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IDFPR says tie-breaking cannabis dispensary lottery will wait until questions reviewed

Tuesday, Sep 15, 2020

* Some background is here if you need it. From an IDFPR email to reporters…

Good morning,

A number of you have asked to be updated on the date of the lottery. Here is the latest update.

“The final date for the lottery for adult-use cannabis licenses had not been set as of today. As we continue to review questions that have been raised, our goal is to provide time to ensure that the process is fair and equitable. A date for the lottery will be announced by IDFPR.”

Paul A. Isaac
Illinois Department of Financial and Professional Regulation

* Meanwhile

Two Democratic legislators penned a letter to Gov. J.B. Pritzker on Sunday proposing a compromise to the potential legal standoff over the upcoming lottery for the next batch of pot shop licenses.

In pitching the plan to Pritzker, state Reps. La Shawn Ford, of Chicago, and Kathleen Willis, of Northlake, said the attorneys representing dozens of losing firms would drop a federal lawsuit seeking to halt this month’s lottery for the 75 new pot shop licenses.

In return, the Pritzker administration would need to give all losing applicants a chance to remedy discrepancies in their applications and address possible scoring inconsistencies.

Just 21 firms qualified for the lottery after submitting perfect applications. Though some of the applicants are clouted and seemingly well capitalized, they all qualified as so-called social equity applicants, a designation created to bolster diversity participation in the overwhelmingly white pot industry.

“As we suspect you have heard from many others, virtually no one is happy with how this is unfolding,” Ford and Willis said of the grading process, which has incensed other social equity applicants who invested considerable resources only to have their prospects go up in smoke.

* WGN

On Sunday, Ford said attorneys are willing to dismiss the lawsuit if the playing field is “leveled” through changes to what’s called a “deficiency notice procedure.”

Under the proposed changes, applicants would be given a 10-day period to fix any problems on their forms. Ford said some applicants were never given the opportunity to correct any errors.

“Many did not learn their applications were deemed insufficient until they received notice on September 3rd that they did not win,” Ford said.

Another concern is reports of inconsistencies in the way scores have been calculated.

* Law 360

Pressure has ramped up on Illinois’ cannabis regulators in charge of retail licensing as dozens of businesses shut out of the upcoming lottery for 75 dispensary licenses have turned to litigation to challenge the regulators’ decision-making. A federal suit filed on behalf of a group of would-be Illinois cannabis operators against the Illinois Department of Financial and Professional Regulation has grown to include more than 70 plaintiffs, and at least three other suits have been filed against the department in the wake of its announcement that just 21 businesses will be able to enter the lottery, court records show.

* Crain’s

If the plaintiffs succeed, it would foil the state’s plans to quickly expand the recreational-marijuana program launched in January, limiting a badly needed source of new government revenue at a time when the coronavirus is squeezing tax collections. A delay in issuing new licenses also would extend the oligopoly that existing licensees currently enjoy over marijuana sales, which are growing at double-digit rates.

Illinois officials expected litigation. Lawsuits were filed when Illinois issued medical cannabis licenses in 2015, and winners were able to proceed to build out cultivation centers and dispensaries while the litigation played out. That’s been true in other states, as well.

But rejected applicants have won injunctions or stays in Nevada and New Jersey that put all new licenses on hold. In Nevada, litigation held up licenses for 62 stores for 18 months. The suit was resolved Sept. 3. In New Jersey, 150 applications for 24 medical marijuana licenses remain on hold after a year, awaiting a hearing.

* Meanwhile

Two more lawsuits have been filed over the state’s process to award 75 new retail marijuana licenses.

Both suits target a provision in the process that gave an extra five points to applicants that were led by military veterans. The state is preparing to hold a lottery to award 75 new licenses. It will choose from 21 applicants who received the maximum 252 points possible, which included the points for veteran status.

The lawsuits note the law that allowed recreational marijuana sales in Illinois set a goal to diversify industry ownership with “social equity” applicants from areas disproportionately impacted by the war on drugs, or those who had been arrested or convicted of minor cannabis crimes.

