by Rebecca Rivas, Missouri Independent
July 7, 2025

A Kansas City man spent his weekends in Cole County jail in June, after pleading guilty last year to two misdemeanor charges for submitting fraudulent documents to cannabis regulators in 2021 to obtain a marijuana cultivation license. 

It’s a license his company still holds, according to the Missouri Division of Cannabis Regulation, along with a manufacturing license issued in January 2020. 

And the state shows no signs of taking the cultivation license away from him, despite his application resulting in a criminal conviction last August.

“Neither of these licenses is operational and has never been,” the division’s spokeswoman Lisa Cox told The Independent in an email last week. “Due to the licenses being suspended and not operational, DCR has not taken any additional enforcement action at this time. DCR is currently reviewing the guilty plea and monitoring the civil litigation to determine if additional enforcement action is necessary.” 

Cox said both licenses were suspended on Jan. 19, 2023, due to internal disputes on ownership and control.

A Missouri State Highway Patrol investigation in 2023 alleged Kelly Waggoner committed 20 felonies, including identity theft, forgery and conspiracy, according to the probable cause statement investigators gave to Cole County Prosecutor Locke Thompson. 

Last summer, Thompson dropped the charges down to two misdemeanors —  identity theft and deceptive business practices. Waggoner was sentenced to a total of 10 days in jail, served on the weekends. 

Without a felony conviction to make him ineligible, Waggoner retained the two cannabis manufacturing licenses held by his company, Red Tractor Cultivation LLC, where he holds 77% ownership interest.

In an interview in June, Waggoner told The Independent that he knew he was submitting erroneous documents but he only did it to “buy more time” in the application process. 

“I didn’t think I was doing anything malicious because I knew those documents, as soon as they hit DHSS would be rejected,” Waggoner said, believing cannabis regulators would give him time to fix the errors. “But that’s not how the highway patrol saw it. I made a mistake, so I have to do the time.”

When the state informed Waggoner that Red Tractor would be awarded a cultivation license in 2021, he said he and most of the minority shareholders had been in a heated ownership battle for months. 

To stall for time to reach an agreement, he said he sent in the same personal financial disclosure forms he used in 2020 for the manufacturing license. But he knowingly included errors in them, like lowering the minority shareholders’ percentages of equity without their permission so regulators would “kick them back.”

Identity theft comes in because he resubmitted pages with the shareholders’ signatures attesting to their identity — a crime the shareholders reported to the division three months after it happened, according to an October 2021 email the highway patrol reviewed as part of its investigation.

In July 2023, highway patrol investigator Sgt. Larry Nelson asked several Missouri Division of Cannabis Regulation officials what they would do if his investigation ended up proving fraud, according to a recording of the interview The Independent obtained. 

Andrea Balkenbush, the division’s deputy director, said at the time, “In our rules from an administrative perspective, if we find something and we call it false and misleading information in an application… then we have the opportunity to revoke their license.” 

The Independent obtained a 2022 notice of pending revocation that the division issued in Red Tractor’s cultivation license, with a detailed timeline of the ongoing ownership dispute. 

Balkenbush told Nelson in 2023 that division officials had been dealing with ownership issues among Waggoner and the minority shareholder “for years now and they are not willing to resolve it.” 

“We’ve tried to bring them together and say, ‘Hey, sign this settlement agreement,’ but we need all parties to sign it,” she said. “But we’re not going to go and tell them, you know, that they have to kick one person out … that’s just not in our rules to do that.”

Waggoner and the minority shareholders both agree on one thing — the division revoking the licenses would be the worst outcome.

“I want to ensure that the whistleblowers who promptly informed state regulators about crimes are not penalized for reporting these violations,” stated Michael Allen, the owner of a marijuana transportation company and the director of security for Red Tractor. “For six years now, we have been excluded from this industry due to his fraud. We want to pursue our original mission and fully participate in this industry.”

‘Our dream’ 

In 2015, Waggoner, then a graphic designer, knew he wanted to get into the marijuana industry, he said, so he volunteered with the Missouri Cannabis Industry Association, where he served as a board member for four years. 

