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Jackpot: Hundreds of firms now vying for permits in cannabis dispensary lotteries

If all goes as planned, Thursday’s drawing will mark the beginning of the end of a lengthy imbroglio that has marred Gov. Pritzker’s first term in office. 

The location represents the first cannabis retail shop to open near downtown Chicago and the first recreational-use only dispensary in the city. | Ashlee Rezin Garcia/Sun-Times
Jordan Davis, a wellness advisor, shows products to a 55-year-old man from River North as he makes the second purchase at Cresco Labs’ seventh Sunnyside dispensary at 436 N. Clark St. on the store’s opening day in River North, Thursday morning, May 28, 2020.
Ashlee Rezin Garcia/Sun-Times

After a year of turmoil, Illinois is finally on the verge of dishing out precious new pot shop permits — and hundreds of groups are now in the running.

The first of three lotteries for 185 total dispensary licenses is set for Thursday, with the others scheduled next month. Toi Hutchinson, Gov. J.B. Pritzker’s chief adviser on cannabis, told reporters Wednesday that 626 of the more than 900 applicant groups qualified for the first drawing, which will determine the winners of 55 licenses.

The Illinois Department of Financial and Professional Regulation is expected to publicly announce those finalists at some point Wednesday. The second drawing will include 589 contestants from the original applicant group, Hutchinson said, but the final number of participants in the third lottery hasn’t been set.

“Our goal is to give this opportunity to as many people as possible,” she said, noting that 97% of the finalists qualified as social equity applicants, those given a leg-up in the process in an effort to diversify the white-dominated pot industry.

“It doesn’t matter who they are, per se, just that we end up with an industry that looks different than it does today,” added Hutchinson, though she couldn’t provide demographic information for the applicants.

If all goes as planned — which largely hasn’t happened so far — Thursday’s lottery will mark the beginning of the end of a lengthy imbroglio that has marred Pritzker’s first term in office. The licensing rollout previously came to a grinding halt last September, when state officials announced that just 21 of the applicant groups had earned the perfect scores needed to secure spots in the long-delayed lottery for what was then limited to just 75 upcoming permits.

The announcement prompted protests, lawsuits and intense scrutiny of the firms tapped for the lottery, some of which include white partners with political connections and deep pockets. That revelation caused much consternation among jilted minority applicants, who claimed state officials had fallen woefully short of their lofty diversity goals.

Pritzker’s administration ultimately bowed to the pressure, and he announced a supplementary scoring period aimed at expanding the pool of finalists. On Wednesday, Hutchinson said the number of perfect applicants has now jumped to 133.

Seeking to include even more of the applicants, a group of social equity candidates banded together this year and helped draft legislation that added 110 more licenses. Pritzker signed it earlier this month, the same day officials announced the lotteries to dish out all the new permits.

Cannabis consultant Mike Malcolm smokes a joint in a North Side home as he explains what customers can expect at dispensaries now that recreational marijuana is legal in Illinois, Jan. 8, 2020.
Cannabis consultant Mike Malcolm smokes a joint in a North Side home as he explains what customers can expect at dispensaries now that recreational marijuana is legal in Illinois, Jan. 8, 2020.
Ashlee Rezin Garcia/Sun-Times

For those who won spots in the lottery Wednesday after they were previously shut out, the news was encouraging, although they still have misgivings about how the process is playing out.

“I’m exhausted mentally and emotionally from just fighting,” said Michael Malcolm, a cannabis consultant and real estate broker up for 10 licenses. “It feels like I’ve been fighting for two years.”

“I just want to see it through and just let the chips fall where they may,” he added.

The Illinois Lottery is conducting all the upcoming drawings, but they won’t resemble the old televised segments with balls bouncing around a tumbler. Instead, an automated computer system will identify random numbers previously assigned to applicants. After a series of audits, the IDFPR will match the winning numbers with the corresponding applicants and make the results public later in the day.

Thursday’s drawing for 55 licenses created under the new law will include applicant groups that received a lower “cut score,” which was adopted to ensure that teams that didn’t receive bonus points for having a military veteran could still qualify.

The lottery will, however, include firms that qualified as social equity applicants through a controversial provision of the legalization law derided by critics as the “slave-master clause.” Under that provision, groups earned crucial social equity points by hiring a workforce made up of individuals who qualify for that designation, either by living in an area ravaged by past drug policies or having a pot offense on their records.

The second lottery for the other 55 new licenses, set for Aug. 5, includes groups that meet the same scoring threshold and have a majority owner that checks one of those two boxes. The final drawing, scheduled for Aug. 19, will issue the 75 delayed licenses to applicants with perfect scores.

During Wednesday’s press briefing, Hutchinson claimed the state is now back on track to meet its lofty goal of bolstering racial equity in the state’s booming pot business.

“When you talk about impacting an entire community that was hardest hit by the war on drugs, there was a feeling that you wanted as many people as possible to at least have a chance. So we are very excited about making such a big jump,” she said of the number of applicants now up for licenses.

Judge rules licenses can’t be issued before Aug. 9

While a federal lawsuit that threatened the process was abruptly dropped Tuesday, the judge in another suit filed last year in Cook County issued a last-minute order that could have serious implications.

The suit, brought by two firms that qualified for the first two lotteries, holds that the bonus points for veterans creates a special applicant class. Judge Moshe Jacobius ruled Wednesday that the first two drawings can proceed and the winners can be published, but the licenses can’t be issued before an Aug. 9 hearing is held.

The plaintiffs will decide whether to move forward after those lotteries have been held, their attorney Mazie Harris said.