Pot shop fi­nal­ists in­clude firms backed by ex-top cop, clouted busi­ness­men

Pot shop fi­nal­ists in­clude firms backed by ex-top cop, in­flu­en­tial busi­ness­men: ‘Doesn’t sound ... like so­cial equity’

Chicago Sun-Times - - CHICAGO SUN TIMES - BY TOM SCHUBA,

A day af­ter state of­fi­cials an­nounced that just 21 ap­pli­cants would be in­cluded in an up­com­ing lot­tery to de­ter­mine the win­ners of the next round of cannabis dis­pen­sary li­censes, mi­nor­ity law­mak­ers are urg­ing Gov. J.B. Pritzker to de­lay all new pot per­mits over con­cerns about the ap­pli­ca­tions process — which al­lowed many clouted and seem­ingly well cap­i­tal­ized firms to move onto the next phase.

State of­fi­cials on Thurs­day were quick to men­tion that all the qual­i­fy­ing ap­pli­cants are so-called so­cial equity can­di­dates, who are given a leg-up in the process to bol­ster mi­nor­ity par­tic­i­pa­tion in the over­whelm­ingly white pot in­dus­try.

De­spite the lofty goals of Pritzker and his al­lies, the small pool of re­main­ing ap­pli­cants in­cludes for­mer Chicago Po­lice Supt. Terry Hil­lard, well-known Chicago restau­ra­teur Phil Ste­fani, Lucky Lin­coln Gam­ing Pres­i­dent Jeff Re­hberger and ex­ist­ing play­ers in the pot in­dus­try. Their sta­tus as ap­pli­cants was first re­ported by the Grown In news­let­ter.

In a joint state­ment Fri­day, mem­bers of the Black and Latino cau­cuses said they “voted for a law that had a frame­work for the ad­min­is­tra­tion to cre­ate more Black and Latino cannabis star­tups than any other state in the coun­try.”

“That’s why we were shocked to see that up to 75 dis­pen­saries will be awarded to 21 en­ti­ties,” the law­mak­ers wrote. “Our shock is out­weighed by the count­less calls we’ve fielded from con­stituents ques­tion­ing if this process was eq­ui­table and achieve the goals we share to di­ver­sify the cannabis in­dus­try.”

Mem­bers of the Black Cau­cus also penned a sep­a­rate let­ter call­ing on Pritzker to pro­vide more in­for­ma­tion about the re­main­ing hope­fuls and the meth­ods for scor­ing ap­pli­ca­tions.

The group is also ask­ing for ad­di­tional in­for­ma­tion about the graders from KPMG, the global ac­count­ing firm that was awarded two no-bid con­tracts val­ued at nearly $7 mil­lion to grade all the up­com­ing recre­ational pot li­censes. KPMG gave per­fect scores to all 21 ap­pli­cants, who all earned so­cial equity points for hav­ing at least one part­ner that ei­ther lives in an area that’s been dis­pro­por­tion­ately im­pacted by past drug en­force­ment, has a prior ar­rest or con­vic­tion for an ex­punge­able pot of­fense or meets other cri­te­ria.

Pritzker’s of­fice didn’t im­me­di­ately re­spond to a re­quest for com­ment late Fri­day.

There are 336 spots in the lot­tery, which rep­re­sent each ap­pli­ca­tion that re­ceived a per­fect score. An ap­pli­cant can win the right to run as many as 10 stores across the state’s 17 re­gions.

Hil­lard, the city’s for­mer top cop, is listed as a man­ager for ap­pli­cant EHR Hold­ings LLC, which lists an ad­dress on the Near West Side in records kept by the Illi­nois sec­re­tary of state’s of­fice. His firm will have five op­por­tu­ni­ties in the lot­tery to win li­censes to open dis­pen­saries in three of the state’s re­gions.

While the le­gal­iza­tion law was framed as a way to ad­dress some of the harms in­flicted by the war on drugs, Hil­lard played a part in that type of en­force­ment as a long­time po­lice of­fi­cial. He re­tired as Chicago’s po­lice su­per­in­ten­dent in 2003 af­ter five years, and his pri­vate se­cu­rity firm has sub­se­quently been con­tracted by cannabis dis­pen­saries in Illi­nois.

Hil­lard, like other fi­nal­ists con­tacted Fri­day, could not be reached for com­ment.

Ste­fani’s restau­rant group in­cludes Tav­ern on Rush and other city hot spots. Now, he’s serv­ing as man­ager of Hins­dale-based GRI Hold­ings LLC, which has 25 lot­tery spots, mostly to open dis­pen­saries in the Chicago area.

