Cresco senior counsel Jim Boland reviews the company’s plan for a dispensary at 436 N. Clark St. Credit: Alex Nitkin/The Daily Line

This story was produced in partnership with The Daily Line.

CITY HALL — Downtown Ald. Brendan Reilly (42nd) excoriated the mayoral-appointed Zoning Board of Appeals as “a joke” on Friday after its members green-lit a proposal for a River North cannabis dispensary over his objections and those of a neighborhood group.

MOCA Modern Cannabis was one of five cannabis companies that emerged from a 12-hour hearing of the board with a special-use permit to open a recreational dispensary, clearing a key regulatory hurdle. However, because state law prevents pot shops from opening within 1,500 feet of one another, only three of the locations that received approval will be allowed to open.

The board also approved permits for dispensaries proposed by Cresco Labs at 436 N. Clark St., MedMen at 1001 W. North Ave., Nature’s Care Company at 810 W. Randolph St. and Windy City Cannabis at 923 W. Weed St.— with conditions tied to three of the approvals.

The five companies must now build out their dispensaries ahead of a final state inspection. Whichever company receives final approval first will be able to open and block all others from opening within 1,500 feet.

Because none of the proposed dispensaries required a zoning change, they were able to bypass the City Council and head straight to the zoning board for the permit.

MOCA is racing Cresco Labs for the right to set up shop in a small section of River North that had been coveted by four firms. PharmaCanna and Greenhouse Group withdrew their applications to open in the area prior to the hearing.

The five-member board’s approval of MOCA’s application to open its dispensary at 216 W. Ohio St. over the objections lodged by Reilly and the River North Residents Association ratcheted up the simmering battle between Mayor Lori Lightfoot and members of City Council over how new pot shops are approved.

Leaders of the residents’ association said they supported Cresco’s plan to open a dispensary at 436 N. Clark St. However, association president Michael Riordan testified during the hearing  that MOCA had not done enough to alleviate their concerns after the company’s Logan Square dispensary was burglarized in January, a crime Riordan called a “startling turn of events for someone who is asking to be a partner with us.”

Taking his cue from neighbors, Reilly sent board members a letter of support for the Cresco proposal and a statement of opposition to MOCA’s plan.

The board ultimately approved MOCA’s proposal with a series of conditions designed to address neighbors’ concerns. Reilly lashed out on Twitter minutes later, writing that “an incompetent ZBA full of connected bureaucrats” had “ignored overwhelming neighborhood & aldermanic opposition” to the plan.

“Your first taste of “Aldermanic Prerogative Reform” at ZBA? A total embarrassment,” Reilly wrote in another tweet.“Trust the Mayor’s bureaucrats to make good decisions for neighborhoods they don’t live in and aren’t held to account? The Cannabis Ordinance is a joke and so is the ZBA. We’ll be making changes.”

Lightfoot tapped Reilly to serve as president pro tem of the City Council, giving him a coveted role on her leadership team. Reilly presides over the City Council when the mayor is not present and controls the Legislative Reference Bureau.

In January, MOCA hired former Chicago Police Superintendent and River North resident Garry McCarthy as a security consultant for the location, but Riordan told Block Club Chicago his presence was “window dressing.”

“What they provided in that meeting was not reassuring at all,” Riordan said. “It was a bunch of statistical information and data that was not relevant to that location.”

MOCA co-owner Danny Marks and zoning attorney Sara Barnes both said on Friday that they were “feeling pretty good” after a community meeting with residents and did not hear any complaints directly from Reilly’s office or leaders of the neighborhood group. Barnes filed a Freedom of Information Act Request to request a copy of Reilly’s letter of opposition, she said.

Rather than deny the application, the zoning board asked Riordan and the company to work out their differences in a back room while the meeting continued.

The two parties met for more than an hour but did not come back with a signed deal, with Riordan saying he didn’t feel comfortable overriding the decision of his neighborhood group without further consultation.

