Amid a seemingly endless series of delays, Britteney Kapri finally got some good news last month.
Baked, her cannabis startup, had been named the winner of a dispensary license in a sought-after region that covers Chicago.
But instead of feeling joy, or even relief, Kapri fell into a state of panic as she reflected on the latest hurdle stymying the licensing process: a court order that remains intact had blocked the issuance of her permit and 184 others.
“I was just like, don’t let it be another year of waiting,” she said. “So I haven’t actually celebrated.”
Like other Black entrepreneurs from Chicago who were named license winners over the course of three recent lotteries, Kapri has been subjected to a bureaucratic nightmare while pursuing her dream of carving out a stake in the white-dominated weed industry. It’s all taken a serious toll.
After leaving her job at a nonprofit in hopes of fully immersing herself in the cannabis business, she became unemployed in January and only started working again recently.
“It’s definitely bled into my personal life,” said Kapri, who’s also a renowned poet. “It’s led to me being just stuck between a rock and a hard place for the past few months because I couldn’t answer anybody about what was happening.”
Pro-pot legislators sought to bolster diversity in the cannabis industry by prioritizing new licenses to firms like Kapri’s that qualified as so-called social equity applicants. But even if Baked and other minority-owned firms can get open, the path to success is daunting for small businesses competing with publicly traded pot giants that already have strong footholds in the soon-to-be-diluted retail market.
Though she’s gotten a flood of solicitations from real estate professionals and prospective partners, Kapri said she’s reticent to make any plans, much less any binding decisions.
“I don’t have a business yet,” she said matter of factly.
Back to square one?
Attorney Akele Parnell, who’s partnered in groups that respectively earned new dispensary and cultivation licenses, echoed some of Kapri’s concerns about the uncertainty surrounding the rollout. And while Parnell acknowledged that he has started scoping out properties for a pot shop in Chicago, he said his team won’t sign a lease now “unless there’s a way out.”
“You don’t even know for sure that you have a license,” he said. “So if you did spend money and time doing all that stuff, it’s possible that you could lose that license if they redo the lottery and then everybody’s back to square one.”
Judge Moshe Jacobius, who put an indefinite hold on the dispensary permits, raised that possibility during a court hearing last month. Jacobius is presiding over a convoluted, still developing lawsuit that has challenged the bonus application points granted to military veterans, which the plaintiffs have claimed created a special and illegal class of applicants.
“Counsel says that if you ultimately rule that the whole structure was improper, then the whole thing will have to be redone over again,” Jacobius said during the hearing. “That may very well be, but I can’t anticipate what’s going to happen. ... But then, everybody then would be subject to just another application process or another lottery, who knows what.”
Since then, another pressing issue has emerged.
On Sept. 3, state officials announced that a fourth lottery for cannabis dispensary licenses will now be held to give certain applicant groups a chance to win additional permits after they were wrongfully excluded from drawings in an earlier lottery.
Meanwhile, at least seven other lawsuits challenging the state’s licensing efforts continue to wind their way through the courts. That includes a suit Baked filed with another applicant group in Cook County alleging that state officials pushed them to give up additional spots ahead of the third lottery on Aug. 19, when each firm ultimately grabbed a license.
Parnell said his team is now “losing money by the day” as he and his partners wait for the dust to settle. At the same time, other firms that won licenses may just sell them off to the highest bidder — a process that could undercut the state’s lofty goal of diversifying the industry.
Financial, health impacts
Former state Sen. Rickey Hendon, who also scored a license in the Chicago area, said he’s weighing offers from buyers from across the country, including multi-state pot firms and investment bankers. Just minutes after he was named a winner, Hendon said he received a $5 million bid that he quickly rejected.
Despite entertaining offers, Hendon said selling just a stake of the company would be “the best scenario,” as opposed to potentially taking out a high-interest loan. At this point, he added, his team’s savings have been depleted and they need an infusion of cash.
“The money that we could’ve had to open with a year ago is not necessarily available any more,” he noted. “Life goes on. Surviving the pandemic has not been easy for anybody.”
Hendon’s last year has been particularly turbulent, though. After leading protests and emerging as the unofficial spokesman for other jilted applicants, Hendon’s advocacy came to a grinding halt in April when his blood pressure skyrocketed and he was hospitalized for a week.
“It was all caused by stress,” he said, “and the stress was the delay.”