Hundreds of cannabis industry entrepreneurs, investors and opportunists across the state of Illinois are sitting in limbo.
Although there is no end-date to Governor J.B. Pritzker’s April 29 executive order to delay awarding 75 new state-issued dispensary licenses, municipalities are making some moves. The City of McHenry on May 4 unanimously approved new business entity Denver Cole, LLC to open up a dispensary as well as craft grow and infuser facilities on the condition of state approval.
Last week the City of Aurora, which at close to 200,000 residents is the second largest city in Illinois, greenlit its first potential downtown location to a politically-connected entity called Bloom Holdings. Bloom’s principals include Peter Stazzone, who also serves as chief financial officer of Las Vegas-based national cannabis company Strainz, and political consultant Joe Duffy, who managed Illinois Attorney General Kwame Raoul’s successful 2018 campaign.
Duffy’s father, Chicago-based real estate attorney Tom Duffy, is the majority owner of Bloom. As a result of the senior Duffy’s past arrest for marijuana possession, Bloom was able to apply as a social equity applicant which increases the entity’s chances of being awarded a license by the state (still a longshot as 600 of the 700 applications for the 75 lucrative licenses were from social equity-infused entities).
“Sometimes things that are unpleasant earlier in life turn out to be an asset,” said Tom Duffy, a partner at Chicago-based Hamilton Thies & Lorch LLP.
During a City Council hearing on March 15, Aurora Alderman Sherman Jenkins noted that the “spirit” of Bloom’s application “didn’t seem like a social equity license,” sparking a delay in approving a conditional location at the corner of New York Street and Broadway. In the intervening weeks, Jenkins apparently had a spiritual awakening while speaking with the Bloom team and is now “in full favor” of the operation, which also promises to allocate more than 50-percent of its workforce to social-equity qualified employees.
Jenkins did not respond to phone or email requests by publication to learn what specifically won him over.
Blooming beyond Aurora
While Bloom positions itself to potentially become Aurora’s fourth dispensary, the entity is also close to getting municipal approval of a recreational dispensary in the small village of Wadsworth, a stone’s throw from Wisconsin where recreational cannabis remains illegal.
“There is a public hearing scheduled,” said Joe Duffy, “but the community is not set up right now to do a Zoom meeting and the village hall is too small to accommodate social distancing.”
Bloom partners are marketing their unique combination of political access, cannabis industry experience and “creative zoning experimentation” as a value-add to investors, municipalities and collaborators who potentially could obtain a state license before they do.
Bloom president Stazzone, who served as controller for real estate developer Paul Stepan & Associates before moving to Arizona 20 years ago, joined the cannabis industry in 2016. Although Stainz does not have a presence in Illinois, Stazzone has been paying close attention to the emerging commercial cannabis industry in his native state.
“Once the market matures”, he said, “Illinois will be the second largest state in terms of gross revenue, with anticipated $2.4 billion in sales by 2023. Our focus will be on economic revitalization and growing great companies so we can invest back into the communities.”
He added that “the door remains open” for Strainz, which raised $8 million in 2016, to partner with Bloom in some capacity.
Veteran real estate attorney Tom Duffy is a social equity applicant for an Illinois cannabis dispensary license due to an arrest for marijuana possession earlier in his life.
As for the Duffys, neither 69-year old father Tom nor 34-year old son Joe envisioned ever getting into the weed business together.
“Twenty years ago I hoped Joe would not even know what it was,” he said. “But today it’s an economic opportunity. It’s a viable business model. Somebody’s got to try it.”
