Illinois Pot Shop Lottery: Lawsuit Asks Judge To Change Scoring

CHICAGO — The latest lawsuit to challenge Illinois' cannabis licensing lotteries asks a federal judge to overrule decisions from state regulators about which would-be pot shop operators qualify as "social equity applicants."

The two-count complaint asks a judge to order state officials to include the applicants in a lottery planned for later this month, the third of three due to determine the allocation of the first 185 new cannabis dispensary licenses since the legalization of recreational marijuana in Illinois.

The suit was Friday by attorney Jon Loevy, of Loevy & Loevy, on behalf of a trio of cannabis license applicants who submitted a combined 75 applications to IDFPR. At least one of those plaintiffs, JG IL LLC, is linked to Justice Grown, Loevy's multi-state cannabis company.

Loevy also filed a federal suit last year to challenge the state's original scoring. The Pritzker administration later halted the licensing process to allow for applications to be re-scored, and the suit was dropped.

The latest suit alleges that the Illinois Department of Financial and Professional Regulation, or IDFPR, failed to properly award social equity applicant, or SEA, status to JG IL, which provided proof that more than half of its workforce lives in what the state defines as a "disproportionately impacted area."

The two-count complaint claims violations of the constitutional protections of due process and equal protection because it did not receive the full number of points possible on its application. It says the applicants will be irreparably harmed if they are not allowed to participate in the tied applicant lottery — currently scheduled for Aug. 19 and only open to applicants who received perfect scores under the original version of the law that legalized weed in Illinois.

Read more: Weed License Lottery Dates Set As Governor Signs New Cannabis Law

A recent amendment to the Cannabis Regulation and Tax Act creates a new classification of applicant — "social equity justice involved" — which excludes companies like Justice Grown that say they qualify as SEA due to their workforce. Critics have derided the provision allowing social equity status to come from employees as the "slave master clause."

The second lottery, due to take place Thursday, is limited to social equity justice involved applicants, who may only receive the SEA points from their owners, not their workers. According to the complaint, that "demonstrated antipathy" toward applicants like Justice Grown.

"While JG IL is entitled to have IDFPR’s grading error corrected so that it can participate in the lottery, there is also evidence that the error may be the result of discrimination against applicants who sought to meet the SEA requirements using employment instead of ownership," Loevy alleges in the complaint. "Multiple other applicants who applied for SEA status based on the residence of their employees and IDFPR appears to have discriminated against them by falsely refusing to award them SEA points."

Read more: First Pot Shop Lottery Picks 55 Winners Of Dispensary Licenses

The case is due for a hearing by telephone Friday morning. The suit calls for a due process hearing next week to determine if the plaintiffs should be ordered to be included in the lottery.

"If a Plaintiff’s application is selected for a license, then that license can be reserved pending resolution of the case. If the case is resolved adversely to a Plaintiff then the names of the other applicants can be drawn anew for that particular license. By contrast, running the lottery without Plaintiffs in it forever dooms their opportunity for a license," according to a memorandum in support of Loevy's motion for an injunction.

"Alternatively, there is no possibility of harm if the Court were to hear the evidence itself and decide the question of scoring error at a preliminary injunction hearing," it continued. "The facts are not at all complicated and Plaintiffs are not seeking discovery. They wish only to present the same evidence that they presented in the application process and question some witnesses to show that the IDFPR erred. Similarly, IDFPR may present all of its evidence and defenses and the hearing."

One of the three plaintiffs in the case, ReNu LLC, was selected as a winner of Thursday's Social Equity Justice Involved Lottery. It argues it should also be eligible for the maximum-score lottery because 51 percent of it is jointly owned by veterans of the U.S. military, which lawmakers made a requirement for applicants to receive a perfect score.

Read more: Complaint, Motion, Memo from JG IL LLC et al vs IDFPR