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’
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.
CPS CEO Janice Jackson