When the board announced their 5-0 decision hours later, those concerns were turned into conditions placed on MOCA’s approval that must be met to retain the special use permit. The company must:

  • Have 24-hour, 7-day armed security at the site
  • Employ a debit transaction process for purchases to limit the amount of cash held at the facility
  • Build a non-transparent, permanent overflow structure to prevent outdoor queueing
  • Permanently prohibit on-site consumption at the location.

Board chair Farzin Parang defended the decision, saying the board followed the “criteria under the code that was passed by the City Council.”

“The neighborhood group had a guide of best practices for cannabis that at the end of the day, with the revisions the applicant had made…it basically met all of those, with the conditions,” Parang said.

Board member Sam Toia said the process worked.

“The neighborhood group and the applicant went to the back and they were there for a good hour and a half and they came to the middle,” he said. “That’s what we like to see, what the mayor likes to see.”

The decision came a day after Alds. Brian Hopkins (2nd) and Michele Smith (43rd), said they would oppose dispensaries vying to open in the Gold Coast.

“If we start to see the ZBA making decisions that contradict aldermanic recommendations, I think you’ll see a groundswell of support to make changes,” to the cannabis ordinance, Hopkins told Block Club.

MOCA executives declined to comment on the approval process on Monday.

Cresco dispensary approved with conditions

During Friday’s hearing, cannabis company leaders spent more than two hours each giving painstaking testimony on every aspect of their pot shops, including their layouts, plans to manage security, traffic patterns and electronic transactions.

Board members pressed the firms on how they would manage large crowds, and they asked the companies to explain how they would prevent waiting customers from spilling out onto the sidewalks, a common site at the city’s 11 existing dispensaries.

Cresco would set up a “queuing area” at 22 W. Hubbard St., about a block away from their proposed dispensary, where customers would show up to enter their phone numbers into a virtual waiting system similar to some restaurants, according to company senior counsel Jim Boland.

The waiting facility, a former restaurant space emptied of its tables and chairs, would have space for some 200 customers, Boland said.

Cresco’s approval came with the condition that they provide 30-day notice to the alderman before they cease providing the overflow space, and that they collect data from customers on what transportation methods they are using to get to the dispensary.

The board approved of the special use in a 4-1 vote, with Sylvia Garcia voting to deny the permit. It was the only dissenting vote cast Friday.

Conditions can be removed from a special-use permit, but the company would have to return to the board and present their case for why the condition is no longer necessary.

The three other approved dispensaries would be located in Ald. Walter Burnett Jr.’s 27th Ward. Asked by email on Friday whether Burnett opposed any of the three 27th Ward proposals, he responded, “No.”

Questions remain over diverse hiring

Before the meeting began, Burnett asked the board to consider what the applicants are doing to increase “African American participation.”

The leaders of all five companies, who are almost exclusively white men, were grilled by the board on their efforts to promote diversity and equity in their businesses.

Concerns about whether Black and Latino will benefit from the sale of cannabis after decades of being disproportionately impacted during the War on Drugs prompted Black Caucus Chair Ald. Jason Ervin (28th) to attempt to delay the legal sale of cannabis in Chicago until July.

Before the meeting, leaders of the Cannabis Equity Illinois Coalition held a press conference touting a community benefits agreement they had signed with Nature’s Care Company, an Illinois dispensary owned by cannabis giant Acreage Holdings.

The agreement binds the company to hiring standards and community outreach efforts beyond what state law requires. It was the only pot firm of the five applicants to sign such an agreement.

Akele Parnell, an attorney with the Chicago Lawyers’ Committee on Civil Rights who represents the coalition, testified during the hearing on Friday that the agreement went “above and beyond” the commitments of the other four applicants, saying the “historic” agreement would “set a precedent potentially throughout the U.S.”

Owners of MOCA and Windy City Cannabis testified on Friday that more than half their dispensary staffers are people of color, and they detailed local charity organizations they support with donations. Aside from that, Marks of MOCA said they could do little else to promote equity in the industry.

