75 Pot Shop Licenses To Be Awarded – Losing Firms ‘Shocked’

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Illinois marijuana dispensaries sold over $44 million of recreational cannabis in May Photo: Shutterstock

Illinois – State officials announced Thursday the next round of long-delayed and highly sought after cannabis dispensary licenses will be awarded in a lottery later this month.

The 21 qualifying applicants for the 75 new licenses were informed after a global accounting firm finished grading 1,667 applications, according to the Illinois Department of Financial and Professional Regulation.

All those applicants received perfect scores and qualify as social equity candidates, meaning they were afforded a leg up in the application process as part of the state’s efforts to build diversity in an industry dominated by white men.

“We are extremely gratified that every license in this first round will go to a social equity applicant. … Equity has been at the center of this legislation from day one of negotiations, as we worked to create a system that prioritizes social equity applicants and reinvests revenues in communities hit hardest by the war on drugs,” said Toi Hutchinson, Gov. J.B. Pritzker’s key cannabis adviser.

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

Two-thirds of the applicants qualified because at least one person involved has for five of the last 10 years lived in an area that’s been disproportionately impacted by past marijuana enforcement, the IDFPR said.

The remaining applicants met other qualifications: Four are majority owned by individuals who have been arrested for or convicted of an expungeable pot offense; two more are majority owned by applicants with a family member, guardian or dependent that meets that criteria; and another has a workforce that consists mostly of people who would qualify.

The licenses, which were initially set to be issued on May 1, have been delayed months by the coronavirus pandemic, which prompted a nationwide travel ban for the outside grading firm KPMG.

Applicants with tied scores in each of the 17 regions will receive a single entry into a region’s lottery for each application they submitted, the IDFPR said. Some firms gambled and paid to submit multiple applications at a cost of $2,500 each.

Nearly 50 of the licenses will be awarded to shops to open in the Chicago region, which includes a wide area in the city, suburbs and beyond. Licenses will be awarded conditionally and be contingent on the businesses meeting various requirements, including equity provisions.

Announcement leaves losing applicants ‘shocked’
Some of the qualifying applicants share the same owners, according to records kept by the Illinois Secretary of State’s office. They will ultimately be able to win the right to open up to 10 pot shops in the lottery.

Edie Moore, executive director of the Chicago chapter of the National Organization for the Reform of Marijuana Laws, is listed as a manager of two of the limited liability corporations that were selected, records show. Moore didn’t immediately respond to a request for comment.

In addition, two other applicants are both managed by a Western Springs company called Clean Slate Holdings LLC, records show. The firm couldn’t be reached.

Of the 336 lottery spots, applicants tied to Clean Slate control 76 and Moore’s groups have nine more.

The announcement of the drawing marked the end of the line for many socially equity candidates hoping to gain footholds in the state’s booming weed business.

Michael Malcolm, a real estate broker from Morgan Park who submitted 10 applications across multiple regions, said it’s “insane” the lottery includes so few entrants.

“That doesn’t sound to me like social equity. … That sounds like big business,” Malcolm added while awaiting a call from his attorney to clarify certain rules. “It’s a bit of a shock right now.”

Vincent Norment, an Englewood native and veteran of the U.S. Marines, led a group that applied for 21 licenses across all the regions. Like Malcolm, Norment came out empty-handed and expressed concerns about the small pool of applicants included in the lottery.

“My team is shocked. I’m disappointed,” noted Norment, who said his group ultimately plans to invest in some of the firms included in the upcoming drawing.

After all the state’s outstanding pot licenses have been issued — including the other delayed permits to grow, infuse and transport the drug — Hutchinson said the state will conduct a disparity study “to better understand how this new industry is working and correct any structural challenges to equity as we move forward in issuing hundreds of additional licenses and further developing this new industry.”