Los­ing firms, so­cial eq­uity can­di­dates that were left out ‘shocked’

Chicago Sun-Times - - TOP NEWS - BY TOM SCHUBA, STAFF RE­PORTER tschuba@sun­times.com | @TomSchuba

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 so­cial 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.”

Vin­cent Nor­ment (left) and Michael Mal­colm were shut out of a lot­tery to win li­censes to run pot busi­nesses in Illi­nois.

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