This doesn’t look good.
NPR has the story
Of the 96 microbusiness licenses issued by Missouri through a lottery since the program’s inception last year, cannabis consultant David Brodsky is connected to seven. They are all under investigation or facing revocation.
The Missouri Cannabis Trade Association describes David Brodsky as “instrumental in developing the Missouri microbusiness community” and a mentor to disadvantaged business owners.
In his cannabis consulting work, Brodsky is part of a group that charges up to $4,000 to help eligible applicants enter the microbusiness lottery. It’s a program intended to help steer small-scale marijuana facility licenses to disabled veterans, those with lower incomes and people with non-violent marijuana offenses.
That price doesn’t include the state’s $1,500 refundable submission fee.
“We have also assisted clients who won licenses in lottery based application systems in Ohio and Connecticut and have never had an application that did not meet the criteria to go into the lottery,” Brodsky and his partners say on MOmicrolicense.com.
Yet in Missouri, microbusiness applications connected to Brodsky have repeatedly run into problems with state regulators.
Of the 96 microbusiness licenses issued by the state through a lottery since the program’s inception last year, Brodsky is connected to seven. And all of them are under investigation or facing revocation because the state questions whether a qualified applicant will actually be running the business.
In October, the Division of Cannabis Regulation sent letters of pending revocation to four of the seven licensees connected to Brodsky, stating that their agreements included “false or misleading information.”
“The licensee entered into an agreement that transfers ownership and operational control to another entity,” the letters stated.
Notices of investigation were issued involving the other three licenses back in July, stating regulators wanted to ensure the businesses continue “to be majority owned and operated by eligible individuals.”
For more than a year, The Independent has documented the pattern of well-connected groups and individuals flooding the microbusiness lottery by recruiting people to submit applications and then offering them contracts that limited their profit and control of the business.
State regulators have been sounding the alarm about the scheme, warning of potentially predatory practices in the microbusiness application process.
Financial agreements for the seven licenses connected to Brodsky are closed records. But The Independent was able to obtain a portion of one agreement connected to Brodsky through a public records request last year.
The agreement only provides the qualified applicant with one-third of the voting power to make company decisions.
An almost identical agreement was used to recruit applicants by John Payne, who led the campaign to legalize marijuana in 2022. Payne’s listed as part of the momicrolicense.com team and is the designated contact for all seven licenses connected to Brodsky.
Payne has drawn scrutiny after The Independent revealed he asked at least one applicant to sign a 47-page contract that would give him and his partners 90.1% of profits and majority control of the business.
Despite only owning a fraction of the business, under state law the applicants would be seen as the owner and bear all of the regulatory scrutiny. If applicants ever want to walk away from the deal, they would be required to pay a nearly $1 million fee.
It’s unclear if the financial agreement in that contract is also in place for the licenses connected to Brodsky or his business partner, Scott Wootton. In an email to The Independent, they declined to comment on their roles in the seven licenses “due to confidentiality clauses in the agreements, which is standard practice in business contracts.”
However, they said Payne “has no involvement beyond being the designated contact to handle communications with the division” for all seven licenses.
Andrew Mullins, executive director of the Missouri Cannabis Trade Association, said he’s seen contracts that look like Payne’s 47-page agreement. In some cases, he said if it weren’t for these types of agreements, the licensees wouldn’t have the resources on their own to make a business work.
“Were it not for some of those partners and the way that they’re doing that,” he said, “you basically would have people who have a license but no ability to do anything with it.”
If the 47-page contract was submitted to a federal Disadvantaged Business Enterprise program, it could be considered fraud, said attorney Rod Chapel, president of the Missouri NAACP.
“When I go and I get a loan to buy a house that I don’t have the cash to actually buy, the bank does not send over two tellers and a dog to live in the house with me – not how that works,” he said. “Ladies and gentlemen, that’s why this is a front.”
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Missouri cannabis microbusiness ‘mentor’ connected to licenses under state investigation