Ste­fani no­tably spoke out against ex­ist­ing pot firm Phar­ma­cann’s pro­posal to open a shop near the Gold Coast dur­ing a meet­ing last month of the Zon­ing Board of Ap­peals, say­ing it didn’t fit in a neigh­bor­hood fa­mous for its nightlife. The planned dis­pen­sary was ul­ti­mately shot down by the city.

Re­hberger, who runs the West Town-based ter­mi­nal gam­bling com­pany Lucky Lin­coln Gam­ing, is listed as the agent and man­ager of For­tu­nate Son Part­ners LLC, an ap­pli­cant based in High­land Park with 38 ap­pli­ca­tions across all 17 re­gions, records show.

Omar Fakhouri, the cousin of Lucky Lin­coln’s busi­ness de­vel­op­ment man­ager, is listed in state records as the agent and man­ager of Lyons-based Mint IL LLC, which has 28 chances to win li­censes. Fakhouri cur­rently op­er­ates a cannabis busi­ness in Michi­gan with a sim­i­lar name.

His cousin, Sam Fakhouri, is also the land­lord for the Modern Cannabis

store in River North.

Law­mak­ers could limit num­ber of li­censes

In a sep­a­rate state­ment Fri­day, state Rep. Sonya Harper, said “many things about this equa­tion and re­sult­ing num­bers just seem very in­equitable.” The chair of the House Eco­nomic Op­por­tu­nity & Equity Com­mit­tee, she said law­mak­ers “are con­sid­er­ing a change in the amount of li­censes one ap­pli­cant may be able to ap­ply for at one par­tic­u­lar time, know­ing that a true so­cial equity ap­pli­cant may not have the means to sub­mit dozens of ap­pli­ca­tions in ev­ery district across the state.”

Al­most im­me­di­ately af­ter the state re­leased the list of com­pa­nies mov­ing onto the next phase, so­cial equity ap­pli­cants com­plained about the win­ners.

Michael Mal­colm, a Mor­gan Park real es­tate bro­ker whose ap­pli­ca­tions were re­jected, said it was “in­sane” that the state is al­low­ing just 21 ap­pli­cants to go for­ward, fur­ther lim­it­ing the play­ers in an in­dus­try al­ready dom­i­nated by a few highly cap­i­tal­ized white-owned busi­nesses.

“That doesn’t sound to me like so­cial equity . ... That sounds like big busi­ness,” said Mal­colm, who is also Black.

Chicago Pub­lic Schools’ five-year grad­u­a­tion rate hit a record high of 82.5% for the 2019-20 school year, of­fi­cials an­nounced Fri­day.

“We saw im­prove­ments across the city,” CPS CEO Jan­ice Jack­son said at a news con­fer­ence with Mayor Lori Light­foot.

“Stu­dents of color, led by Lat­inx stu­dents, are driv­ing this year’s progress, and African Amer­i­can stu­dents, whose growth has also been on the rise, have in­creased their grad­u­a­tion rates by 4 per­cent­age points since 2017,” Jack­son said.

Light­foot called the im­prove­ment a “huge leap for­ward.”

“This is in­cred­i­bly great news, espe­cially when you con­sider the chal­lenges all of us faced over this past year, par­tic­u­larly our stu­dents,” the mayor said.

The dis­trictwide, one-year dropout rate reached a record low of 5.6%.

“This is be­ing driven by African Amer­i­can males, as well as our di­verse learn­ers,” Jack­son said.

The method of cal­cu­lat­ing grad­u­a­tion rates changed this year, she said, to “bet­ter rep­re­sent the work that is hap­pen­ing in our schools.” Those changes in­cluded count­ing stu­dents who tech­ni­cally have earned their di­ploma but whose spe­cial ed­u­ca­tion plans in­cluded con­tin­ued en­roll­ment af­ter 12th grade, and clean­ing up du­pli­cates from school trans­fers and stu­dents who un-en­rolled then later re-en­rolled. Un­der the old cal­cu­la­tion, the five-year grad­u­a­tion rate would have been 80.8%, up about two per­cent­age points from 2019.

With the school year set to be­gin Tues­day, Jack­son tried to re­as­sure par­ents and stu­dents that learn­ing at home “feels as nor­mal as any other school ex­pe­ri­ence.”

“As­sign­ments will be graded, at­ten­dance will be taken and stu­dents should ex­pect to be held to the same high stan­dards that they re­ceive dur­ing in-per­son in­struc­tion,” Jack­son said.

Jack­son urged fam­i­lies to go to cps.edu/ school-re­open­ing-2020 to make sure stu­dents are ready for the first day of school.

Phil Ste­fani

Terry Hil­lard

CPS CEO Jan­ice Jack­son

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