Allegations of predatory contracts within Missouri’s social equity cannabis program have surfaced, casting a dark shadow on the integrity of this initiative aimed at empowering disadvantaged groups. An investigation by The Missouri Independent revealed a disturbing case involving Destiny Brown, a Black woman who believed she was being offered ownership of a cannabis dispensary and substantial financial backing to compete for a license in the state’s social equity lottery. Unbeknownst to Brown, the contract she signed granted control of the business to investor Michael Halow. Halow, ineligible for a license due to a felony on his record, used Brown’s qualifications to secure the license in her name. When Brown realized the exploitative nature of the agreement, she sought legal assistance and severed ties with Halow. Missouri regulators, following their investigation, revoked six licenses tied to Halow and uncovered a pattern of similar contracts employed by other applicants, raising concerns that have been under investigation since last year.
Brown’s case is far from an isolated incident. The investigation unearthed multiple examples of out-of-state companies and cannabis industry insiders exploiting the social equity program by manipulating disadvantaged applicants. A common tactic involves flooding the lottery with numerous applications under qualified applicants, only to secure contracts that transfer business control to investors upon license approval. In these predatory arrangements, the applicant receives minimal to no benefit while the investor maintains full control of the business.
Missouri’s microbusiness program was designed to assist marginalized groups, including disabled veterans and those affected by non-violent drug offenses. The Missouri Division of Cannabis Regulation is actively investigating these cases, anticipating more license revocations as the extent of the abuse becomes clearer.
Missouri is not alone in grappling with the shortcomings of its social equity programs. Similar predatory practices have emerged in New York and Arizona, where social equity cannabis initiatives face scrutiny for allowing private interests to exploit disadvantaged applicants. In New York, a public-private fund meant to aid those impacted by discriminatory drug laws has been criticized for favoring private equity firms over qualified applicants. The fund’s stringent loan terms and high interest rates have left many licensees struggling to maintain control of their businesses. Moreover, social equity in the state has encountered significant bureaucratic hurdles. In Arizona, individuals have employed tactics mirroring those found in Missouri, flooding the state’s application process and using complex contracts to exploit social equity applicants.
These incidents highlight the need for a comprehensive and robust regulatory framework to ensure the integrity of social equity programs. Without effective oversight and safeguards, these initiatives risk becoming tools for exploitation rather than instruments for social justice and economic empowerment.
