Why are nearly half of KC-area marijuana micro-licenses tied to secretive companies?
This summer, Missouri awarded 57 marijuana micro-licenses across the state. The licenses were meant to help small and minority-owned businesses break into the industry, which has been dominated by large companies.
But nearly half of the 15 licenses awarded in the Kansas City area went to secretive LLCs tied to a Wyoming company whose true beneficiaries can’t be easily identified. Seven of those licenses are connected to the Wyoming-based incorporating service called Wyoming Corporate Services that prides itself in keeping information private.
While the unknown groups or people behind the LLCs appear poised to cash in, Kansas Citians like Suzette Leftwich were left out. Leftwich, who is Black, was one of hundreds of applicants denied a micro-license to open a dispensary in July.
“We’re working against, you know, forces that we don’t even know exist. It makes me angry,” said Leftwich, who said she has never met another dispensary owner who is Black. “It doesn’t seem like it’s homegrown people that are, you know, creating these dispensaries.”
The state listed the proposed address of Leftwich’s dispensary along Troost Avenue.
“I have money, I have business credit, I have friends that are willing to invest,” said Leftwich, who works in human resources. “And we put all of that into this application process the last couple, you know, the last two rounds.”
Revelations about the out-of-state LLCs come as questions regarding predatory behavior in the program have cast a cloud over the state’s marijuana industry. The state in October stripped licenses from a Michigan-based company that had been accused of using predatory practices to flood the first round of the lottery and obtain licenses.
The Michigan-based company had come under fire for offering to pay eligible people to enter lotteries awarding licenses for underserved groups in Missouri, Illinois and Maryland, according to reporting from The Star, Missouri Independent and the Chicago Sun-Times.
A January report released by the Missouri Department of Health and Senior Services, or DHSS, also found that more than 40% of the applicants for the first round of the micro-license lottery were from outside of Missouri.
The businesses or people behind the new round of winning LLCs largely remain a mystery. The Star requested application documents from the state but DHSS said the records were closed to the public.
In an email, DHSS spokesperson Lisa Cox said that every applicant was required to submit documentation showing they were eligible for the program. That criteria is geared toward lower-income individuals and minority groups and includes having a net worth less than $250,000 or a prior marijuana-related charge.
Cox said the agency was currently conducting a 60-day verification process to investigate the eligibility of the winning license holders.
She did not respond to a question asking whether the state was concerned about the licenses tied to Wyoming but pointed to a 2021 federal ruling that barred Missouri from enacting a residency requirement for medical marijuana licenses.
Ties to Wyoming
The little information available about the licenses connects them to Wyoming Corporate Services in Cheyenne, Wyoming. The company incorporates, or sets up, businesses for clients.
Business records show that each of the seven LLCs was organized by one of two current or former employees of the company: Jasmine James or Sierra Sanders.
LLC organizers don’t have to be owners or members of the LLC, according to documents with the Missouri Secretary of State’s Office.
Neither James nor Sanders responded to an email from The Star.
Therese Hoard, a manager for the company, said in a phone call that the the company would only provide information about who was behind the LLCs or license-holders through a subpoena.
“What we do is we just incorporate businesses for clients,” Hoard said. “So if we would have incorporated any type of business there, it would have been at the direction of a client requesting it.”
The company’s website encourages businesses to incorporate in Wyoming, touting the state’s low costs and zero business license fees. The state has some of the strongest privacy laws in the country, “helping to turn the state into one of the world’s top tax havens,” The Washington Post reported in 2021.
The seven licenses were among 15 dispensary or marijuana wholesale licenses awarded in Missouri’s 5th and 6th Congressional Districts. The 5th Congressional District covers the inner ring of the Kansas City metro while the 6th Congressional District stretches across northern Missouri and includes Clay and Platte counties.
Two other licenses tied to the Wyoming company were awarded in the 4th Congressional District, which stretches from the southern part of the Kansas City metro to central Missouri.
