CHICAGO — Almost seven years after Illinois lawmakers approved the legalization of recreational cannabis, applicants who missed out on valuable business licenses are still contesting the state’s process in court. They allege that the implementation of the law has compromised its intended equity objectives.
When the law was enacted in 2019, supporters heralded it as the most equity-focused cannabis legalization initiative in the nation. A key feature of the legislation was the allocation of most cannabis business licenses to “social equity” applicants, those disproportionately affected by the War on Drugs. However, this provision has proven more complex in execution, leading to years of litigation.
Final Lawsuit in a Prolonged Legal Battle
The last of numerous lawsuits stemming from the initial cannabis licensing lottery in 2020 was heard this week, concluding a lengthy legal dispute that has scrutinized the state’s legalization framework. For the plaintiff, Well-Being Holistic Group, this marks a critical opportunity for a dispensary license after its four applications were unsuccessful in three separate lotteries.
“We just want a fair shot,” said Rev. Otis Davis after Wednesday’s hearing. “We’re not asking for anything special, just what was promised from the very beginning. If the system is broken, it should be redone to give everyone a chance.”
Davis is a minister at Repairers of the Breach Ministries in Chicago and was part of the team that applied for dispensary licenses as Well-Being Holistic Group in 2020. Lawyer Chris Harris and business partner David Roberts assisted in submitting the applications.
Harris emphasized the unique qualifications of the team: “With Otis being a veteran from a disproportionately impacted area, we felt we had an ideal team to obtain this license.”
Despite Well-Being Holistic Group’s applications receiving perfect scores, they failed to secure a license. Unlike many other lawsuits, which challenged specific scoring outcomes, Well-Being’s case presents a unique legal argument, identified by attorney Chris Carmichael as one of the most challenging paths in litigation.
Claims of Irregularities in the Lottery Process
Well-Being contends that the Illinois Department of Financial and Professional Regulation (IDFPR) improperly included around 450 ineligible entries in a pool of 901 applicants for dispensary licenses in the Chicago area. This, they argue, significantly diminished their chances of success.
The plaintiffs assert that many applications should have been flagged as ineligible, as established dispensaries already involved in Illinois’ medical cannabis market were linked to social equity applicant submissions.
In one instance, Carmichael highlighted that a company paid approximately $500,000 in application fees, indicating that IDFPR should have noticed this connection during the vetting process.
IDFPR maintains that it acted appropriately by reviewing the individuals named as principal officers on the applications and would have identified any ownership discrepancies. However, Well-Being argues that this approach failed to account for widespread corporate sponsorship across several applications.
In defense, Alex Moe from the Illinois Attorney General’s office stated that Well-Being misunderstood the expectations of consultants involved in the application process. Moreover, he argued that even if Well-Being’s claims about ineligible applicants were correct, it would not alter the overall outcome of the lottery.
“Even if half the applicants should not have been included, it won’t change the final result,” Moe stated, indicating that Well-Being would have finished 126th out of 450 had the ineligible applications been removed.
Consideration for Corrective Actions
Carmichael countered Moe’s assertions by stating that with numerous social equity cannabis dispensary licenses going unused, the state should consider a corrective lottery to address these issues justly.
Corrective lotteries have previously been executed, as delays in the initial license awarding process extended the timeline significantly. The first dispensaries owned by social equity license holders opened in November 2022, nearly three years after the application process began, with only 64% operational as of January, according to a report by The Chicago Reporter.
Judge Patrick Stanton noted during the hearing that while he understands Well-Being’s concerns, he seems hesitant to intervene in how a state agency functions. He indicated that IDFPR might have carried out sufficient vetting, albeit perhaps not to the level desired by the plaintiffs.
Stanton plans to deliver a ruling on May 21 regarding the matter.