticism, the state health department last week made some tweaks to the program, allowing prospective applicants to provide documents to the state showing that, while they may not meet the requirements, they should still qualify for a micro-license.

Here’s a look at the roll out of the controversial micro-license program and what to know before applying to sell legal weed.

What is a micro-license?

The micro-licenses are supposed to be a way for small business owners to break into the recreational weed market — which is dominated by large medical marijuana companies.

The smaller licenses are more restrictive than the full licenses for large-scale facilities that sell, cultivate and distribute marijuana. There will be two kinds of micro-licenses: one for dispensaries, and another for wholesale facilities.

Wholesale facilities with micro-licenses will be capped at 250 flowering plants at any given time. These facilities can only sell marijuana products to other micro-licensed facilities, not to the bigger dispensaries. And dispensaries with micro-licenses can only acquire marijuana products from other microbusiness facilities, not from the larger players.

When can you apply?

The health department made applications for the micro-license program available on its website earlier this month. The state will accept the applications from July 27 to Aug. 10.

Applicants will need to meet specific requirements, have a proposed building for the business and pay a $1,500 fee to be considered.

After the application period closes, the state will hold a lottery to award licenses. In October, six micro-licenses will be awarded in each of the state’s eight congressional districts for a total of 48 licenses. An additional 48 will be awarded in 2024 and another 48 in 2025.

Who qualifies for the program?

To qualify for a micro-license, business owners will need to meet one of several requirements. Applicants don’t need to fit all of the requirements to be eligible, just one.

Income

Individuals applying will need to have a net worth less than $250,000, or have an income that is less than 250% of the federal poverty level, which is around $34,000 a year for one person in 2022. A person qualifying for a license under the income category needs to meet this financial criteria for at least three of the past 10 years to qualify.

Location

People could qualify for a micro-license if they live in a census tract area where at least 30% of the community lives below the poverty line.

Another eligibility requirement is people who live in an area where the unemployment rate is 50% higher than the state’s average.

People who graduated from an unaccredited high school or live in a ZIP code that housed an unaccredited school district for three of the past five years can also qualify for the micro-license program. This would likely include most Kansas City residents, since Kansas City Public Schools didn’t gain accreditation until 2022.

Communities impacted by marijuana prohibition

Specific groups that qualify include disabled veterans and individuals whose families have been arrested, prosecuted or convicted of a nonviolent marijuana offense.

To qualify, the charge must have occurred before December 2021. This category does not include anyone charged with providing marijuana to minors or driving under the influence of marijuana.

People who live in a community where the rate of incarceration for marijuana-related charges is historically higher than the rest of the state by at least 50% also qualify.

Why is the program being criticized?

The micro-license program has faced criticism since its inception for being more restrictive than the full licenses given to established companies.

The rollout of the program has some groups, including the Missouri NAACP, increasingly worried that minorities and Black-owned companies will be left behind. A list of qualifying ZIP codes for places with high rates of marijuana criminalization released by the state last month only included one geographic ZIP code in Kansas City.

And other ZIP codes included were not for geographic areas but for unique places, such as post offices, banks and the Federal Reserve in Kansas City.

“Anytime that you have ZIP codes that are so targeted that they reside within the four walls of a post office, I think that you’ve got to look at the inherent problems with the administration of the program,” Chapel told The Star. “It looks like the state of Missouri has been in opposition to the expansion of marijuana usage and utilization by Missourians from day one.”

Lisa Cox, a spokesperson for the Missouri Department of Health and Senior Services, told The Star in an email that the formula the state used to calculate incarceration rate included dividing the 20-year average number of incarcerations in an area (provided by the Missouri State Highway Patrol) by the area’s average population. Areas where the rate of incarceration was 50% higher than the statewide rate were included on the list.

Cox, in an email, said Chapel was misunderstanding the scope of the eligibility requirements, pointing to the fact that the incarceration rate was just one of several possible qualifiers. The state, Cox said, has reached out to minority groups about the micro-license program and also received more than 800 public comments on the rollout.

But, in response to criticism, the state issued a variance last week, allowing people living in other ZIP codes to prove that they should be included. Prospective applicants are expected to provide documents, including independent studies or evidence from a state or local official.

“The Department has demonstrated many times its willingness to incorporate feedback and new information into its processes over time to ensure the cannabis program is effectively and appropriately implementing” the amendment to the state constitution, Cox said in an email.

How are marijuana companies reacting?

People like Andrew McDowell who plan to apply for a micro-license have been scouring the state health department’s website to research the new program and prepare for the application period.

McDowell, who co-owns Funky Skunk, a Black-owned smoke shop in Raytown, said he’s been trying not to focus too much on criticism of the program or the rules rolled out by the state. He knows that even if he qualifies for the program, there’s still a chance he won’t get a license from the lottery.

“You can have all the boxes checked and be the best possible option for the state to select and you still might not get it because it’s a random selection,” he said. “It’s just about making sure that we put our best foot forward with the application and make sure it’s timely and complete.”

Josh Mitchem, the CEO of Clovr, a Kansas City manufacturer of marijuana-infused products, said the micro-license program was intended to help minority groups break into the industry. He doesn’t think some of the ways in which the state has implemented the program, including the list of ZIP codes, has aligned with that goal.

“That sort of alignment isn’t what we were looking for when we wrote the constitutional amendment,” he said.