After more than a year of waiting, Ambrose Jackson learned Thursday that his team was one of the lucky few to win rights to open a new marijuana retail store in Illinois.
Combined with the craft grower license they won earlier this month, his group is poised to become a vertically integrated company, producing and selling in what’s expected to be a $2 billion industry this year.
“It’s a big deal,” he said. “I was fortunate, but everybody who wasn’t is still in a holding pattern.”
Jackson was among 55 winners of a state lottery to award recreational dispensary licenses among 626 entrants who scored 85% or better on their applications. When the state legalized recreational marijuana last year, only previously existing medical marijuana dispensaries were allowed to also open retail shops. A batch of 75 new licenses have been delayed more than a year due to the COVID-19 pandemic and problems with consultant KPMG in scoring the complicated applications.
Just a day before the lottery, though, a judge ordered that the licenses can’t be awarded until he rules on a lawsuit challenging to the process.
The ruling by Cook County Judge Moshe Jacobius comes in the case of Wah Group, LLC, and Haaayy, LLC, versus the Illinois Department of Professional Regulation, Deputy Director Bret Bender, KPMG, LLP and Roe Corporations.
People are also reading…
The plaintiffs had asked for an injunction against the lotteries. They are challenging a provision that awarded majority veteran-owned companies an extra 5 points. As it turned out, only applicants with perfect scores initially qualified for licenses, and only veteran-owned teams got perfect scores.
In addition, the two companies bringing the suit claim that some applicants had unfair advantages, such as those with ties to lobbyists or to former state cannabis regulators.
The lawsuit was one of several claiming that the initial scoring last year was unfair, with different scores for identical applications. Gov. J.B. Pritzker’s administration delayed the lottery for a lengthy rescoring process, and plans two more lotteries Aug. 5 and 19 for different qualifying categories.
The next hearing on the lawsuit was scheduled for Aug. 9.
Winners must pay license fees and satisfy other procedural requirements before receiving their licenses. They then have one year to become operational, though officials expect some to open well before that.
Applicants were allowed to submit multiple applications at a cost $5,000 each, and some had dozens of chances to win. Winners in the initial lottery could win only two licenses, while ultimately applicants may win up to ten. Winners must also pay license fees of $30,000 per license and meet other procedural hurdles before getting a conditional license.
Up to 97% of those who qualified were social equity applicants, meaning they lived in areas designated as disproportionately affected by the war on drugs, such as the South and West sides of Chicago, or they or their family members had been arrested or convicted of a minor cannabis offense.
Such applicants got a 20% bonus in scoring, and pay half the fees.
But during the year-plus delay in awarding licenses, many applicants paid their employees or paid rent to continue to meet requirements for a license. Some burned through their life savings, which hurt the very people the program was meant to help. Many applicants hope Illinois will reimburse them for losses caused by the state’s delays.
Jackson, president and CEO of Helios Labs and Parkway Dispensary, credited large cannabis company Cresco Labs of Chicago with helping his team enter the industry through its business incubator program.
Now, lottery winners need to start fundraising to build and open their facilities. Jackson estimates his team will need around $10 million to build and open its facilities. Family and friends already invested about $250,000 to get this far.
“Some friends and family didn’t invest the first time, they thought we were crazy,” Jackson said. “Now that we won, they want in.”
Photos: Scenes from Lollapalooza, Day 1
Stay up-to-date on the latest in local and national government and political topics with our newsletter.