Round 1 Revisited: Missouri’s Cannabis License Lottery

Growing up in Missouri, my family would sometimes gift lottery scratch cards or get one or two randomly because “you never know.” I can remember thinking about the potential while searching for some loose change to do my scratching. That potential vanishes as soon as you see what’s on the card. Thinking what that grand prize would be like to win and then proceeding to win a free Slurpee that I wasn’t old enough to redeem was less than rewarding. There were a few times when my brother and I would pick the lotto numbers for my dad when the PowerBall was high. We’d be driving home and laughing about what we’d do or where we’d go when we won; it was fun to dream and do something together. Now twenty years later, Missouri has me playing the lottery again, but this time it’s the lottery for Social Equity Cannabis Mircobusinesses. I applied for Apartment 113 to get a Wholesale Microbusiness license in the fall of last year and found a great location to build out a cultivation and extraction facility not too far from Kansas City. It was like that childhood experience in some ways, getting ready to go finding that penny to scratch the card and planning what I’ll be needing to do next while waiting.

The Microbusiness program is meant to boost opportunity in the industry for disadvantaged communities and was part of the constitutional amendment that legalized recreational cannabis in Missouri back in November 2022. Four wholesale winners were selected for each congressional district of Missouri in October of last year. I noticed the email arrived and opened the attached file with the lottery results. It was a forty-five-page monster, so I did a fair bit of scrolling before finding my district. I saw the winners there and caught my breath. The first license was awarded to applicant ID 5041. At that moment, my head was spinning. Was that my number, or wasn’t it? “I could have just won a license!” I shouted to the pets nearby. Opening my application to confirm my ID my heart sank as I saw that my application ID was 5042. Dude, so close. I can’t believe it came down to that last number. I checked and double checked, but the numbers didn’t lie. I would have to give it another try and wait for the second of three windows planned for the Microbusiness Lottery.

The Missouri Department of Health & Senior Services oversees the licensing and regulations for the state. The DHSS has been following up on all the applications selected as winners to verify application details are accurate. The listed owners were pulled from all applications to make sure one owner wasn’t listed on multiple applications, and the owners of existing licensed businesses in Missouri were also checked to prevent them from entering the microbusiness lottery.

Several applications had the same property listed, which isn’t a big deal. The location has to meet the zoning requirements initially. This is verified after winning the license and if needed the licensee can submit a business change application. Licenses can be sold once acquired as long as the eligibility requirements are proven for any would-be purchaser or member with majority ownership in the business.

There seems to be some potential controversy with applicants being found on Craigslist and paid to sign over control of the business to Canna Zoned, a cannabis real estate company out of Michigan. I haven’t learned anything about the accuracy of this yet, but from my experience, Canna Zoned was helpful. They worked with me to find a possible location and allowed me to list it on the application with no contracts, agreements, or payments. They would have helped to arrange the rent or purchase of the building if/when needed. Finding a location was difficult without using a service like Canna Zoned. On the dispensary side, it looks like Canna Zoned was associated with almost 10% of the applications. That’s where there may be some concern, but Abigail Vivas, the Chief Equity officer, within the division of cannabis for Missouri is mandated to produce an annual report for the public and state legislators. She’s working to make sure all awarded licenses go to eligible legit applicants.

There was a consulting company I talked to first that was charging over two thousand dollars to “help” me submit the license. Which is pretty crazy, as the paperwork is detailed but not rocket science. On top of that, they were encouraging me to have more people apply, so that I could get a better chance of winning. As long as the names on the applications are different, ownership can be worked out after winning the license. I’m applying as an individual currently, not a team. I didn’t take them up on it, but it’s an option to consider for the third round to put together a team of eligible applicants to join Apartment 113.

Cannabis Business Advisors in Arizona is associated with 40% of all of the submitted dispensary licenses. As you can imagine, they then won 6 of them, but all six have been flagged and may be revoked if necessary details can’t be provided. It’s not clear what may be missing from these applications, if it’s the eligibility requirements or maybe the ownership structure that’s throwing some red flags. Time will tell here, but there may be another license or two going down the line to the next picked applicants with the deadline for follow-up set for January 15th. Clickbait headlines are announcing that 11 out of 48 awarded licenses have been found ineligible, but what they don’t say is that we don’t know why they were ineligible. It could be many different things, and they all have a chance to resolve this going forward. This is an unfortunate example of “feeding the fire.” Keep calm, and let’s see how things shake out. People may have been trying to game the system, but Missouri knows what’s up. They’re doing the diligence now to make sure the licenses are awarded properly.

The second of three rounds is gearing up to start in March this year with winners being announced in July. There will be an additional 48 licenses overall, including dispensaries and wholesale again, so the odds may be the same or similar if those who didn’t win last time stay in the running. I’ve got my fingers crossed like you can’t believe. For me personally and professionally, winning a license in or near KCMO would be excellent. I want to move back home to be close to family again after moving away for the cannabis industry in the West after college in 2012. If I don’t win the second round, I’ll start looking towards the third and final 48 (for now) being drawn next year in 2025.

I understand that cannabis businesses need to be regulated, but the small number of licensed businesses allowed restricts me from owning and operating the business I want. The whole thing is wild. Imagine you wanted to open a bookshop and had worked in bookshops and other adjacent services for a decade. then you finally are ready to own your bookshop, but only 48 are allowed where you live, so you have to leave your family and friends to go somewhere else. You have to wait, or you have to get even more creative to find that bookshop to own. Bookshops are much cheaper, but the point I’m trying to make is that there are few other businesses you just “cannot” start. While we’ve come a long way in cannabis, I hope future entrepreneurs don’t have to deal with this hurdle of licensing to such a degree. As the big dogs and multi-state operators fight for supremacy, the greater public is figuring out that they’re done with mid-quality or lower. Craft microbusiness flower and products, made with care and understanding, will thrive in the end, and that’s exactly what Apartment 113 would like to create in Missouri soon!