After Missouri legalized medical marijuana in 2018, he and a friend, David Ross, joined the mad rush to form teams of marijuana experts to apply for facility licenses, he said. 

“It just kind of came together organically from friends, new friends,” Waggoner said, adding that most of them had been working in cannabis in other states. “Without them, [I] probably wouldn’t have gotten any licenses. But with them, it’s been very difficult.”

Waggoner said experts each earned “sweat equity” of up to 3.03% of the company because they completed the license applications on behalf of Red Tractor. At that time, the license had to be majority owned by a Missouri resident, so Waggoner held 77.26%.

Red Tractor ended up scoring second on its manufacturing license application, winning a license in January 2020. 

“A tremendous amount of effort and emotion went into this,” said Allen, adding that the sweat-equity group worked around the clock to complete the applications. “This was a once-in-a-lifetime opportunity to earn a license in this industry’s launch in our home state — and we won.”

They scored 63rd for a cultivation license— the most lucrative type of license – which was just shy of the cut off. 

When the 2020 Census results came in a year later, it triggered the release of additional cultivation licenses because the Constitution mandates a minimum number of licenses to be available based on population. 

It meant Red Tractor was in line for a cultivation license. And that’s when a slowly brewing ownership battle between Waggoner and the seven sweat-equity minority shareholders — including Ross — really started to heat up. 

In April 2021, Waggoner’s attorney, Nick Kurt, sent the seven shareholders a letter that stated Waggoner was “the only proper member of the company” because he was the only person who signed the operating agreement. 

“Any ‘ownership’ purportedly granted to you as a result of the May 2016 operating agreement — signed only by Mr. Waggoner – is invalid and not recognized under Missouri law,” the letter states.   

Despite the letter, Kurt asked them to sign financial disclosure forms with their original ownership percentages – but with the caveat that Waggoner would challenge their ownership interest in the future, said Matt Brown, a Missouri native who worked in Colorado’s cannabis industry and is among the shareholders. 

That’s why they refused to sign them.

To secure the license, Waggoner reused old personal disclosure forms with their signatures on them but changed the date and reduced some of their shareholder percentages, Waggoner said. While he believed the division would flag the percentage errors and give him time to fix them, he said he also believed that the shareholders should receive a lower percentage based on the team’s early negotiations. 

The team found out about the documents during a WebEx meeting between Waggoner, the other owners and division employees several months after they were submitted, Allen said.

“I’ve worked for the Missouri State Highway Patrol,” said Allen, who has served more than 30 years in Missouri public safety agencies. “I have never, never in my life seen a three-month Division of Drug and Crime Control investigation that yielded a probable cause statement of 20 felonies be watered down to two misdemeanors.”

Thompson said the highway patrol identified a number of charges, and he “exercised prosecutorial discretion” in pursuing three felony charges in June 2024. But he said “a number of factors” played into his decision to drop it to two misdemeanors, “including the allocation of prosecutorial resources, Mr. Waggoner’s lack of documented criminal history, and the pendency of civil litigation in the matter.”

Red Tractor’s operating agreement gave the sweat-equity players rights as members to call meetings and take actions “by written consent of all members, or otherwise as agreed among the members,” it states.

In October 2021, the sweat-equity shareholders filed a lawsuit against Waggoner in Cass County Circuit Court, arguing they legitimately held a meeting as members to oust Waggoner as the manager of the company. The lawsuit is still pending.

The best outcome

In July 2023, Nelson sat down with several Division of Cannabis Regulation leaders and its general counsel as part of his investigation into possible fraud. 

The Independent obtained a copy of an audio recording of the hour-plus meeting. 

When the minority shareholders notified the division about the signatures in the fall of 2021, division leaders told Nelson they delayed processing the application at first.

 “I think we did look into it the best we could,” Balkenbush said. “We asked questions, but we couldn’t find anything fraudulent.” 

