Green to go

Small-time weed farmers win lawsuits

Would-be pot growers soon may get a green light thanks to a recent ruling from Sangamon County Circuit Court Judge Gail Noll.

At issue was a state Department of Agriculture decision to disqualify 11 growing-license applicants for failure to provide information about law and accounting firms named on applications. Disqualified applicants sued, maintaining that since the accountants and lawyers had no ownership interests in the planned growing operations, the state had no right to the information, which plaintiffs’ attorney Carl Draper said included Social Security numbers.

“The bottom line is, the act (legislation) and the rules don’t require that you disclose who your attorney or accountant will be, much less their Social Security numbers – they’re not the business,” Draper said. He added that his clients nonetheless told the state who would be providing financial and legal services – the applicants believed they had no choice.

“If we’d left that blank, there’s no question the department would send a notice of disqualification,” said Draper, who represented two clients whose applications were rejected by the state. Attorney Don Craven, who represented seven applicants who sued on the same grounds, said his clients had to go to court to confirm why their applications were rejected. “We had to file suit in order to get the paperwork,” Craven said. “Based on the administrative record, all of these folks, my clients and Carl’s, had perfect scores.”

Judge Noll on March 10 sided with plaintiffs, remanding their applications to the Department of Agriculture for renewed consideration. Within a week, she dissolved an injunction that had prevented the state from awarding 60 growing licenses while lawsuits were pending. Under the 2019 law that legalized recreational marijuana, the state was supposed to grant the licenses in December.

Krista Lisser, spokeswoman for the Department of Agriculture, said via email that the department won’t comment on whether litigants had perfect scores on applications that can run into the hundreds of pages. “(T)he Department is prepared to finalize the process of notifying the top scoring craft grower applicants of their eligibility to receive a license pursuant to the scoring and selection process of the Cannabis Regulation and Tax Act and its corresponding administrative rules,” Lisser wrote. “The department remains committed to ensuring that all licenses are issued in a fair and equitable manner.”

The state awarded 40 growing licenses last summer, a year later than mandated by the 2019 legalization law, which was supposed to give an inside track to applicants disproportionately impacted by the war on drugs or otherwise benefit communities harmed by the drug war. Since the law took effect, the state has been hit with a succession of lawsuits from unsuccessful applicants to grow or sell pot.

The first litigation came in 2020, when no people of color were among the initial winners of licenses to sell recreational marijuana, contrary to stated goals of legislators. Large companies, none run by minorities, continue to control the Illinois marijuana industry, which is entirely supplied by 21 growing operations that each can cultivate as much as 210,000 square feet of recreational pot. The state licensed those operations when only medical marijuana was legal. Winners of 150 subsequent licenses will be limited to 5,000 square feet initially, with the chance to expand to 14,000 square feet, subject to state approval.

Consumers have purchased nearly $2.3 billion worth of recreational pot, all from large-scale operations that started business under the state’s medical marijuana law, since Jan. 1, 2020, when recreational weed became legal. The same cultivation centers have realized nearly $800 million in wholesale medical marijuana sales during that same time period. Only large cultivation centers are allowed to grow medical pot, with no cap on square footage.

The first small-scale operations, dubbed craft grows in state statute, likely won’t have product available for a year, says Scott Redman, president of the Illinois Independent Craft Growers Association. About two-thirds of the growing entities licensed last summer have started design and construction work, he estimates. Redman, a lawyer with ownership in a McHenry County craft-growing entity, says that he regularly hears from people interested in buying craft-grow licenses from successful applicants. The going rate, he said, is between $3 million and $4 million; licensees can spend as much as $150,000 to assemble an application. “I think they’re selling in that range,” Redman said. “I’m not involved in those deals.”

Small-scale licensees have asked lawmakers to amend the law so that craft growers can immediately cultivate 14,000 square feet instead of the 5,000 square feet initially permitted under statute. The effort stalled, Redman said, after the board of the Cannabis Business Association of Illinois, which includes owners of large cultivation centers, decided not to support an expansion proposal. “That happened in February, and that killed the bill,” he said. The change is needed, he said, so that investors will put money into craft grows.

Politicians and others who once proclaimed that Illinois would be a national leader in making recreational pot profitable for minorities and other disadvantaged entrepreneurs have been proven wrong, he said: “Illinois is no longer seen as the poster child of social equity cannabis – that’s gone away with all these lawsuits and delays.”

Bruce Rushton is a freelance writer. He can be reached at brucerushton@hotmail.com.