Craft pot growers seek court order to get Ill. licenses

Claim they’ll go broke if state doesn’t take action

Now the craft cannabis growers want their licenses too.

An association of entrepreneurs applying for licenses to grow relatively small amounts of pot, infuse edibles and other products with marijuana extracts, or transport recreational marijuana in Illinois have filed suit asking the court to order the state to award the licenses.

The Illinois Craft Cannabis Association filed suit in Cook County thisweek, stating that the delay in awarding licenses is costing applicants millions of dollars to reserve property indefinitely without knowing if they’ll get licenses.

By state law, the licenses were supposed to be awarded by July 1. But Gov. J.B. Pritzker extended that deadline indefinitely due initially to the coronavirus pandemic, and now while a dispute rages over problems with the scoring of applications for retail store licenses.

The lawsuit claims that the governor’s executive order was improper because it didn’t identify a sufficient legal basis for the delay, and didn’t set a newdeadline, as Pritzker’s order required.

The association seeks a court order for the state to issue the 40 new craft grower licenses, 40 infuser licenses and unlimited number of transporter licenses, as specified by law. The suit also asks for allowances for applicants who lose properties, employees or other aspects of their plans due to the delay.

In response to questions about the suit and the status of licenses, Pritzker spokesperson Charity Greene issued this statement: “The COVID-19 pandemic and the extension of the application deadlines have led to an extension of the scoring process. The Department of Agriculture remains committed to ensuring that scoring of applications is conducted in a fair and equitable manner and is currently in the final stages of completing the scoring process in accordancewith the Act and rules. The Department will announce the date licenses will beawardedin the near future.”

The craft association, which just formed in the past month or so, includes more than 35 members who’ve applied for licenses, co-founder Paul Magelli said. Some have reported they got permission from state regulators to change some aspects of their application, such as their location or employees. In an informal survey, about two out of three said they would lose their site, financing or employees by the end of the month.

Craft growers face very different circumstances than dispensaries. Growers said they need to identify floor plans down to energy, water andwaste management, along with plans for biosecurity and physical security, including tracking each plant. They need time to install special lighting, heating and humidity controls, and then need three to four months to grow their crops. Now because of the delay, many are looking at breaking ground in the winter, which raises construction costs.

Also, officials said, while craft grower applicantswere not required to lease or buy property, each was required to specifically identify a suitable and properly zoned location, though that could be changed if necessary.

Because of these requirements, Magelli estimated the startup costs for a craft grower at$5 million to $10 million, as opposed to $500,000to $1.5 million for a dispensary. He said he knows one applicant whowas paying $10,000 a month to reserve their site for a business they can’t open.

“They’re just bleeding money,” he said. “This is not a path to social equity.”

As for state regulators, Magelli said, “I think the Department of Agriculture is sympathetic, they want a fair and equitable process, but I think they’re struggling with how to do that on timely basis.”

Last year, the previously existing medical marijuana growers in the state, now numbering 18, got new licenses to also begin growing marijuana for recreational sales. They are allowed up to 210,000 square feet of growing space, compared with themaximum10,000 square feet for new craft growers. The existing companies — many of them large multistate operators — have continued to rack up record sales almost every month since legal sales began New Year’s Day.

One bright spot is that the craft licenses may avoid the fate of the dispensary licenses, in which the only winning applicants had perfect scores, including points for majority veteran ownership, according toRose Ashby, a former field director for state Sen. Heather Steans, who helped lawmakers draft the legalization law, and who likeMagelli, said she advised some applicants without fee.

Because the scoring is based more on qualitative differences and less on yes or no categories, Ashby expects there tobe a wider variety in the top scores. But she warned, some social equity applicants who invested their life savings may be forced out by further delays.