At that point, no one at the division reported the allegation of fraud to law enforcement authorities, they said. The division general counsel, Steven Doerhoff, told Nelson that there are 400 licensed marijuana facilities with different ownership groups.

“And it’s not uncommon there’s pretty sharp business tactics,” he said. “And there’s several that have disputes going on. And this, I think this felt like an ownership dispute… and less of criminal activity.”

The shareholders went before a judge, who certified the documents as fraudulent, and that’s when Doerhoff said he forwarded it on to the prosecutor.

Nelson asked if division officials normally investigate allegations of fraudulent documents or do they wait for a judge’s order.

“This is the first time that I believe the Division of Cannabis Regulation has dealt with allegations of a fraudulent signature,” Doerhoff said. 

Balkenbush told Nelson that Red Tractor had “been one of our licensees who we’ve encountered problems with for a very long time,” regarding ownership disputes. 

The division doesn’t have the authority to do criminal investigations, she told him, but the cultivation license has been suspended.

“They can’t move forward with, like, doing a commencement inspection to become operational,” she said. “So they’re just basically sitting there.”

Doerhoff said the division lacks authority to do more than revoke, fine or suspend a license because of how the constitutional amendment that legalized marijuana was written. 

“It was probably drafted by marijuana lawyers, industry groups, all kinds of people and they didn’t put anything in there about law enforcement…so all of our powers are derived from there,” he said. “We don’t have a law enforcement arm, so that’s why we’re excited that you guys are here to help us.”

Cox told The Independent last week that the division does not intervene in internal licensee ownership disputes. 

“It is the individual owners’ responsibility to run a compliant licensed facility,” Cox said. “If such a dispute occurs, reviews of minimum standards/business change applications, etc., are placed on hold or denied, and the license may be suspended until the dispute is resolved.”  

Cox said the division may revoke a license that is suspended for more than a year due to an ownership dispute.  

“DCR may also take enforcement action on licensees for rule violations, including providing false and misleading information to DCR,” she said. “DCR makes enforcement decisions based on the totality of the circumstances.”

The sweat equity shareholders’ lawsuit is still ongoing, and Allen recognizes that the most likely outcome for them is not going to be great. A win would mean the three new managers — the minority shareholders who were elected in 2021 — would take over control of the licenses while Waggoner retains 77% of the ownership and profits.

Allen said they’d also be coming into the industry with a “negative reputation.” 

“Finding executives and investors will be challenging due to Waggoner’s history and criminal convictions,” Allen said, but it’s still something he wants to take on.

For Waggoner, he said his best outcome would be for a judge to appoint a “receiver” or someone to take over and run the company, “and do what’s best for shareholders.” 

Even if he gets no say in who the appointed manager is, Waggoner said he’d prefer that to the minority shareholders taking over — because the appointee would likely sell the licenses. A judge rejected Waggoner’s motion suggesting this in 2023. 

He told The Independent he wants out.

Waggoner said, “It’s just been a long journey.”

This story was edited at 9 a.m. on July 7 to change Missouri Cannabis Trade Association to Missouri Cannabis Industry Association, which is a different group.

Missouri Independent is part of States Newsroom, a nonprofit news network supported by grants and a coalition of donors as a 501c(3) public charity. Missouri Independent maintains editorial independence. Contact Editor Jason Hancock for questions: info@missouriindependent.com.

The post The six-year saga of two cannabis facility licenses appeared first on missouriindependent.com

Note: The following A.I. based commentary is not part of the original article, reproduced above, but is offered in the hopes that it will promote greater media literacy and critical thinking, by making any potential bias more visible to the reader –Staff Editor.

Political Bias Rating: Centrist

This content presents a detailed, factual report focusing on a legal and regulatory issue involving a cannabis business in Missouri. The tone is neutral and journalistic, emphasizing multiple perspectives, including those of the accused, minority shareholders, regulators, and law enforcement, without clear political framing or ideological slant. It does not advocate for a particular political position but rather informs about the complexities of cannabis regulation, ownership disputes, and legal proceedings, maintaining an objective stance typical of centrist reporting.