Pot license winners lose court challenge
SPRINGFIELD — A Sangamon County court on Thursday denied a restraining order requested by cannabis dispensary license finalists in an attempt to stop the state from rescoring the applications of losing applicants.
In early September, Gov. JB Pritzker’s administration revealed after months of delays due to the COVID-19 pandemic that just 21 firms out of over 900 applicants qualified for the first round of 75 “social equity licenses” for marijuana dispensaries. These licenses were earmarked for dispensaries expected to improve the economic conditions of communities harmed by the war on drugs.
Later that month, Pritzker announced marijuana dispensary applicants would have another chance to amend their submissions before the licenses were awarded.
Some firms originally selected as finalists criticized the governor for the decision, accusing him of caving to political pressure. Three firms sued the administration in an attempt to stop the re-evaluation, first appealing to the state Supreme Court, then to a lower court once that request was denied.
That lawsuit was dealt a blow Thursday after Sangamon County Judge Adam Giganti denied a temporary restraining order that would have prevented the Illinois Department of Financial and Professional Regulation from grading amended applications and adding new finalists to the 75-license lottery.
The three firms named as plaintiffs in the lawsuit – SB IL LLC, Vertical Management LLC and GRI Holdings LLC – argued for the injunction on the grounds that changing the process after winners were already announced was unfair and that allowing losing firms to resubmit their applications would cause the three groups “irreparable harm.”
In the court’s 17-page opinion, Giganti wrote the plaintiffs failed to demonstrate how Pritzker’s administration giving losing firms a second chance would cause irreparable harm, and that “the public interest favors allowing (IDFPR’s) administrative process, including its announced supplemental process, to proceed.”
The Pritzker administration made the decision to rescore applications after backlash over allegations of unfairness and inconsistencies in how applications were scored. The Illinois Legislative Black Caucus and the Illinois Legislative Latino Caucus each sent Pritzker letters asking him to suspend the lottery. Lawmakers and cannabis advocates took to social media and news outlets to criticize the administration over so few winners being selected and what they saw as inconsistencies in the licensing process.
Several losing firms sued IDFPR and the Pritzker administration. One complaint featured in lawsuits was that the process violated a provision in the Cannabis Regulation and Tax Act that applicants were to be notified if their submission was “deficient in any respect,” since no firm received such a notification. Some also alleged that applicants with ties to KPMG, the third-party firm in charge of scoring applicants for IDFPR, had an unfair advantage in the process.
Two weeks after the initial winners were announced, the state halted the process. A release from Pritzker and IDFPR said they would give losing firms another opportunity to join the 21 finalists in the lottery after “careful examination” based on “feedback from community leaders and stakeholders.”
As a result of the change, losing firms dropped their lawsuits against the state. KPMG denied all allegations of impropriety and is still under contract with IDFPR to score marijuana license applications, including resubmissions.
Now that the temporary restraining order has been dismissed, IDFPR can continue its supplemental grading process and potentially add several more firms to the final lottery. Failed applicants will receive a “supplementary deficiency notice” explaining where they lost points and will have 10 days after receipt to edit their submission to address the errors. Resubmissions that achieve a perfect score will progress into the next round of tiebreaker lotteries alongside the original 21 finalists.
As part of the supplementary process, firms are not allowed to change owners or the makeup of their ownership from their first failed application.
In an interview with the Chicago Sun-Times, Pritzker spokeswoman Charity Greene said the administration would start the supplementary grading process “in the coming weeks.”
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