Proposed Illinois license law fails to satisfy license litigants: “We need to pursue the litigation”

A long awaited bill to update Illinois’ cannabis licensing process affirms the award of 75 dispensary licenses to the 21 winners of 2020’s license process, creates a new lottery for 110 licenses for 2,291 other dispensary applicants, but does not satisfy at least one group currently suing the state over the dispensary license process.

Introduced by State Rep. LaShawn Ford (D-Chicago), the legislation comes after months of negotiations between social equity applicant groups, and is aimed at breaking legal logjams created by two lawsuits filed by applicant groups charging that 2020’s licensing process is unconstitutional.

[Read the proposed legislation]

“This is the best way to do it for the second round,” said Rep. Ford. Rather than, “to hire a new company or rely on KPMG to score everything again, or create a new application process that we’re not ready to have.”

The legislation’s proposed new process would award 75 licenses to a “Tied Applicant Group”, the 21 winners of the 2020 license process, but would limit those winners to no more than 10 licenses each. Then, within 45 days, every group that applied in the 2020 process, but scored 85% or better of the 250 points allowed, so-called “Qualified Applicants”, would be automatically entered into a second round lottery of 110 licenses. In addition, winners of the Qualified Applicant lottery, would only be allowed to be the majority owner of three licenses, seven less than those awarded in other lotteries.

Also, according to the proposed legislation, the Qualified Applicant lottery would not include 276 social equity applicants who obtained their social equity status through hiring residents of disproportionately impacted areas, were arrested for cannabis laws, or were part of an impacted family. This path to social equity status, a so-called “slave clause” by activists, has incensed applicants since a majority of the 21 winners announced last September attained their social equity status through this method.

“This one group is getting no shot at all,” said Irina Dashevsky, an attorney from Locke Lorde representing a group of applicants suing the state over the license process. “There were many requests on the FAQs asking, ‘Are you going to treat different social equity groups differently?’ The resounding response was no.”

A key reason for Rep. Ford’s proposed legislation is to address two pending Illinois lawsuits, one in Cook County and another, litigated by Dashevsky in Sangamon County, that contend the license scoring process’ award of “veterans bonus points” to applicant teams led by a military veteran. Plaintiffs in both lawsuits charge the veterans points unfairly advantage a class of individuals in scoring, a “special class” not allowed in the Illinois constitution.

“I don’t think this is compelling enough, where I would recommend to my clients dropping the litigation,” says Dashevsky, who says she has not been contacted by legislators. “Rather to the contrary, it lends itself to the opposite result: We need to pursue the litigation.”

Unlike earlier legislation floated by Rep. Ford, the latest version is choc-a-bloc with legislative fixes unrelated to the dispensary licenses held up in court. It includes: 

• creating five new medical licenses, each with a “plus-one adult use license”, targeted at social equity applicants, 
• bringing FOIA rules for medical licenses in line with adult-use ones, unties medical patients from purchasing from a specific medical dispensary, 
• broadening dispensaries’ ability to purchase from craft grower, processors, and other dispensaries, 
• allowing cannabis workers to start work before they received their state-issued IDs, 
• requiring adult-use cultivators, processors, craft growers, and transporters to keep an up-to-date ownership table, 
• stopping state regulators from modifying BLS regions for distribution of licenses, and 
• clarifying the Cannabis Oversight Officer as a “coordinator” between agencies, but reenforces language limiting that regulator from participating in license awards or disciplinary action.

According to Rep. Ford, that last aspect was language “requested by the Governor’s office”, a curious move, as many states, including California, New York, Missouri, and Michigan, are moving to unify authority under a single cannabis regulator. 

State officials did not respond to a request for comment by publication.