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Governors own messes and Pritzker owns this one

Monday, Sep 14, 2020

* My weekly syndicated newspaper column

There’s been much gnashing of teeth since the state announced that just 21 social equity applicants had qualified for regional lotteries that will award 75 cannabis dispensary store licenses.

The 21 winning entities submitted well over 300 applications for those 75 licenses, which has forced a tie-breaking round.

In total, 937 entities submitted 4,518 dispensary site applications, so that’s a whole lot of unhappy people, many of whom have friends in the General Assembly. It really doesn’t matter that 13 of the 21 companies are “majority owned and controlled by people of color and 17 have at least one owner who is a person of color,” as the administration claims. A lot of folks were unexpectedly shut out and people are downright furious.

Even so, the same legislators who are now complaining also voted for the bill, which lays out what applicants had to do to qualify for a license.

The legislation awarded up to 250 points for things like status as a social equity candidate (50 points), labor-friendly employment practices (5 points), an environmental plan to limit carbon footprints (5 points), an Illinois owner (5 points), a diversity plan (5 points), security and record-keeping (65 points) and 51 percent ownership by military veterans (5 points), etc.

Now, here’s where the unexpected problem comes in. According to the Pritzker administration, all 21 of the successful applicants scored a perfect 250, plus they all earned two extra bonus points for having what the statute calls “a plan to engage with the community.”

That many perfect scores for that many entities and their respective applications absolutely shocked most applicants and the administration.

The 51% veterans requirement, which was added late in the 2019 negotiations after demands by veteran-friendly state Sen. Tony Munoz (D-Chicago) and others, turned out to be a major stumbling block for several applicants.

But, hey, it was in the bill, plain as day. Lots of applicants just didn’t think it was necessary to have a perfect score to make it into the tiebreaker round. Oops.

And now all heck is breaking loose.

“It’s a knife through the heart of the black and brown community,” said former state Sen. Rickey Hendon at a press conference, according to WGN News. The Legislative Black Caucus and the Latino Caucus want the governor to stop the program in its tracks.

Democratic state Reps. La Shawn Ford and Kathleen Willis wrote Pritzker a letter calling the whole system into question.

The state will eventually award 500 dispensary licenses, so this round was “only a test,” as one Pritzker administration official put it. And even the governor admitted that there is significant room for improvement.

Gov. Pritzker told reporters last week that he wants to look at limiting the number of dispensary site applications which can be submitted by each entity. By law, companies can hold only 10 dispensary licenses at once, but a few legally applied for dozens. Some legislators and others say they foresaw this problem and claim the administration flatly rejected the idea on multiple occasions.

This particular issue was preventable, and the governor does deserve blame for not listening to those warnings until it was too late, even though members of his administration deny the claims.

Another change being discussed is allowing applicants to automatically qualify for the lottery if they score, say, at least 90% of the 252 total points.

But even that may not work. Some of the points are won under clearly objective standards (veterans ownership, for instance). But some are subjective, and multiple applicants have claimed that the no-bid contractor that graded their applications for the state, KPMG, inexplicably denied them points that they believe they were entitled to. Unfortunately for them, there is no appeals process — yet another glaring statutory omission that will likely lead to lawsuits.

The fact that a KPMG consultant was part of a successful team that will seek six licenses in the tie-breaking lottery just makes matters worse.

The “test” clearly did not succeed as hoped. But the administration claims it needs to get this part of the process behind it so the state can conduct a “disparity study” to allow it to legally use race in awarding many of the rest of the 500 licenses. Lawsuits, however, could delay this process for years if the lottery doesn’t proceed.

Bottom line: It’s a big freaking mess. And even though lots of legislators are not being completely forthcoming about their own roles, governors own messes.

Some of this is being ginned up by sore losers with political ties. Hendon, for instance, was an unsuccessful applicant.

* But here’s one of the winners…


Today we had our first official meeting as the (future) owners (fingers crossed) of Baked.

I am really lucky to have…

Posted by Bee Kapri on Wednesday, September 9, 2020

* I’ve asked the governor’s office for a response to this, and I’ll post it when I receive it. I’d definitely like to see more details either way

Dispensary applicants with application problems continued to come forward Wednesday. One applicant, Joline Rivera from the Functional Food Inc. group told Grown In that her team submitted three identical applications, and received discrepancy notices for two of the applications, but no comment for the third.

