Mike Fourcher / Grown In
Hundreds jammed into a February 1, 2020 seminar in Chicago to learn more about applying for cannabis licenses. Credit: Mike Fourcher / Grown InTwo hundred sixty-one applicant groups were disqualified from the Illinois dispensary license process, and 896 applicant groups qualified for veterans bonus points, according to an August 2020 scoring table released to Grown In by Illinois cannabis regulators through a Freedom of Information Act request. Previously, attorneys suing the state on behalf of dispensary applicants had received a compilation of scores, but the list obtained by Grown In includes applicant names assigned to each score.
[Download the complete scores.]
The spreadsheet Grown In obtained is a tally of scores provided on August 24, 2020 to the Illinois Department of Financial and Professional Regulation (IDFPR) by KPMG, the accounting firm hired to score the dispensary applications last year. Although some applicants submitted multiple applications, IDFPR lumped those applications into groups for each application region, assuming they were only copies of the same application, submitted multiple times to obtain more chances at a final lottery.
By law, dispensary licenses were supposed to be issued by May 1, 2020, but on April 28, Gov. J.B. Pritzker issued an executive order delaying the licenses under the pretense that the Covid-19 pandemic had overwhelmed state officials. A subsequent Grown In investigation found that actually, delays were largely due to missteps by regulators. Scores were finally released on September 3, 2020, and then immediately contested in court.
Ultimately, because there were so many applications, 2,588 groups of applications were submitted, applicants needed to obtain a perfect score of 252 points to qualify for the final lottery. Two critical scoring components were five points assigned to application teams with a majority, 51% ownership by a military veteran, and two points for a social equity plan, which was only assessed as a tie-breaker if the applicant scored 250 points.
The veterans’ points became the focus of two, still to be resolved lawsuits against the state by applicant groups. [See today’s accompanying article.]
Applications were overwhelmingly centered on Chicago and its suburbs, with 870 of the 2,327 fully scored applications going to the Chicago-Naperville-Elgin BLS region. No other region attracted nearly as much interest, with 211 application groups going to the East St. Louis suburbs, as the next largest.
The scoring table reveals that while veteran’s points was a major stumbling block for many teams, only 38.5% of application groups were led by a veteran, a bigger issue was applicants’ plans for Recalls, Quarantine, and Destruction, an exhibit for which only 31% of application groups, obtained a perfect score of 16 points. Less than half, 47%, received a perfect score for their security plan.
Contacted by Grown In last week, some applicants were not surprised by those results.
“The recall plan, you’re going to follow those standard operating procedures no matter what the location is. The recall and destruction plan, those are critical, operational exhibits that should be very carefully scrutinized, because it shows whether the applicant knows how to do a critical aspect of this business,” said Scott Redman, a member of 2068 Investments LLC application group.
“Security is everything on this,” said Keith McGinnis, co-owner of NuEra, an Illinois cultivator and group of dispensaries, as well as dispensary applicant. “If you’re not passing that security part, why would you even be considered? It’s puzzling, to tell you the truth.”
“You needed all the points for this. You need one hundred percent,” said Edie Moore, a member of a team admitted to the lottery round. “It literally said that in the statute: ‘Highest score.’ Highest score in this case means one hundred percent. You need all the points. That was my team’s goal from the beginning. When we realized you needed a veteran, and the veteran needed fifty-one percent, we switched the cap table around.”
Recently proposed legislation would create a new round of dispensary applications, allowing any team who scored more 85% or better to enter a lottery for 110 licenses. While applicants have been provided an additional opportunity to fix problems with their scores, as of last August, about two-thirds of application groups, 66.7%, would have qualified for that lottery. Likely even more would qualify now that they have a chance to correct their applications.