One wholesale or cultivation license, for example, was awarded to a company called DRAMA DUNES LLC, which listed its proposed address along Squire Court in Grain Valley. Business records name Sanders from Wyoming as the organizer.
Records posted online by DHSS list a person named Yossi Sarshar, who appears to own a nightclub in Dallas, Texas, as the designated contact for the license and another one with a proposed address in Excelsior Springs. Sarshar is also listed as the contact for 41 other licenses submitted to the state.
A person answering texts to a phone number for Sarshar initially responded to messages from The Star but stopped responding when asked about the marijuana license.
A designated contact for another license hung up the phone when asked about the license. Another did not respond to two voicemails left over multiple days.
John Payne served as the campaign manager for the efforts to legalize both medical and recreational marijuana in Missouri. He said in an interview that he had not heard about the micro-licenses tied to Wyoming.
“That’s a new one to me,” Payne said. Once the state reviews the winning licenses, Payne said he planned to start reaching out to the license-holders.
Payne, whose name appeared on more than 300 micro-license applications to the state, has also been accused of “predatory practices” within the program, according to the Missouri Independent. For some applications, Payne recruited eligible Missourians for the licenses and had them sign contracts that would give him and his partners a majority of the profits of the business.
Concerns about the program
Not all of the licenses awarded in the Kansas City area were hard to track.
Hunter Schmitt, a local attorney, won one of the micro-licenses through an LLC called Flower to the People and hopes to open a dispensary in the metro. Schmitt is listed as the designated contact for the company and his business partner, attorney Nicolas Cirese, is the LLC organizer.
Schmitt said he qualified for the license after being prosecuted for a past felony marijuana possession charge. That arrest also fueled his desire to become a lawyer, he said.
“We understand that it’s a big climb uphill, as we’re going against big and even out-of-state companies,” he said. “That’s part of the reason we named our LLC Flower to the People, is so that we could get this product to the people of Kansas City.”
When informed about the licenses tied to the Wyoming company, Rep. Richard Brown, a Kansas City Democrat, said he would like to see the state revisit how it issues micro-licenses. Specifically, he said that the state should not cap or limit the number of marijuana licenses issued in the state.
Limits on licenses, he said, is “why we’re starting to see the shady deals take place.”
“My concern is the people that were previously prosecuted and persecuted for marijuana are now being denied entry into the legalized business,” said Brown, who is running for lieutenant governor. “And these licenses were set up so that marginalized people…have opportunity to get in.”
Chase Cookson, a professor at Saint Louis University based in Kansas City and a marijuana legalization activist, said that large companies flooded the micro-license lottery across all of the state’s eight congressional districts.
“I continue to be concerned that this program is not going to serve the purpose that it was designed to serve,” he said. “In particular, I’m concerned that it’s not going to serve folks from disadvantaged communities here in the state of Missouri.”
Cookson raised concerns about how the micro-license program was designed as well as the overall economic system that allows people to take advantage of opportunities to make a profit. He said he expects the same tactics during the third lottery round next year.
“It’s not going to meet the purpose of creating some kind of intergenerational wealth in the communities that have been most disadvantaged by prohibition,” he said. “I’m frustrated, but also I think we all saw this coming.”
The state’s micro-license program was included in the 2022 constitutional amendment when voters legalized recreational marijuana. It was touted as a way to help marginalized groups, particularly those impacted by the war on drugs.
Leftwich, from Kansas City, saw in the program an opportunity to join the market.
“Being from parents who were denied opportunities because of their race in Kansas City, I mean, you know, definitely it felt great to be able to open a business here and make money from that,” she said.
But, after being denied a shot for the second time, Leftwich has questions about the integrity of the program.
“It’s just angering that we still don’t have the opportunity. You just don’t know what’s going on behind closed doors,” she said. “For half of (the licenses) to even have a commonality, it’s like there’s something going on somewhere.”