“I don’t know if they missed it or what?” said Rivera. “I emailed the IDFPR and got a response saying they don’t accept emails.”

“I really believed they were going to do right. I should have known better,” she told Grown In.

Application discrepancy notices questioning the veracity of social equity applicants is also becoming a theme. The Chicago Cannabis Club team, advised by Charlena Berry, is one application group that got a discrepancy notice questioning the social equity status of their team leader, a Latino veteran.

“We provided information to show he was [from] a disproportionately impacted area, then they gave us a deficiency. I thought it was because he served time away. We responded with tax returns, and double and triple checked everything for the deficiency [response],” said Berry. Time away while in the military is not supposed to count against time away from a disproportionately impacted area, according to IDFPR application rules.

…Adding… Emily Bittner at the governor’s office…

As we have been from the very beginning, the administration remains committed to launching the Illinois adult-use cannabis industry in a fair, equitable manner that provides a path for Illinoisans from all backgrounds to benefit from legalization, from diversifying the industry and criminal justice reform, to investing proceeds to rebuild communities. We take all of the concerns that applicants have raised seriously, are reviewing all of them and will continue to communicate in a clear, transparent way about the licensure process.

- Posted by Rich Miller        

20 Comments »
  1. - Bruce( no not him) - Monday, Sep 14, 20 @ 10:26 am:

    I hate it when people follow the law to the T and win. S/


  2. - TNR - Monday, Sep 14, 20 @ 10:38 am:

    == Pritzker owns this one ==

    Yep. The Guv and his team are good at messaging and politics. However, there are some signs of them not exactly excelling when it comes to operating the machinery of government. Cannabis licensing and the IDES debacle are two prominent examples.


  3. - Perrid - Monday, Sep 14, 20 @ 10:46 am:

    “Even so, the same legislators who are now complaining also voted for the bill, which lays out what applicants had to do to qualify for a license.”

    This all day. I’m sure there’s enough finger wagging to go around, but the GA pretending to be helpless bystanders that have absolutely no responsibility for anything, ever, in any way always annoys me. The Guv is The Guy, I get that, but when the GA hands agencies a mess and then screams when they get a mess back I see red.


  4. - Oswego Willy - Monday, Sep 14, 20 @ 10:53 am:

    === The Guv is The Guy, I get that, but when the GA hands agencies a mess..===

    The Governor owns this.

    It up to the agencies to adhere, the Governor has a Czar, (that couldn’t be named the Czar, and is currently the “Food and Beverage Director” or something, the title changes monthly, but I digress… ) and the functioning of things like licensure is the domain of this administration.

    Governors own. They always do.

    Agency functionality is an issue for this administration in places. That’s on a governor too.


  5. - West Side the Best Side - Monday, Sep 14, 20 @ 10:55 am:

    The KPMG consultant tainted the entire process. You would think that the bill would prohibit someone applying for a license from being involved in any way in the application process. Seems to make ethical sense. Wait, maybe that’s why it wasn’t included in the bill.


  6. - dbk - Monday, Sep 14, 20 @ 11:05 am:

    This is so confusing - for everyone involved. Goes to show how the road to bureaucratic … is paved with good (equity-based) intentions.

    It’ll be interesting to see how the point system and criteria are modified for round 2 of applications. One suggestion: Once they’re drafted, run multiple possible scenarios to see how they play out. That can help identify potential problems/glitches in the application process.


  7. - Curious George - Monday, Sep 14, 20 @ 11:06 am:

    Nothing to see here , let’s move on


  8. - Anyone Remember - Monday, Sep 14, 20 @ 11:27 am:

    Veteran’s Preference?

    Ex-Senator Hendon - if “13 of the 21 companies are “majority owned and controlled by people of color and 17 have at least one owner who is a person of color,” how is that “It’s a knife through the heart of the black and brown community,” ??


  9. - sulla - Monday, Sep 14, 20 @ 11:34 am:

    I wish we could dispense with the fiction that the cannabis industry requires monolithic regulation from the State. There are clearly a ton of people who want to get into this industry, just as there appears to be a ton of Illinoisans who want to consume cannabis legally.

