Josh Mitchem (left), Jack Mitchell (right). Photos courtesy of the Missouri Medical Cannabis Trade Association
ST. LOUIS — Among the winners of licenses to sell medical marijuana products in Missouri are multi-state retailers and local business owners who have been sued in other states over alleged fraudulent practices.
They include two Kansas City-area men who helped lead the Missouri Cannabis Trade Association and whose former businesses settled lawsuits alleging misconduct for thousands of dollars.
In recent months, the state Department of Health and Senior Services has faced criticism from rejected applicants — and now faces scrutiny from a Missouri House investigative committee — for the way it handled applications from roughly 700 business groups competing for 338 licenses to grow, process or sell marijuana. Hundreds of applicants poured thousands of dollars into their business plans. The state hired a third-party company to score applications in a blind process on a wide range of criteria that included “the character, veracity, background, qualifications, and relevant experience of principal officers or managers.”
Based on a review of the latest publicly available records, about 130 separate business groups won all of the available business licenses, as well as 10 licenses to test marijuana and 21 licenses to transport marijuana.
A Post-Dispatch review found out-of-state pot executives as well as board members of the Missouri Medical Cannabis Trade Association, or MoCannTrade, a key industry group, are tied to about two dozen business groups that each won five or more of those licenses or licenses.
MoCann board member Josh Mitchem, of Kansas City, who along with his father Steve Mitchem, a former evangelist and jewelry executive, were tied to Green Four Ventures LLC, which won two licenses. Green Four listed on state records managers that also work for Blue Dart Ventures, which Steve Mitchem owns. Josh Mitchem is an executive with the group, and is CEO of Clovr Cannabis, which shared contact information in state records with Green Four Ventures.
The Mitchems operated payday loan companies in the Kansas City region that were accused by the states of New York and Arkansas for alleged predatory practices.
Former Arkansas Attorney General Dustin McDaniel sued Josh Mitchem, PDL Support LLC and Platinum B Services LLC in 2012 alleging they used multiple limited liability companies purportedly based in the West Indies to charge borrowers triple-digit interest rates on short-term loans through a number of websites meant to shield them from liability. In a settlement, Mitchem denied the allegations and agreed to pay $80,000 and to stop lending in Arkansas.
In 2017, two payday lenders linked to Josh Mitchem agreed not to lend in the state of New York and forgive millions worth in loans there after the state Department of Financial Services accused the companies of predatory practices using high-interest loans online. Mitchem’s company, E-Finance, and a partner company, Total Account Recovery, agreed to pay at least $45,000.
Jack Ray Mitchell was listed in state records as an owner of two limited liability companies that won a total seven marijuana business licenses. In March, he settled lawsuits alleging he took part in embezzling funds from a former business partner.
Mitchell was previously on MoCannTrade’s board of directors, and was chair of government affairs for the organization.
Mitchell was also previously CEO of Thunderbird Resorts, a publicly traded company that owns casinos, hotels and restaurants in Peru and Nicaragua. Mitchell was a defendant in a breach of fiduciary duty lawsuit filed by his former company against Mitzim Properties, a Nevada property company in which he was a partner, and Taloma Zulu, a Panama property company.
The three businesses were partners in casino operations in Costa Rica. Mitzim and Taloma were accused of embezzling profits meant to go to Thunderbird Resorts. The U.S. District Court of Southern California ordered the Panama company, Taloma Zulu, to pay $407,643.24 to Thunderbird Resorts.
Meanwhile a multistate retailer that won several licenses in Missouri faces a lawsuit in Nevada for allegedly cutting partners out of an agreement to jointly operate new marijuana businesses, according to the Las Vegas Review-Journal.
Chicago-based Verano Holdings, which won four Missouri marijuana business licenses, was sued in Clark County District Court in Nevada by a business partner alleging the company broke agreements to jointly share newly won licenses with their partners. Verano agreed to jointly apply for the licenses but then cut out the partners, according to the suit.
The suit, filed by Naturex and BB Marketing, also claim Verano misappropriated trade secrets in filing the applications and petitions for $135 million in damages.
Meanwhile, dozens of rejected applicants have filed appeals with the Administrative Hearing Commission, challenging the state’s limit on business licenses as well as a ZIP code bonus that gave extra points to applicants in certain high-unemployment areas.
Many of the rejected applicants also accuse the state’s third-party scorer, Wise Health Solutions, of giving certain applicants insider advise, but state marijuana program officials said they have substantiated no conflict of interest allegations.
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