COURTESY PHOTO
Marne Madison gives a speech on cannabis.
Jermasa Johnson-Dees has big plans. After operating a cannabis cuisine and edibles business, STL Spacetreats, Johnson-Dees hopes to someday open a dispensary under the same name in Missouri.
That’s why she plans to apply for one of Missouri’s new microbusiness dispensary licenses, made possible by the 2022 constitutional amendment that legalized recreational marijuana in the state.
She does so with some optimism, but she’s also realistic: Her chances of realizing her dream in her hometown are slim.
Next month, the Missouri Department of Health will begin accepting applications for a small pool of licenses intended to bring new players into the state’s cannabis industry. The state will issue microbusiness licenses in three different rounds throughout the next few years, with up to 144 microlicenses awarded by 2025.
The microlicenses were a large focus of criticism to Amendment 3. Some minority entrepreneurs thought the licenses would unjustly limit their business capabilities and further entrench a “monopoly” of wealthy, majority-white businesses that won licenses during the 2020 rollout of medical marijuana in Missouri.
Only one person of color owned a cannabis dispensary in Missouri at the time Amendment 3’s passage expanded access to include recreational sales. Supporters of the microbusiness licenses championed them as a way to close the state’s equity gap and allow small business owners into the industry.
But the very people these microbusiness licenses were intended for fear they’ll still lose out.
The application period for the first round of 48 microbusiness licenses opens July 27 and ends August 10. While some cannabis entrepreneurs plan to apply, others don’t see the point.
Courtesy Jermasa Johnson-Dees
Jermasa Johnson-Dees of STL Spacetreats.
Applicants must literally win the lottery to receive a license. No matter how many people apply for a microbusiness license, only six will be awarded this fall in each of Missouri’s eight congressional districts.
“The underground cannabis industry is huge,” Johnson-Dees says. “I don’t feel like any of us are gonna make it, but we’re going to try because somebody’s gotta get it.”
Johnson-Dees wants STL Spacetreats to become a household name. She also wants to further set an example for her three kids, the eldest of whom is a junior in college. “It feels amazing to show them a Black woman who is paving the way in cannabis,” she says.
So Johnson-Dees will take whatever chance she’ll get to receive a license and grow her business in Missouri — even if “it doesn’t feel fair at all.”
Some critics say the microbusiness licenses create an unequal class of businesses that will have to compete with large, well-known brands that were allowed to sell recreational marijuana several months before microbusinesses had any chance at a license. Others worry how microbusinesses will sustain themselves in the long run.
Microlicense brands can only sell to and purchase from other Missouri microlicensees. This may be difficult, especially in the early stages, as only two microbusiness dispensaries and four wholesale facilities (where marijuana is cultivated or processed) will open in each district after the first round of licenses are issued.
“If the product is low quality on the producer side, the retailers are stuck with it,” says Lila Waier, co-owner of an indoor/outdoor garden supply store in south city. “If the retailers don’t deliver in sales, the producers suffer while their perishable product degrades.”
The state health department has made tweaks in response to criticism, however. Brennan England, director of Minorities for Medical Marijuana Missouri, says state officials have been responsive to concerns.
“They’re doing what they can to clean it up to the best of their ability,” England says.
Last month, the Missouri Independent reported that state regulators tasked with identifying ZIP codes with historic high rates of incarceration for marijuana-related offenses — where residence is one eligibility requirement for applicants — only included parts of the St. Louis area that were mostly white (St. Charles) or affluent (Clayton). None were in north St. Louis, where about half of the state’s Black population lives.
Responding to the concerns, the Division of Cannabis Regulation issued a variance that provided an exception for applicants who didn’t live in those census tracts or ZIP codes. Applicants can instead prove they reside in a qualifying ZIP code or census tract through an “independent study or attestation from a state or local official.”
Proving they reside in an area with historic high rates of incarceration for nonviolent marijuana offenses is just one eligibility requirement for microbusiness applicants. Others include:
• A net worth less than $250,000 and have had an income below 250 percent of the federal poverty level
• A valid service-connected disability card issued by the U.S. Department of Veterans Affairs
• Either has been, or has a parent, guardian or spouse who has been, arrested for, prosecuted for, or convicted of a non-violent marijuana offense. Offenses involving DUIs or dealing to minors do not count, and the conviction must have occurred at least one year prior to December 8, 2022.
• Lives in a ZIP code or census tract where:
– Thirty percent or more of the population lives below the federal poverty level, or
– The rate of unemployment is 50 percent higher than the state average rate of unemployment, or
– The historic rate of incarceration for marijuana-related offenses is 50 percent higher than the state’s.
Denise McCracken, a lawyer who specializes in cannabis law, says she’s fielded questions about whether the microbusinesses are equitable. The answer isn’t so clear cut.
“It’s definitely allowing more people on the team, but I go back and forth on whether it’s actually leveling the playing field,” McCracken says.
But unlike the requirements for medical marijuana licenses, there is no liquidity requirement for microbusiness applicants. In other words, applicants do not have to have a certain amount of cash to be eligible.
“This gives leverage to applicants who would otherwise have to give up a portion of their ownership interest in order to get the money they needed up front to show on their license application,” McCracken says.
Applications are also unscored (the medical license scoring drew complaints and even lawsuits).
Marne Madison, a cannabis consultant based in Missouri and Oklahoma, has advised her clients to apply in more rural districts where they’ll be more likely to receive a license. There are no residency requirements. Out-of-state applicants are also eligible.
Madison was one of the staunchest critics of Missouri’s recreational marijuana amendment and one of the few vocal critics from a Black-led organization to take a public stance.
“It’s been disheartening to explain to the Black community that what they thought were these ‘social equity’ licenses are not that,” Madison says.
Among other concerns, she says there should have been explicit language designating these licenses solely for Black residents of Missouri.
“How dare you give us a crumb of the whole loaf,” Madison says.
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