A judge continued to keep in limbo new cannabis store licenses in Illinois while one applicant alleges that the state mistakenly kept it out of the first lottery to award licenses.
Cook County Judge Moshe Jacobius has ordered that the state not award any new dispensary licenses, including for medical cannabis, until he rules on a lawsuit before him. The state plans to hold the last of three lotteries to award licenses Aug. 19, but the judge’s order means the winners won’t get any of the 185 new licenses until the judge rules. State officials noted that lottery results may change as a result of further court orders or administrative review.
A business called Wah Group LLC, claimed that state officials wrongly eliminated one of its applications that qualified for the lottery in the St. Louis region. Court filings by Wah attorney Mazie Harris assert that state officials told Wah it would qualify for the next lottery.
Wah and Haaayy LLC have claimed that the state process for scoring cannabis license applications was flawed, and unfairly required veteran ownership to achieve a perfect score and qualify for all lotteries. The next court hearing is set for Monday.
Last year, after only 21 applicants qualified for 75 new licenses, Gov. J.B. Pritzker admitted problems with the scoring process conducted by consultant KPMG, and ordered that the applications be rescored. Those scores were released July 28, more than a year late, and winners were eligible for up to three lotteries.
Other suits also challenge the state licensing process.
On July 30, JG IL LLC, Emerald Coast LLC, and Renu LLC, represented by the firm of civil rights attorney Jon Loevy, a founder of licensed cannabis grower Justice Grown, filed a federal lawsuit alleging scoring screw-ups, and asking the court to order them to be included in the lotteries.
The suit asserts that JG was wrongly denied as a social equity applicant, while Emerald Coast was wrongly denied veteran ownership status, and ReNu was wrongly denied Illinois resident and veteran ownership, all of which cost them crucial points in the scoring of their applications.
JG argued that it qualified for social equity status because more than 51% of its workforce lived in areas designed by state cannabis law as areas disproportionately impacted by the war on drugs. It stated that other applicants were also denied their rightful social equity status.
Members of Illinois Attorney General Kwame Raoul’s office argued in court filings that the allegations were unfounded. For instance, they argued that JG IL only provided documentation for eight employees, rather than the 10 required.
ReNu changed its ownership after the death of its principal owner John Martin, but failed to provide the required proof that Martin initially qualified for Illinois or veteran ownership status when the original application was filed, state attorneys argued.
Emerald Coast, however, submitted a document in court that appears to show information about its veteran ownership status. The Illinois Department of Financial and Professional Regulation, which oversees the dispensary licensing process, is investigating whether that information was sufficient to prove veteran ownership, and therefore earn a perfect score to qualify for the lotteries.
In the first lottery July 29, ReNu and Emerald Coast won the opportunity for cannabis businesses, while JG’s score was too low to qualify. But all three firms maintain that they should have earned perfect scores and participated in all the lotteries.
The attorney general’s office also noted that courts nationwide have dismissed a variety of cannabis-related lawsuits because the plant remains illegal under federal law.
Any applicants may seek reviews in state court after the state finishes its licensing process, they argued, but not while it’s still ongoing.
Other suits disputing the licensing process are likely to arise, as has occurred in other states.
One suit filed by Sozo Illinois Inc. was dropped last month after Black and Latino applicants claimed that it would only further delay the licensing.
Asked for comment, Charity Greene, a spokeswoman for Gov. J.B. Pritzker, did not address questions about whether applicants were mistakenly left out of the lotteries, but wrote, “IDFPR is committed to facilitating a licensing process that is fair and equitable for all eligible participants. While we cannot comment on active litigation, the department will continue working toward a legal cannabis industry that repairs the harms of the past and creates opportunities for all Illinoisans.”
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August 10, 2021 at 05:33PM