    Yet the state’s overly burdensome regulation has left dispensary shelves limited and what product is on the shelves is clocking in at about twice the cost of the black market. Illinois legal cannabis is the second most expensive in the US due to heavy demand, hefty tax rates and an artificially-constrained supply.

    I would hope that an upcoming GA would look at an expansion of licenses on both the grower and dispensary side of things as well as fixing the other issues with the original bill (tax rates, homegrow etc.)

    Steans and Cassidy did a great job getting the GA to legalize it, but now they should look at dialing back the oversight.


  10. - Hmmmmmmmmm - Monday, Sep 14, 20 @ 11:55 am:

    How are we surprised that a three time bar exam failure also failed in administering the pot program? As Uncle Joe says, “C’mon mannnnn.”


  11. - Rabid - Monday, Sep 14, 20 @ 12:04 pm:

    Love it when a plan comes together


  12. - Unstable Genius - Monday, Sep 14, 20 @ 12:21 pm:

    Does Tyrone own 51%? Congrats to Tyrone.


  13. - tea_and_honey - Monday, Sep 14, 20 @ 12:55 pm:

    Somewhat unrelated to the topic at hand but what is with this new trend (seen here but lots of other places as well) of taking two pictures of the same group/event, one properly masked and one not?


  14. - Fav Human - Monday, Sep 14, 20 @ 1:05 pm:

    KPMG One might think that having gotten the contract to evaluate that part of that contract would have been:

    Spelling out specifically what was missing

    Spelling out specifically what was needed to check the box

    Spelling out when you lost points (say 8/10 - where did I lose two?)

    Contract writing 101?


  15. - Back to the Future - Monday, Sep 14, 20 @ 1:08 pm:

    Difficult process and quite a mess.
    Their are rules for issuing Local and State liquor licenses that have worked since prohibition. While licenses for wholesale distribution went very slowly on the diversity front, it did pick up some and retail licenses with diverse business owners have been around for at least 60 years. Not sure why we can not just add this kind of licensing to the Local and State Liquor commissions and move on. A change in rules might be in order, but the folks issuing liquor licenses and their attorneys have a lot of experience.
    Never heard J.B. took 3 swings at the State Bar Exam. Not sure that is true. I know the test got a lot harder than when I took it years ago so not in a position to be critical of folks that are having a hard time with the exam now. I do know I would not want to try to pass the thing now.


  16. - DuPage Saint - Monday, Sep 14, 20 @ 1:26 pm:

    No one should be allowed to apply for multiple licenses. I believe there was a non refundable fee so right off the bat the rich guys are at an advantage.
    And what difference does it make if someone had to take the bar three times. i know lots of judges in that category and I think bar exam more relevant to that job. Also, how would one even know that?


  17. - Downstate Illinois - Monday, Sep 14, 20 @ 1:49 pm:

    The idea that we would give licenses to drug dealers is a bad joke. These are ex-cons connected with the criminal syndicates and gangs flooding our streets with illegal drugs. After Prohibition state law specifically prohibited those convicted of bootlegging and beer-running from getting liquor licenses. We bend over backwards to keep the mob out of the electronic gaming and casinos. To reward these people who have brought death and destruction to countless neighborhoods shows the depths of stupidity, if not outright corruption, of our state’s lawmakers.


  18. - SAP - Monday, Sep 14, 20 @ 3:04 pm:

    Perrid: I would be sympathetic to your argument if the GA didn’t give the Governor exactly what he asked for.


  19. - Out of Contxt - Monday, Sep 14, 20 @ 5:13 pm:

    Didn’t Little Richie have to take the bar exam multiple times?


  20. - SN1789 - Monday, Sep 14, 20 @ 9:29 pm:

    The equity component will very likely fade as licenses are transferred from diverse applicants to large corps willing to eat relatively low fees associated with transferring the licenses between firms. Cannabis dispensaries should have been set up as solely public sector businesses (like in parts of Canada), with more transparency and accountability than the private sector and more union friendly labor law. The reparations could come from channeling the tax revenue raised towards funding public infrastructure and public services in zip codes or census tracts with high % of drug offense convictions.


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