When Chase Cookson opened his email, he was disgusted by a peculiar ad in his inbox.
“Don’t Miss Out!” the email, which was sent last month, said. “Two Prime Dispensaries in Missouri Up for Grabs.”
Cookson, a college professor in St. Louis and a marijuana legalization activist, was struck by what he viewed as predatory behavior. A Michigan-based marijuana real estate company had listed for sale two coveted licenses that were intended to help marginalized communities break into Missouri’s lucrative marijuana industry, which has been dominated by large companies.
“My gut reaction was — this is the kind of blatant profiteering that does not benefit any of the people that it’s designed to benefit,” said Cookson, who also applied for and was denied a license. “They were not a young Black man that had spent time in prison for a cannabis charge, had gotten a license and were selling it for a million dollars. I knew that immediately.”
The email from Canna Zoned MLS, a company accused of using predatory tactics to try to secure social equity marijuana licenses in at least three states, advertised a marijuana dispensary micro-license and real estate in Arnold near St. Louis for $1.1 million and another dispensary license in Columbia for $795,000 with a chance to lease the property for $6,000 a month.
While the licenses are no longer listed for sale online, Cookson said the company’s ability to obtain — and list for sale — licenses meant for marginalized communities in Missouri illustrates that the program was designed to help people who already have a stake in the industry — not underserved groups.
Canna Zoned MLS downplayed the ads in an email to The Star, saying that the marketing material was “generated to gauge interest and establish a value of the license and real estate.” The company noted that the licenses are no longer listed online, but did not answer when asked specifically if they were for sale.
The Missouri Department of Health and Senior Services last month awarded 48 marijuana micro-licenses, including 16 dispensary licenses, divided across the state’s eight congressional districts after the agency conducted a random lottery. Geared toward lower income individuals and minority groups, applicants had to meet one of several requirements, including having a net worth less than $250,000 or having a prior marijuana-related charge.
The two micro-licenses that Canna Zoned MLS had listed for sale were awarded to Seashore Rhythm, LLC in Arnold and Frankenstein Enemy, LLC in Columbia, documents from DHSS show. Jeffrey Yatooma, the owner of Canna Zoned MLS, is listed as the “authorized agent” for both entities along with the email “socialequitymissouri@gmail.com.”
Yatooma is listed as the main contact for 104 of the more than 1,000 applications submitted to the state, records show.
Yatooma’s company has come under fire recently for offering to pay eligible people to enter lotteries awarding social equity licenses in Missouri, Illinois and Maryland. The company’s contracts force applicants to give up all control and profits of the business, according to recent reports from The Missouri Independent and The Chicago Sun-Times.
In Illinois, for example, the company used an ad on Craigslist to recruit a victim of gun violence to apply for a social equity marijuana license, the Sun-Times reported.
Canna Zoned MLS’ tactics, as well as its ability to win two licenses in Missouri, have sparked outrage from some state lawmakers, including from state Sen. Karla May, a St. Louis Democrat and candidate for U.S. Senate, who in a letter last month to DHSS demanded an investigation.
May, in an interview with The Star, said she has concerns about “unscrupulous actors who are subverting the law and the process.”
“It was for marginalized communities to become a part of this process, and to benefit from it. And it wasn’t for them to do what they normally do with marginalized communities — take advantage of them. It’s awful,” she said.
May said she hopes that the state can strip away the licenses of “bad actors and anyone that is operating outside of the intended constitutional amendment.”
State Rep. Ashley Bland Manlove, a Kansas City Democrat, said in a text to The Star that the company’s actions were “predatory and criminal.”
“I encourage all states involved to revoke any licenses issued and reissue them to actual residents who qualify,” she said. “I’d like to see criminal charges for the lawyers who created the contacts and whomever created the Craigslist posts for fraud.”
Amy Moore, the director of DHSS’ division of cannabis regulation, responded to May in a letter, saying that the division shared May’s hope that the micro-license program be “implemented exactly as designed and that no unscrupulous actors be allowed to subvert the law.”
“In fact, the law itself anticipated the need to investigate whether microbusiness licenses were awarded to eligible applicants post-licensure, and we are currently conducting that mandated verification process,” she wrote.
Moore wrote that the “post-licensure verification” for the winning licenses would be completed in December and that the division would release a public report. If the agency determines that an application was false or misleading in any way, “the license issued based on that application may be revoked,” she said.
John Payne served as campaign manager for the constitutional amendments to legalize both medical and recreational marijuana in Missouri. He said the big question is whether the “social equity applicant” — the person who actually won the license — is getting a benefit of ownership from the license.
Payne said he couldn’t answer that because he doesn’t know what’s in the agreement between the company and the applicant.
“That is certainly the attempt of the amendment is that there is a real, actual benefit to this ownership,” he said. “Are the people that won the lottery, are they getting real substantial benefits of ownership from this license? And that’s something that the department enforces.”
After Cookson received the advertisements from Canna Zoned MLS, he said he forwarded the email to DHSS. The agency, in response last month, issued guidance stating that change of ownership of a micro-licenses was subject to approval from the state and that licenses must continue to be majority owned by someone who fits the requirements for a micro-license.
When asked about the licenses that were listed for sale, Lisa Cox, the spokesperson for DHSS, said the agency spoke “directly with the licensees.”
“They explained they are seeking investors and do not intend to sell the licenses prior to becoming operational or without Department approval,” Cox told The Star in an email. “Seeking additional investors prior to being operational is allowed if the change in ownership does not exceed 50%.”
In response to a series of questions from The Star, Canna Zoned MLS sent emailed statements from Yatooma and Amanda Kilroe, an attorney for the company, that touted the company’s work within state-run lotteries for social equity licenses.
Yatooma said that the company works to “ensure that we are complying with state law, local laws and the program’s regulations that can all benefit from the cannabis industry.”
“State licenses that are available for transfer or sale will go through a state regulated process to ensure that both the seller and buyer are adhering to all guidelines,” he said. “We also work with local representation to ensure that we fully comply with state regulations at every stage of the process.”
Kilroe, in the email, said the company has worked with “so many incredible individuals who have been a part of the social equity state lotteries and it’s a part of our overall mission to begin supporting more social equity practices in cannabis across the country.”
“We worked hard to set a standard so anyone who wants to be a part of it is able to benefit from the processes that the state has set up for the cannabis industry,” she said.
But Cookson, the professor and marijuana activist, said the company’s tactics were “the kind of predatory behavior that we don’t want to see in the business world.”
“I’m really disappointed in this group, these individuals, and the way that they’ve approached the licensing process,” he said.
H?T: www.kansascity.com
