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Pot Shop Applicants Getting 2nd Chance To Try To Get Illinois Licenses After Protests, Lawsuits

The change comes after weeks of criticism, protests and mounting lawsuits over how the state awarded points.

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Chicago — Those hoping to open a pot shop in Illinois will be able to to revise their applications, giving them a second chance at securing one of the state’s coveted licenses.

Gov. JB Pritzker announced the change Monday. It comes after weeks of criticism, protests and mounting lawsuits.

On Sept. 3, after months of delay, the state announced only 21 groups that had applied for a license to open a pot shop had received a perfect score. They were to split the lucrative 75 licenses available statewide following a lottery to be held later in September. 

The announcement drew immediate criticism from losing applicants, lawmakers and community groups. They condemned the process as opaque and said the state’s list included clouted organizations and had failed to increase minority participation in the industry, which is dominated by white men, despite vows to do so.

The scoring was done by accounting giant K.P.M.G.

Multiple lawsuits were filed, including a federal suit targeting the Illinois Department of Financial and Professional Regulation, which regulates cannabis dispensaries, and its deputy director, Bret Bender. 

The lawsuit, filed by attorney Jonathan Loevy, grew to include more than 70 plaintiffs, according to the Sun-Times. Loevy told the Sun-Times he would drop the lawsuit and a related injunction seeking to halt the lottery if the state took measures similar to those Pritzker announced Monday.

“When we heard significant concerns from numerous stakeholders about the process to award dispensary licenses, I said we needed to take a pause to fix their concerns, within the bounds of our landmark law,” Pritzker said in a news release. “While this process remains a marathon and not a sprint, we believe that these new steps will inject more equity and fairness in the first round of license awards and provide insight as we improve the process for future rounds.”

Each of the 21 finalists announced Sept. 3 received a perfect score of 252 on their applications.

While the state repeatedly said every finalist qualified as a social equity applicant, the winning groups included a clouted list of powerful interests, including Chicago restaurateur Phil Stefani, former Chicago Police Supt. Terry Hillard and others with ties to existing cannabis operators. The full list of those with an ownership stake in the finalists was reported by cannabis newsletter Grown In.

Now, those who failed to achieve a perfect score will be sent a “supplemental deficiency notice” identifying where they lost points and a chance to amend that section of their application or ask state regulators to rescore it if they believe it was initially scored in error, according to the Governor’s Office.

The state will not allow applicants to change the ownership structure of their original application, ensuring only applicants that previously qualified for social equity and veteran ownership status have a chance at receiving a perfect score. 

But the change means some applicants who didn’t get a perfect score could now see their scores go higher, giving them a chance at being part of the lottery.

At a Tuesday news conference, Pritzker said he hopes to wrap up the new round of scoring and the lottery this fall, and he said it’s worth any additional costs to the state.

“We want to make sure we get this right from the outset,” he said. “The more costly thing would be getting it wrong and awarding licenses in a way that’s not fair and ending up with an industry that’s not truly diverse.”

Peter Contos, advocacy coordinator for the Cannabis Equity Coalition Illinois, said he is glad applicants will be able to revise their applications — and this gives the state a chance to correct errors made by K.P.M.G. during the scoring process.

“We continue to hear stories from folks who are losing points for things that are just errors,” Contos said said. “Folks who have lived in Illinois their whole life losing points for not having Illinois residency, or somebody who’s lived in a disproportionately impacted area their whole life and didn’t get the social equity points.”

The coalition joined with Equity And Transformation in calling for greater transparency in the review process and eventual lottery to determine the winners.

Toi Hutchinson, cannabis adviser to Pritzker, said the extra time will give the state a chance to get the process right.

“We do not want a world where people who absolutely earned points that they should have received are denied those points,” Hutchinson said.

Applicants will have 10 days to respond after receiving their deficiency notice, Hutchinson said.

To qualify for a perfect score, applicants must have received bonus points for having a military veteran, or group of veterans, with a 51 percent ownership stake.

That requirement limited the number of qualified social equity applicants, Contos said. Hutchinson said the state will revisit the issue in future rounds of licenses.

“I’m not trying to come at veterans, but we recognize there are far more people in the state who have been affected by the War on Drugs who immediately lose out because they’re not veterans,” Contos said.

Hutchinson said the state will take the lessons learned from this wave of licenses to urge lawmakers to tweak the cannabis law before future rounds of licenses are awarded.

“I think the surprise in this was that the points awarded for veteran status was five points and the points awarded for social equity status was 50 points, we were very surprised at how many perfect scores there were,” she said.

Pritzker said he will urge lawmakers to change the law for future rounds to allow a larger range of applicants to advance to a lottery beyond only those who receive a perfect score. That change would match what lawmakers and community groups frustrated by the process have called for.

The Department of Financial and Professional Regulation, not K.P.M.G., will be in charge of oversight of the review process, Hutchinson said.

“We don’t want any more delays than we need, but we want to make absolutely sure that people have trust that the process was fair,” she said.

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