Contract tied to six revoked microbusiness licenses aimed to give investor full ownership of the business, while Black disabled veteran applied for the license
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Destiny Brown thought she was about to step into an exciting new business venture last year—owning a small cannabis dispensary in Missouri and earning $200,000 for it. As a Black disabled veteran with a family history of marijuana-related offenses, she seemed like the perfect candidate for Missouri’s microbusiness program, which was designed to help disadvantaged people get a foothold in the cannabis industry.
Investor Michael Halow told Brown she met all the qualifications and that he’d be there to support her, promising to invest $2 million to help get the business running. But as it turns out, the situation wasn’t as straightforward as it seemed.
Brown signed a 40-page contract from Halow without reading it too closely, trusting his assurance that he had the money to back her. However, according to an interview transcript from Missouri’s Division of Cannabis Regulation, Brown wasn’t told that the fine print in the contract would actually give Halow full control of the business. Due to a felony on his record, Halow couldn’t own the dispensary outright, so the contract made Brown the front of the operation while Halow pulled the strings.
Brown, who lives in Arizona, was one of 16 people selected in a lottery last October for Missouri’s microbusiness dispensary licenses. Six of those winners were connected to Halow, but all of their licenses have since been revoked. After receiving the license, Brown hired a lawyer and managed to break ties with Halow. She turned over documents to the state, some of which had not been previously submitted, showing the agreements Halow had her sign. These agreements made it clear that Brown wouldn’t be allowed to sell cannabis until she either handed the business over to Halow or repaid him the $2 million he supposedly invested, plus interest.
Halow’s consulting firm, Cannabis Business Advisors, was listed as the contact for more than 400 of the 1,048 applicants in Missouri's lottery—a strategy known as "flooding" to increase his chances. All six winners tied to Halow had similar contracts, each giving him eventual control of the business.
Unfortunately, Halow isn’t the only one using these tactics. The microbusiness program, which was meant to give marginalized communities a chance in the industry, has been exploited by others trying to capitalize on the system. The Independent previously reported a Michigan-based company was recruiting people on Craigslist to enter Missouri’s social equity license lottery, offering contracts that eventually forced the recruits to give up control and profits. Similarly, Missouri cannabis leader John Payne was found using contracts that gave him and his partners control of 90.1% of the profits.
Legal experts have called these agreements unfair and potentially predatory. Cannabis regulators even opened an investigation into one of Payne’s licenses to ensure it remains in the hands of eligible individuals, with that investigation still ongoing.
Joseph von Kaenel, a corporate governance attorney, reviewed the contract Halow had Brown sign and saw it as another version of the same exploitative playbook. He said, “It’s the same old story of unscrupulous promoters using disadvantaged individuals as fronts for businesses they ultimately take over.”
Halow and his attorney are appealing the revocation of the licenses tied to him, with the help of St. Louis-based law firm Armstrong Teasdale. Interestingly, Payne also claimed that Armstrong Teasdale wrote his contracts, though the firm has strongly denied this.
Brown is also appealing the loss of her license, though the Administrative Hearing Commission found her complaint was filed after the deadline, putting her case at risk of being dismissed.
Halow, according to his LinkedIn profile, lives in Puerto Rico and boasts that he holds multiple cannabis licenses across various states. He claims to be passionate about social equity, mentoring underrepresented candidates through the licensing process. But this isn’t the first time he’s faced scrutiny. In Arizona, Halow was sued by a woman who accused him of recruiting her to apply for a social equity license, only to take over the business without her knowledge. Halow won the case and was awarded $45,000 in legal fees.
Halow’s legal troubles go further back, though. In 2003, he was indicted in El Paso on charges of sexual assault of a child and producing child pornography, though the charges were dismissed as part of a plea deal. He pled guilty to aggravated assault and received three years of community supervision.
While Missouri law states that individuals with certain felonies are barred from the cannabis industry, the rules are a bit murky. Nonviolent felonies are generally excused if it’s been five years since the person’s parole or probation ended, but other types of felonies are judged on a case-by-case basis.
As for Brown, she told regulators that she originally signed up for the program to help veterans like herself. She was recruited by one of Halow’s associates, who requested her personal documents and got her to sign agreements she thought were about how the business would operate. She had no idea these agreements would hand over ownership to Halow once the license was issued.
Brown also wasn’t aware of a company called Ever Eco LLC, under which her application was filed. Halow was listed as the sole owner of this Arizona company when it was formed in July 2023. A month after the application was submitted, his name was replaced with Brown’s. The company’s designated contact on the license was Maxime Kot from Cannabis Business Advisors, though Brown said she never met or even heard of Kot.
Missouri’s cannabis regulators requested documents from Ever Eco, but Kot said the company was unable to provide them due to a lack of response from the "purported owner"—meaning Brown.
In November, Brown’s attorney requested that Kot be removed as the contact and provided the state with documents, including a consulting agreement, a promissory note, and a conditional management services agreement. These agreements essentially gave Halow the option to convert his promised $2 million loan into full ownership of the business.
The state ultimately revoked Brown’s license for several reasons, including that the application contained “false or misleading information.” Brown’s attorney has argued that she still intends to move forward with the license, saying she’s qualified and eager to continue.
It remains to be seen what the outcome of the appeals will be, but Brown’s story shines a light on the complexities and challenges within Missouri’s cannabis licensing system.
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