“Contrary to popular opinion, our dispensary is not a wildly profitable business at this point in time,” Marks said. “Everyone involved is underwater right now…but we hope to have the opportunity to do a lot more charitable and equity work in the future.”

Leaders of Cresco touted their SEED initiative, an incubator designed to help guide entrepreneurs of color through the license and business planning process.

“We’ve supported literally hundreds of individuals applying for licensure, a phenomenal group of diverse applicants, on how to think about complaint handling, compliant receiving, how to handle customer flow” and other tips, according to Barrington Rutherford, Cresco’s senior vice president of real estate and community integration.

However, only Nature’s Care’s signed agreement was enough to earn the support of the coalition, Parnell said.

Parnell testified against the Cresco, MOCA, Windy City Cannabis and MedMen proposals, saying that their lack of written commitments to equity measures would have a “significant and irreversible adverse impact on general welfare of our communities of color,” he said.

“Nice words and promises are great, but we can’t hang our hat on those,” Parnell said.

The board approved Nature’s Care’s proposal on the condition that they collect data on transportation methods from customers and have two security guards present at the rear of the property during loading and unloading.

Medmen and Windy City approved without conditions

MedMen, a Los Angeles-based company, told the board members that they are “fully banked” in every state where they operate and are able to allow all transactions to be processed with a debit card.

Board members pushed company leaders on the fact that their building is not adjacent to an alleyway and that deliveries would have to be made while “traversing a sidewalk.”

Barnes, the firm’s zoning attorney, said that process is similar to all other retail businesses in the immediate area, and that all deliveries would occur in the presence of a security guard and watched by security cameras.

Windy City Cannabis leaders received the least pushback from the board, with their hearing taking considerably less time than the others.

Their proposed dispensary is a few blocks away from MedMen’s proposal in the North cannabis district, setting up a race to build out the pot-shops before a state inspection.

Dispensaries taken off the agenda

The board was scheduled to hear a proposal from NuMed Chicago for its planned dispensary at 935 W. Randolph St., but the company asked to defer its proposal after executives accidentally hosted its community meeting outside the 27th Ward, officials said. NuMed’s application was rescheduled for a May 15 hearing.

Burnett came out against NuMed’s plan because of its proximity to the Haymarket addiction treatment center, which he said could spur some patients to relapse.

Haymarket CEO Dan Lustig gave the same argument against Nature’s Care on Friday, testifying that the city should draw a “safe perimeter” around the treatment center at 932 W. Washington Blvd.

“Without doing that, there is a huge cost to relapse,” Lustig said.

The following companies were scheduled to appear on Friday but withdrew their applications for dispensaries:

  • Cresco Labs, for a planned dispensary at 60 W. Superior St.
  • Green House Group, for a planned dispensary at 612 N. Wells St.
  • Pharmacann, for a planned dispensary at 444 N. LaSalle St.

Owners of MOCA Modern Cannabis applied in December to expand their dispensary at 2847 W. Fullerton Ave., but the zoning board deferred their hearing after requesting more information about their investors. MOCA later pulled their application, following the burglary of $200,000 in cash from the site.

Cresco Labs applied in September for a special-use permit to move its Sunnyside Lakeview dispensary from a small 900-square-foot space at 3812 N. Clark St. to what they say could be one of the “world’s largest” at 3524 N. Clark St. The board approved of the move on the condition that they must return to the board before they sell recreational weed at the site.

The City Council approved a zoning change for the location in December, after aldermen grilled Cresco executives over the racial make-up of their staff and investor pool.

RELATED: ‘Give the brothers a piece:’ Aldermen narrowly OK dispensary amid criticism over lack of Black owners

The company has begun construction on the dispensary but is waiting to receive guidance from state regulators on whether they would be affected by a provision of the legalization bill that restricts medical dispensaries from relocating.