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Pot shop licenses to promote social equity could go to firms tied to co-founder of $3B cannabis giant

Matt Estep, the former managing partner of Green Thumb Industries, runs an investment firm linked to two applicants hoping to win the right to open marijuana dispensaries in Illinois.

Matt Estep, a co-founder of Loop-based pot giant Green Thumb Industries, appears connected to two applicants for new dispensary licenses that list the same address as his suburban investment firm.
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Two shadowy companies vying for multiple licenses in the upcoming pot shop lottery share the same west suburban address as an investment firm led by the co-founder of Green Thumb Industries, a River North-based power player in the weed industry.

Matt Estep was among a group of investors who started GTI in 2014, the same year medical cannabis was legalized in Illinois. The firm, which has since blossomed into a publicly traded behemoth valued at roughly $3 billion, has operations in multiple states and runs two cultivation centers and six dispensaries in Illinois, including Rise Joliet and Rise Mundelein.

Although Estep no longer works at GTI, he told the Sun-Times earlier this year that he was still a shareholder.

Now, he appears connected to two finalists that each submitted 38 perfect applications for 75 new dispensary permits that will be awarded via a lottery later this month. Of the 19 other applicants that received the most points in a process that is supposed to prioritize social equity candidates, only one other firm submitted that many perfect applications.

The two companies tied to Estep — Dealership LLC and Clean Slate Opco LLC — both list Clean Slate Holdings LLC as their registered manager, according to records kept by the Illinois secretary of state’s office. All three share the same Western Springs address as Bosworth Capital Partners, an investment group Estep leads.

They also share the same registered agent, ACFB Incorporated, which lists in state filings its agent and officers as three attorneys for Benesch, a major law firm headquartered in Ohio with offices in the Loop.

Bosworth Capital Partners shares the same Western Springs address as the managers of two companies that are finalists for new pot shop licenses.
Pat Nabong/Sun-Times

It’s unclear how exactly Estep is tied to the applicant companies or Clean Slate Holdings, which hasn’t registered in Illinois, state records show.

On Thursday, Estep didn’t respond to questions, saying in an email, “At this time I am not able to discuss matters related to Clean Slate Holdings.”

State officials have said the finalists for dispensary licenses all met the social equity criteria by having a majority owner who lives in an area that’s been adversely impacted by the drug war or who has an expungeable cannabis offense or a family member who does. Applicants can also qualify by hiring a workforce of more than 10 people that mostly includes individuals who check those boxes.

Gov. J.B. Pritzker and other lawmakers in Springfield framed the social equity program as a way to bolster minority ownership in a booming industry overwhelmingly controlled by white men.

Estep, who is white, also didn’t answer questions about how Dealership and Clean Slate Opco earned social equity status. Neither did a spokeswoman for Pritzker’s office.

“From the beginning we have stated that it takes time to transform an industry that is lacking in diversity not just in Illinois, but worldwide,” the governor’s top pot adviser, Toi Hutchinson, said in a statement Thursday. Hutchinson added that 60% of the applicants who qualified for the lottery “are majority owned by people of color.”

The first batch of customers enter Rise Joliet, a cannabis dispensary in southwest suburban Joliet, on the first day of legalized recreational marijuana in Illinois, Wednesday, Jan. 1, 2020. | Ashlee Rezin Garcia/Sun-Times
The first batch of customers enter Rise Joliet, a cannabis dispensary in southwest suburban Joliet, on the first day of legalized recreational marijuana in Illinois, Wednesday, Jan. 1, 2020. | Ashlee Rezin Garcia/Sun-Times
Ashlee Rezin Garcia/Sun-Times

‘Happy and supportive GTI shareholder’

Estep, who earned a master’s degree from Harvard Business School and previously worked at Peoples Energy, launched GTI six years ago alongside the firm’s chief executive Ben Kovler and Ari Levy, whose father founded Levy Restaurants.

In 2017, Estep and Levy filed a lawsuit after Kovler moved to remove them from the company’s board of directors, according to a former GTI employee familiar with the situation. The source said Estep and Levy ultimately settled for equity in a GTI entity and left the company.

But Estep was still an investor when applications for the second round of pot shop licenses were due on Jan. 2, the day after recreational sales kicked off across Illinois, including at GTI’s Rise dispensaries, ending decades of prohibition.

On May 26, weeks after the new dispensary licenses were initially set to be issued, Estep told the Sun-Times he remained close to Kovler.

“Ben Kovler and I maintain numerous successful business relationships today and I remain a happy and supportive GTI shareholder,” Estep said in an email.

Linda Marsicano, a GTI spokeswoman, said the firm “does not have ties, financial or otherwise, to Dealership LLC or Clean Slate Opco LLC.”

“Green Thumb’s LEAP program provided pro bono assistance to hundreds of social equity applicants navigating the license application process, none of whom are on the state’s list of potential license winners,” Marsicano said in a statement. “ Green Thumb Industries Inc. is a publicly traded company and, as such, has a wide base of shareholders able to buy and sell our stock on the open market.”

State Rep. La Shawn Ford
State Rep. La Shawn Ford
Sun-Times Media

‘Too much abuse in the past’

The revelation about Estep’s connection to Dealership and Clean Slate Opco comes as lawmakers and losing applicants are calling on the governor to halt the lottery over concerns that the application process apparently allowed clouted and seemingly well capitalized firms to move onto the next phase.

With just 21 lottery contenders, applicants like Dealership and Clean Slate Opco who shelled out fees of $2,500 each for multiple applications — with no guarantee of success — will have a clear advantage. Both companies will have 10 chances to win dispensary licenses.

Pritzker told reporters earlier this week that the law wouldn’t allow officials to hold up the lottery, though some applicants have filed suit to do just that.

During a press conference with losing applicants Wednesday, state Rep. Kathleen Willis (D-Northlake) called for a thorough review of “who truly are the officers of these corporations that won the bids.”

“Are they in name only or are they actually operating officers? That’s truly important to us,” Willis said. “And we’ve seen that there are some star names in some of these that we question, did they just fall into the category because they were African American, Hispanic, women, veterans? Or are they actually investors and going to be part of the day-in, day-out operations of these dispensaries once they get up and running?

“We’ve seen too much abuse in the past to just take it on paper.”

State Rep. La Shawn Ford (D-Chicago) said the answers need to come before the winners of the lottery are announced, otherwise “it’s too late. And so it’s better that we know up front if there’s true social equity in the ownership of these licenses.”

Ford and Willis now plan to introduce legislation during an upcoming veto session to “make sure that true social equity is achieved.”

Hutchinson’s statement said the governor will work with “the General Assembly to address any challenges to equity as we move forward in implementing the law.”