The Cannabis Regulation and Taxation Act of 2019 conferred authority on the Illinois Department of Agriculture (the “I’M DOING A“) and the Illinois Department of Funding and Professional Regulation (the “IDFPR”) to issue additional Craft Producer, Brewer, Carrier, and Adult Use Dispensary licenses. Each department has developed an application process for each type of license to be filed by a third-party contractor. KPMG was awarded the contract to score license applications. The granting of several categories of licenses has been hampered by a number of lawsuits. We have provided a brief summary of the status of each license category and corresponding disputes below.
Craft cultivation licenses
The State of Illinois originally planned to issue up to 60 new craft producer licenses on December 21, 2021, in accordance with the license application process developed by the IDOA in accordance with the Regulation and Taxation Act of 2019 cannabis. However, those plans were foiled due to an injunction issued by Cook County Judge Neil Cohen on November 22, 2021, preventing the Department of Agriculture from advertising or issuing the licenses.
The Illinois Supreme Court consolidated four cases involving fourteen craft-growing claims and one case comprising the 60 licenses mentioned above. The consolidated case had its first substantive hearing on December 14, 2021, before Sangamon County Judge Gail Noll on multiple motions. The state argued that Judge Cohen exceeded his jurisdictional limits by granting the stay while processing ia GP LLC c. IT Department of Agriculture (“general practitioner”) and advanced motion to dismiss made on the grounds that regulators should be allowed to issue licenses before the court rules on the process. Upon review, Justice Noll found no error of law with respect to Justice Cohen’s injunction and stay of general practitioner and the motion to vary this injunction and stay was dismissed. In addition, it ruled against the motion to reject the reasons on the grounds that the disqualifications pronounced by the State were a final administrative decision, therefore subject to judicial review.
Following additional hearings and submissions, on March 14, 2022, Judge Noll lifted the suspension of the issuance of the additional 60 craft cultivation licenses and reinstated the claim of the 11 applicants contesting their respective disqualifications. The IDOA is currently reviewing applications for the issuance of additional licenses.
The awarding of the 75 dispensary licenses contemplated by the Cannabis Regulation and Taxation Act has been repeatedly delayed throughout 2020. On September 3, 2020, the IDFPR announced that 21 of more than 700 applicants had achieved perfect scores and that licenses would be issued as a result of a lottery. of these candidates. A public outcry ensued and in an attempt to resolve the controversy, the Illinois General Assembly passed HB 14430 which was signed into law on July 15, 2021. This bill created a lottery sequence for the 75 licenses of origin and 110 additional licenses that would be based on social equity status. The winners of the various lotteries were announced in the fall of 2021, however, all have been banned from issuance due to ongoing litigation. There are currently three pending lawsuits that impact dispensary licensing.
The first trial WAH Group LLC dba Leafing Dispensary c. Illinois Department of Financial and Professional Regulation, et al (“Wow”), challenges the awarding of points to veteran applicants, alleging that it essentially created an additional category of applicants, which would violate Illinois’ legislative framework. The original judge in that case issued a stay that prevented the IDFPR from issuing any of the 185 dispensary licenses pending the resolution of the case. The next hearing of wow is scheduled for April 25 and will be presided over by a new judge, covering the state’s motion to dismiss the case and remove the stay.
A second lawsuit, a consolidation of fourteen different lawsuits into a single “super case”, fundamentally challenges the application process, alleging violations of Illinois administrative law. In March, the Cook County Consolidated Super Case judge ruled she had no jurisdiction over the stay. Accordingly, the administrative review of the licenses in the super case will continue, however, this case will not impact the suspension of the issuance of the 185 licenses in question.
Recently, a third case was filed which challenges the entire licensing process based on the residency requirement. Finch et al. v. Mario Tretor, acting secretary of the IDFPR(“Bullfinch”), examines the additional points awarded to Illinois residents in the application process for the 185 dispensary licenses in question, arguing that this requirement should be deemed unconstitutional under the “dormant trade clause”. A residency requirement was recently overturned in Missouri on similar grounds. The outcome of this case could have an impact on the whole process.
While these issues are resolved, the applicant must spend time, money and effort to maintain their proposed business. This is especially difficult for many social equity licensees. Husch Blackwell continues to monitor this situation. If you have any questions, do not hesitate to contact Alyssa Samuel, Destiny Burrell or your Husch Blackwell lawyer.
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