A legal battle over the licensing of the cannabis business in Illinois could overturn the state’s residence requirement by throwing the key into an already dysfunctional process and attempts to diversify the industry.
The lawsuit is just the latest in a series of lawsuits that keep much of the legal cannabis industry in suspense. But there are signs that the congestion may break.
A Cook County judge in another case indicated that she could lift a court injunction against the issuance of 185 licenses to a holiday store and hold a remedial lottery to correct complaints about the licensing process. Government officials also plan to issue 55 new licenses using a new simplified process.
But this new federal affair could jeopardize it. The question is whether the state can facilitate applicants for licenses living in Illinois. Federal courts have overturned similar claims in Maine, Michigan and Missouri, potentially opening up licensing to much more competition across the country.
The lawsuit was filed by Juan Finch Jr. and Mark Toigo, who want to block the issuance of new licenses until the state reconsiders the licensing process to give non-residents a chance to win.
Illinois clearly does not restrict ownership of state residents. But when evaluating cannabis license applications, the state awarded 5 points for majority state ownership and 50 points to social justice applicants, who are most often identified as those previously detained for cannabis or those living in parts of the state who most affected by the war on drugs.
Without these points, the plaintiffs were unable to obtain 85% of the maximum score required to participate in the lotteries to obtain licenses.
When applications became available in 2019, Finch, an African-American disabled veteran, lived in California as a U.S. Navy sailor. He moved to Chicago in December 2021 and plans to apply for the next round of licenses – but state law requires the applicant to have lived in the state for at least the past five years.
“An inclusive and fair program will promote a variety of candidates like me,” Finch said. “Instead, the Illinois cannabis program is rigged.”
Togo, co-owner of a cultivation license and dispensary of organic funds in Missouri and Pennsylvania, has successfully challenged the requirements for living in Missouri. But neither he nor Finch applied to Illinois, and their attorney, John Adams, said it would be useless to spend $ 5,000 on the application.
Federal judges elsewhere have ruled that state residence requirements violate the so-called sleepless commerce provision in the U.S. Constitution, which allows Congress to regulate interstate trade. This paragraph does not specify the requirements for state residence, but the courts explain it so that states cannot interfere in interstate business.
The Illinois Attorney General’s Office has denied that the plaintiffs in this case are not allowed to sue because they have never applied for a license and the two-year statute of limitations on such a lawsuit has expired. Although Illinois legalized marijuana for vacation in 2020, state attorneys argued that it remains illegal under federal law, ahead of commercial regulations.
More generally, they argued in court documents, the “unreasonable and unjustified delay” of the plaintiff should now not withhold the license for everyone else.
At a hearing in April, Law 360 said U.S. District Judge Rebecca Palmayer said state licensing requirements were likely to violate a commercial clause, but added, “We can’t change the whole process in favor of the one who didn’t apply in the first place. ».
Another option would be to apply any changes in the licensing process to the next round of 55 licenses and to any future licenses. Government officials have agreed not to issue any dispensary licenses until Palmayer decides on the matter.
But the case remains in the Cook County case, which has brought together the claims of nearly 70 plaintiffs. In this case, Judge Celia Hamrat recently stated that she is inclined to allow the state to issue 185 non-functioning dispensary licenses and to hold a correction lottery for applicants who say they have been unfairly rejected.
Chicago attorney Ashley Brandt is not involved in the lawsuit, but represents the interests of clients who have won the lottery for their licenses. He is litigating on commercial regulations against other goods such as alcohol, and in 2020 predicted that a legal rebuff would be filed against the residence requirement.
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“These guys don’t have to have the ability to throw a wrench in the process,” he said. “But it’s a violation of the outlet and you need to undo it for the next 55.”
Some states that legalized marijuana at an early stage, such as Colorado and Oregon, have previously waived residence requirements.
The question for Illinois would be what will happen with state lawmakers trying to favor applicants for social justice. Illinois officials have not responded to a request for comment, but if residency requirements are lifted, state standards of social justice could be expanded nationwide.
One applicant, whose team won the lottery to obtain a dispensary license, Frank Cowen said that any move on the re-lottery would do great harm to those waiting to start their own business.
Companies that received 185 temporary licenses spent thousands of dollars on lawyers, consultants and often on finding and securing property. After a two-year delay in the process the start will first force more owners to sell their licenses or open without enough money to be successful.
Cowen, who is black and a native of the South Side and now lives in Westmantle, said he had a minor marijuana criminal record that prevented him for years but now gives him an advantage as a social capital license holder .
He is working with Planet 13, which operates the country’s largest dispensary in Las Vegas. If the lawsuit is resolved, he hopes to eventually open the nation’s second-largest cannabis store in the Chicago area.