On Monday evening an unsourced Chicago Tribune report charged that pot giant Green Thumb Industries (GTI) is under federal investigation for using pay-to-play to obtain Illinois cannabis licenses. In a series of tweets, GTI CEO Ben Kovler has denied the charges, even tagging a tweet, “#FakeNewsChicagoTribune“.
The morning after the Tribune’s report, GTI’s stock dropped by about 20 percent in the first few hours of trading on the Toronto Stock Exchange, but had regained most of its position by mid-day Wednesday.
Some market analysts dismissed the report, saying it wouldn’t affect GTI in the long term.
“That’s not going to change anything for me. Whether they did it or not, if they did it, which I’m skeptical, it didn’t sound like anything that ludicrous,” said Morningstar analyst Kris Inton. “Even if it was pay-to-play, it seemed like political donations, like a lot of companies do. I don’t have it in my core test.”
“The lobbying and political donations are public information (and not new information), legal and no different from any other cannabis operator’s activities or every other industry for that matter,” said Stifel cannabis analyst Andrew Partheniou in an emailed report Tuesday morning. “We believe this is without merit and presents an opportunity for investors with the stock trading down.”
But while GTI has not been charged with illegal activity, in one instance, company executives expressed a willingness to aggressively move the levers of Illinois government to ensure their business’ success.
At the end of May 2020, as Illinois’ spring legislative session came to a close, the state’s cannabis regulators were pushing House members to pass a massive legislative bill meant to fix a slew of problems discovered in the state’s first few months of legalized recreational cannabis.
The package, which had easily passed the State Senate, freed medical cannabis patients from registering with a specific dispensary, created rules allowing print and digital advertising, expedited the state’s badging process for cultivators and dispensaries, and most importantly, established a lottery system for breaking scoring ties for awarding dispensary licenses. Without the tie breaker legislative fix, the state couldn’t create a regulatory fix until last August, which ultimately delayed dispensary licenses by months.
But as lobbyists and activists in Springfield at the time detailed to Grown In, Chicago-based multi-state operator, Green Thumb Industries (GTI) had at least one, maybe two problems with the bill. One, was that it created new rules allowing existing dispensaries to move locations, which some competitors needed to move out of municipalities that only allowed medical sales, not recreational sales. Another measure in the bill opposed by GTI would empower the state to regulate exactly how much product cultivators sold to which dispensaries, a plan championed by independent dispensaries who complained that GTI, one of the state’s biggest cultivators, was restricting flower and other more desirable product sales in favor of GTI’s company-owned dispensaries.
A wave of contract lobbyists, hired by GTI, descended on legislators in the final week of session, especially targeting House Black Caucus members, to convince them that the bill’s relocation measure would disadvantage future social equity-owned dispensaries from getting prime locations of their own. The leading activists for social equity at the time, ChicagoNORML, published a letter calling the opposition a “red herring”, pleading for Black legislators to support the bill. But in the waning hours of Springfield’s session, too many Black Caucus members opposed the bill, attracting Gov. J.B. Pritzker’s opposition as well, keeping it from a vote in the House.
The death of the May 2020 bill demonstrated to observers that legislative fixes would be difficult to pass in Springfield, since it was much easier to lobby against a bill and kill it, than organize support for passage. Since then, Illinois legislators have had trouble passing any cannabis-related legislation.