“One hundred percent of the new dispensary licenses will be distributed to members of one group—military veterans. Military veterans were never identified, lauded or supported by empirical evidence to be a group that was adversely impacted by the war on drugs or required a leg up in the Illinois cannabis industry, let alone one that deserved a monopoly,” according to a suit filed in Sangamon County, home to the state capitol, on behalf of seven unsuccessful applicants.

Yeah, good luck with that in Springfield. The filing is here.

- Posted by Rich Miller        

10 Comments »
  1. - Bruce( no not him) - Tuesday, Sep 15, 20 @ 11:35 am:

    So, when will the winners file their suits to uphold their wins?


  2. - Disgrace - Tuesday, Sep 15, 20 @ 11:39 am:

    Disparaging and minimizing veterans so you can get high and sell weed. Par for the course for some of these sore losers.


  3. - Merica - Tuesday, Sep 15, 20 @ 11:51 am:

    This is the part of government i hate the most. The general assembly passes something impossible, promises the world, then takes no responsibility.

    Most recently the State only awarded valuable operating licenses to candidates with deep political connections.

    Now we’re criticizing a process because it didn’t erase 40 years of discriminatory drug enforcement and at the same time erase income inequality. Crazy!

    This program has been an enormous success. Now, black and brown men will no longer be arrested and imprisoned for cannabis. At the same time, hundreds of small businesses have been formed, throughout the whole state.

    At no prior point in this State’s history could this have been accomplished. Certainly not during the corrupt governorship of Jim Thompson, where every contract was awarded to a political donor.

    A cannabis dispensary and/or cultivation operation costs millions to get off the ground. It was always going to be this way. Kudos to the hundreds of State employees and to Governor JB Pritzker who worked tirelessly to make this project an enormous success.


  4. - Rabid - Tuesday, Sep 15, 20 @ 12:02 pm:

    Waiting to pull the names out of the Lincoln hat


  5. - Bill H. - Tuesday, Sep 15, 20 @ 12:22 pm:

    Compared to many other states, I believe that this has been the most successful program in its execution of a progressive social equity component. Yet, the losers are quick to cry wolf. Seems unfair to the winners, to the state of Illinois, and to the patients/customers that would benefit from lower prices that will result from increased competition.


  6. - Anyone Remember - Tuesday, Sep 15, 20 @ 12:48 pm:

    Veteran’s Preference has long been a bone of contention, particularly since Rutan. Remember a 2002 House Approp - Public Safety Committee hearing in Chicago, with IDOC, Parole & minority hiring being the main topic. Several witnesses asked Chairman Morrow to help repeal Veteran’s Preference. He stated in that time (6 months after 9/11) it wasn’t very likely. This could force a re-visit of that issue.


  7. - Candy Dogood - Tuesday, Sep 15, 20 @ 1:33 pm:

    Sometimes it’s a good idea to fire the appointees made by the previous administration.


  8. - XonXoff - Tuesday, Sep 15, 20 @ 1:41 pm:

    == A cannabis dispensary and/or cultivation operation costs millions to get off the ground. ==

    Only in an environment created by the state to financially benefit the state over the individuals of the state — many of whom would have been happy to legally grown their own — in their state.

    Sans the greedy hands and layers of organizational profit-takers, it’s neither expensive nor particularly difficult. Much of this rats nest is unnecessary. But it had to be about _always_ channeling money to the state.


  9. - Merica - Tuesday, Sep 15, 20 @ 2:18 pm:

    XonXoff, it is amazing that recreational cannabis exists here. Look at equal marriage. that was slow walked in a liberal state for a decade.

    We were never going to grow pot outside in fields like Costa Rica. Security and law enforcement were the biggest opponents. It snuck by because of stringent security measures that cost money.

    Also, edibles and infused products are the fastest growing products and those require special machines and tools that cost hundreds of thousands of dollars.


  10. - frisbee - Tuesday, Sep 15, 20 @ 4:18 pm:

    The state should award 500 dispensary licenses then have the ILGA change the law that capped the amount of dispensaries at 500. So much interest to open one of these business but the bottle neck is the self imposed limit on how many licenses statewide. If Oklahoma can support 2,200 dispensaries surely Illinois can handle more than 500.


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