CHICAGO (CN) — The Illinois Department of Financial and Professional Regulation held its Tied Applicant Lottery for cannabis dispensary licenses on Thursday; the latest of several lotteries granting qualified applicants licenses to open recreational and medical cannabis shops throughout the state. Over 1,600 applications were submitted to the Department, though many came from single applicants submitting multiple applications. Only 75 individual applications were approved for licensure from the pool, spread across 17 distinct state regions.
But even as applicants celebrated their license approval or mourned their rejection, the state's legal authorities were debating whether or not the current licensing process was even legitimate.
It was a series of lawsuits running back to September 2020 from the applicant WAH Group LLC that first brought to light inequities in how the IDFPR graded social equity applicants' - applicants who have been negatively impacted by the cannabis prohibition - scores for qualification. Due to the department's grading system, only social equity groups with perfect scores of 252 points were eligible for a license - and one of the only practical ways to get a perfect score was to have a veteran as a 51% owner of the group. This ran up against the Department's stated guidelines that veteran ownership was merely an optional way to bolster a group's score.
"Under the scoring system the IDFPR implemented, the maximum score Plaintiffs and other social equity applicants who were not 51% or more owned by a veteran could earn was 247 points... Thus, being 51% or more owned by a veteran(s) was made mandatory only by the scoring process the IDFPR implemented," WAH Group's initial complaint against the IDFPR stated.
WAH went on to argue that due to this contradiction, the department's scoring system was fundamentally unfair; a clever way to get hopeful applicants to submit the $2,500 - $5,000 application fee without ever having any actual chance of approval.
"The only purpose the IDFPR had in not announcing that all scored exhibits would be scored on a binary basis was to conceal the inequity and unfairness this scoring process inherently would produce by making 252 points the only possible winning score," the suit read.
It's an appraisal of the situation that Cook County Judge Moshe Jacobius at least partially agrees with. In a hearing on WAH's case on Monday, he ordered that WAH be included in Thursday's lottery. He also rebuked the department's characterization of veteran ownership as "optional" when it was a deciding factor for so many applicants. During the hearing, Jacobius admitted that the implications of the WAH case mean that the entire licensure process may need to be re-worked.
“We can’t predict the future. And counsel says that if you ultimately rule that the whole structure was improper, then the whole thing will have to be redone over again... But then, everybody then would be subject to just another application process or another lottery, who knows what," The Chicago Sun-Times reported Jacobius saying Monday. As part of his ruling on the case, Jacobius blocked the issuance of any new cannabis permits until after September 1, despite allowing the lotteries to proceed.
Judge Jacobius declined to offer further comment on the case to Courthouse News directly.
The prospect of a new licensing process presented a moral dilemma for some of Thursday's other applicants, particularly if a new process voided the old lotteries.
"I can't imagine what it would be like to think you're about to have a life-changing moment," poet Britteney Kapri, a partner with the applicant group So Baked Too LLC, also known by the pen name Black Star, said. "and then learning that that's being taken away from you."
Kapri had good cause to take issue with how the IDFPR has handled the licensure process. So Baked Too was one of two applicant groups, the other being Suite Greens LLC, that filed several lawsuits alleging that they were forced to give up spots in the lottery due to an arcane rule in how the IDFPR processed applications. This rule stipulates that in each of the 17 regions into which it divides the state, a single principal officer, or primary applicant representative, can’t be included in more qualifying applications than there are licenses available. So Baked Too and Suite Greens shared a principal officer in the form of Chicago attorney Brendan Shiller.
To resolve any issues that the two teams might encounter from sharing the same principal officer, Shiller resigned his position with both groups in July. He also resigned as principal officer from Canndid Spirit Too LLC, a third applicant team. Representatives from the groups sent news of Shiller's resignation to the IDFPR on July 22, while the department was still scoring applications for lottery entry. Despite this, and despite Canndid Spirit Too revoking its application whole-cloth just to be safe, the department rejected both Suite Greens and So Baked's applications.
It cited the overlap of Shiller as a principal officer for the groups in its rejection notice, and gave the applicants little time to correct its own oversight.
"We sent in the paperwork, we heard nothing from them, so we assumed we were good," Kapri said. "Then when they told us... there was a problem with [our principal officer], we were only given about 29 hours to respond."
While Suite Greens and So Baked each still had nine spots secured in Thursday's lottery, Kapri said they nonetheless felt cheated by the bureaucracy, especially a lack of communication by the state.
"The biggest issue is just their lack of any response," Kapri said. "They made it completely impossible to communicate... everything had to be done by email, and there were always delays."
If a second license application process were to take place, Kapri said having better communication on the part of the state and IDFPR would be a must, as would the waiving of all application fees for those who had already applied. For many applicants who come from working class backgrounds and are people of color - like Kapri herself - she said financial ease of access is of paramount importance for creating equity in the state's billion dollar cannabis industry.
An industry, Kapri added, that is still dominated by wealthy white owners. Creating equity in that industry, she said, was a motivating factor for her wanting to open a dispensary. She spoke about channeling profits from cannabis to community renewal programs, and creating internships for released inmates as a way for them to break into the industry themselves.
"It's a booming industry... Cannabis is a guaranteed way that I could lift up the people I want to lift up," Kapri said.
Around 3:30 p.m. on Thursday afternoon, the lottery results were released. So Baked Too, Suite Greens and WAH Group were all approved for licensure.
Find the complete list of approved cannabis dispensary licenses here.
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