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Pritzker urged to halt lottery for new marijuana licenses, address ‘orchestrated injustice’ of application process

“We are under the weather from this oppressive system, this rigged system, in which the state representatives and the state senators were lied to,” former state Sen. Rickey Hendon said during a news conference Tuesday.

Licenses for new pot shops will be doled out in a lottery soon — but lawmakers want to slow down the process.
Sun-Times file photo

A pair of state lawmakers joined a group of losing pot shop applicants Tuesday to call on Gov. J.B. Pritzker to halt an upcoming lottery to determine the winners of the 75 long-delayed licenses and review the application grading process, which they claim was tainted and benefitted clouted firms.

“We are under the weather from this oppressive system, this rigged system, in which the state representatives and the state senators were lied to,” Rickey Hendon, a former Democratic state senator from Chicago, said during a news conference, noting that the “legislative intent” of the legalization law was to increase minority and local participation in the booming weed industry.

State law offers additional points on applications to groups and individuals deemed social equity applicants for living in an area disproportionately impacted by drug enforcement, having a past cannabis offense or meeting other criteria.

A total of 937 groups applied for the next round dispensary licenses but only 21 applicants moved onto the lottery last week after receiving perfect scores on their applications, which were graded by the global accounting firm KPMG. All of the applicants in the lottery are considered social equity candidates, who were given a leg-up in the process in an effort to bolster minority participation in the overwhelmingly white pot industry.

Hendon said many eligible applicants are “suspect” over the process, noting that an individual who’s part of one of the applicant groups works for KPMG and has partnered with former Chicago police Supt. Terry Hillard. The small pool of finalists also includes groups involving well-known Chicago restaurateur Phil Stefani, Lucky Lincoln Gaming president Jeff Rehberger and existing players in the pot industry.

State officials have said seventeen of the qualifying applicants have at least one minority owner, while 13 are majority owned by people of color. Sixteen have at least one owner who’s a woman.

Prior to attending the news conference, State Reps. La Shawn Ford, D-8th, and Kathleen Willis, D-77th, penned a joint letter to Pritzker raising a list of concerns.

“The implementation of this law does not seem to meet the true social equity results the General Assembly intended when we passed this bill. We believe the administration should have an opportunity to explain what happened and what is being done to fix the situation,” they wrote.

The letter to Pritzker follows a similar appeal last week from members of the Black and Latino caucuses, who called on the governor to halt the issuance of all upcoming cannabis licenses.

The letter from Ford and Willis includes a series of questions asking among other things why KPMG was awarded a no-bid contract, when information about the scoring process will be released and whether there’s “still time to stop the lottery.” Ford and Willis will also hold a virtual town hall Wednesday afternoon “to hear the concerns from teams that applied and other key individuals worried about social equity.”

Pritzker vows ‘changes and fixes’

Prtizker told reporters Tuesday that the law wouldn’t allow officials to hold up the lottery as he defended the diversity of the groups included in the drawing.

Nevertheless, he vowed that “there will be changes and fixes” to the licensing process while pointing to an upcoming disparity study that will determine how many new pot permits are needed after the upcoming dispensary, cultivation, transportation and infusion licenses are issued.

Toi Hutchinson, Pritzker’s chief pot adviser, detailed some proposed changes to the application process for future licenses, including limiting the number of applications each firm can submit. Many of the firms in the lottery have multiple chances to win because they paid thousands of dollars to submit multiple applications.

“We need to put a limit on how many [licenses] you can apply for at one time so that you can’t have really heavy, moneyed interests apply for way more than what your regular folks can apply for. ... I think another thing is to go from just doing top scores to doing a cutoff score so you can also expand the pool,” Hutchinson said, apparently referring to the lottery only including those with perfect application scores.

Marc Pullins, a Roseland native whose group Lori’s Leads was up for three dispensary licenses, was among the applicants who came up short. Pullins, who is Black, said his attorney was in the process of filing an injunction to put a hold on the lottery.

“We’re here to address the orchestrated injustice of the scoring process and call on the [Illinois Department of Financial and Professional Regulation] and our Gov. Pritzker to make the scoring process fair and transparent,” said Pullins, whose group was included in an incubator started by Chicago-based pot giant Cresco Labs.

“Despite recent press releases from people connected to the state and some of the applicants selected [saying] social equity played a significant role in determining the winners, well, it didn’t,” Pullins added.

Lawsuits filed

In addition to Pullins’ planned injunction, two entirely Black-owned firms from Chicago filed a joint lawsuit Friday against the IDFPR and the director of the department’s cannabis control section. The suit, filed in the U.S. District Court for the Northern District of Illinois, alleges that many of the lottery participants are “owned by politically-connected insiders” and claims the 75 outstanding dispensary licenses are worth over $1 billion.

The plaintiffs, Southshore Restore and Heartland Greens, claim they should have received perfect scores and want to hold up the lottery until they can find out why they aren’t included. The firms hold that it’s unconstitutional not to allow “unsuccessful applicants any opportunity to challenge their ineligibility.”

State officials have announced the lottery will happen later this month.