The six lawsuits tying up Illinois cannabis licenses: It could take many more months

Here be where dragons lie for cannabis licenses. (From Daley Center)

Illinois’ latest round of cannabis licences have been tangled up in a series of lawsuits adding delays and uncertainty to the future of the state’s cannabis program that was supposed to issue 75 dispensary licenses, 40 craft grow, 40 infuser, and an unlimited number of transportation licenses last spring and summer. Those lawsuits, each focused on a different part of Illinois cannabis law, are each moving at different paces. Here is a review of those cases and updates on their status.

SouthShore Restore v. IDFPR – This federal case with 47 plaintiffs that called for a review of the dispensary license scoring system received extensive media coverage and was quickly settled with the state in September. As a result of the settlement, Gov. Pritzker promised the 937 dispensary license applicants “supplementary deficiency notices” and an opportunity to correct their applications so they may seek a perfect score and another chance at the tie-breaker lottery round to distribute 75 dispensary licences. Three weeks later, regulators have not issued guidance on when to expect the new deficiency notices or when the license lottery may be conducted.

24th Regiment-Latino Veterans v. IDFPR – Filed last week, this case in Cook County Circuit Court calls on the state to provide an explanation why some dispensary license applicants were disqualified and to allow those applicants to receive supplementary deficiency notices like other applicants. The case is pending with no scheduled hearings.

SB IL v. Pritzker – Also filed last week, this petition by three of the 21 dispensary applicants who scored high enough to advance to the lottery round asks the Illinois State Supreme Court to direct the state to immediately conduct the lottery on grounds that the scoring process followed the 2019 law passed by the General Assembly and that the state is giving other applicants another chance at the lottery round “in response to political pressure.” 

This week, the state responded to the petition by, among other things, arguing the case should be sent to a lower court, since “response to political pressure” is a factual question that should be resolved, and the Supreme Court is supposed to only address issues of law. The State Supreme Court is expected to announce whether or not it will hear the case by the end of the month, and if accepted, would likely hear arguments in late November.

Wah v. IDFPR – Filed in mid-September, this case in Cook County Circuit Court argues that the bonus points awarded to dispensary applicants led by a military veteran, which effectively makes it impossible for any applicant not led by a veteran to advance to the lottery round, are not part of the intended focus on social equity applications by the General Assembly. The suit

calls for a halt to the lottery, for the 21 current tie breaker applicants to reveal their scores, the creation of an administrative review process for other applicants, and for changes to the scoring process that would eliminate the veterans scoring element and the binary scoring system used for each application section.

The plaintiffs recently added accounting firm KPMG, which handled the scoring, as a defendant. A hearing is scheduled for November 18 to determine whether or not the judge will allow it. In a status hearing last week, attorneys for the state told the judge they have no plans to conduct a license lottery before that date.

Hazehaus v. IDFPR – Also filed in mid-September, this case in Sangamon County Circuit Court is similar to Wah v. IDFPR, but instead alleges the state process turns military veterans into an illegal special class that is unconstitutional for the Illinois Constitution, since they are the only group effectively eligible to win dispensary licenses. The suit calls for a halt to the lottery, to rescore applications without the bonus points for veterans, calls the deficiency notice process and binary point scoring system arbitrary, and calls for appointment of a special master to conduct a rescoring of all applications.

Along with the Wah case, this case would be difficult for the state to settle, since for the state to eliminate the veterans bonus, it would disadvantage other applicants, opening the state to new lawsuits. It is likely that this and the Wah case will have to wend its way through the courts for resolution, which could take months or even a year, delaying these 75 dispensary licenses along with it.

ICCA v. State of Illinois – Filed last week in Cook County Circuit Court, this case from an association of craft grow applicants is a petition for a writ of mandamus directing the State of Illinois to immediately award craft grow, infuser and transporter licenses, and to release craft grow applicants of their staffing requirements to maintain social equity status.

Two weeks ago, before the petition was filed, the Illinois Department of Agriculture indirectly said it had no pending plans to issue licenses. Privately, state officials say that because these licenses were also scored by KPMG, the state has to at least resolve the scoring issues settled in the Southshore Restore case, before moving forward with craft grow, infuser, or transportation licenses.