merchant of venice cannot create puppet

I am playing Venice for the first time. my MoV just cannot create puppets from city states. The option is not in the list. Do I need to do something special?

I have to ask what may seem obvious: Is the MoV inside the borders of a CS?

yes..

Idiot me still had 'one city challenge' selected from my previous game. There was another 'Venice' in the same game, an oddity that should have alerted me to something being out of whack.

OK. When you select your MoV, the top two items on the MoV's menu should be Conduct Trade Mission and Buy City-State. if you are inside the borders of a CS that you are not at war with, both should appear and be enabled. If you are outside CS borders, or inside borders of a CS you are at war with, those should appear but be greyed out.

If this doesn't match what you see, please post a screenshot showing what does appear.

EDIT: Just saw your new post. Yeah, OCC puts a crimp in Venice's UA.