New Litigation Continues to Challenge the Social Equity and Scoring Process of the Illinois Cannabis Regulation And Tax Act
The Illinois Cannabis Regulation and Tax Act (“CRTA”), which was enacted in 2019, legalized recreational adult use cannabis in Illinois. The CRTA also created a Social Equity Program intended to offer disadvantaged people, communities of color, and those disproportionately impacted by the war on drugs an opportunity to benefit from the cannabis industry. Pursuant to the Social Equity Program, the Illinois Department of Agriculture (“IDOA”) awards points to applicants for cannabis licenses based on factors such as residing in an area disproportionately impacted by prior laws criminalizing cannabis and veteran status. The program was widely praised and seen by many as a potential blueprint for other states. In practice, however, administration of the Social Equity Program has proved fraught with difficulties. Various types of applicants that have been denied the valuable licenses have sued IDOA, claiming that the department wrongfully denied their licenses.
Last week, craft cannabis growers filed a flurry of cases in Illinois state court against IDOA that continue to challenge the point scoring process and social equity provisions of the CRTA. In the complaints, the plaintiffs allege IDOA improperly disqualified their cannabis license applications. Specifically, plaintiffs allege that IDOA’s denial of their craft grower licenses was arbitrary and capricious and not supported by substantial evidence. The complaints further allege that IDOA’s decisions contained scoring errors, were made without affording the plaintiffs an opportunity for a hearing with record evidence, and without disclosing the specific alleged deficiencies in the applications. Some of the complaints allege that the scoring criteria and categories on which application points were to be awarded in the CRTA violate the Illinois Constitution because they improperly favor some populations at the expense of others. Several of the complaints challenged the CRTA’s preference system for veteran owned companies. For example, Plaintiff Cabrini: A Green Company alleges that the Social Equity Program provisions of the CRTA are unconstitutional because they discriminated against applicants that are not veteran owned. In the Green Card Veterans complaint, the plaintiff alleged that the IDOA “applied veteran status as though it were a requirement to obtain Craft Grower License rather than as an element thereof.” The complaints ask the courts to review the IDOA’s denials and vacate the final decisions denying the craft grower licenses.
IDOA issued the craft grower licenses in June, after the process had been held up for more than a year due to pending litigation. In March 2022, an Illinois judge lifted a stay that had prevented IDOA from issuing craft grower licenses or announcing their recipients. In addition to lifting the stay, the court resolved several applicants’ requests for review of decisions denying their craft grower licenses.
The craft growers’ license litigation is just one part of the Illinois litigation relating to cannabis licenses. Dispensary applicants have also filed litigation challenging Illinois’ point scoring process and social equity provisions.
Until the Illinois Supreme Court resolves the issues raised in these cases, litigation challenging the provisions of the CRTA will continue.
1 410 Ill. Comp. Stat. 705/15–30(c)(5) (2019).
2 See, e.g., Fancygrow LLC v. Illinois Department of Agriculture, et al., case number 22-CH-06535; Thrax LLC v. Illinois Department of Agriculture, et al., case number 22-CH-06604; Vill-Ops Craft Inc. v. Illinois Department of Agriculture, et al., case number 22-CH-06599; Kechwa LLC v. Illinois Department of Agriculture, et al., case number 22-CH-06571; Craft Americana LLC v. Illinois Department of Agriculture, et al., case number 22-CH-06541; Dunes Cultivation LLC v. Illinois Department of Agriculture, et al., case number 22-CH-06562; Serene Illinois LLC v. Illinois Department of Agriculture, et al., case number 22-CH-06568; Head for the Border LLC v. Illinois Department of Agriculture, et al., case number 22-CH-06542; Green Card Veterans of University Park/Redemption Botanicals Group LLC et al. v. Illinois Department of Agriculture et al., case number 22-CH-06536; and Terra House Agritech LLC v. Illinois Department of Agriculture, et al., case number 22-CH-06551. All of the cases were filed in the Circuit Court of Cook County, Illinois.
3 See, e.g., Head for the Border, LLC v. The Illinois Department of Agriculture, et al., case no. 22-CH-06542.
4 See, e.g., Cabrini: A Green Company, LLC v. Illinois Department of Agriculture, et al., case no. 2022 CH 06529.
5 Cabrini: A Green Company, case no. 2022 CH 06529 (plaintiff alleged that “[t]here is no rational basis … that would justify this distinction of Veteran Status, as opposed to the objectives and rationale set forth in [the CRTA], and the need to reduce barriers to entry for individuals and communities most adversely impacted by the enforcement of cannabis-related laws.”).
6 Case no. 2022 CH 06536.
7 See Cannabis Craft Grower Litigation, case number 21-MR-1256, in the Circuit Court of Sangamon County, Illinois.
8 See, e.g., Juan Finch, Jr., et al. v. Mario Treto, Jr., Case No. 22 C 1508 (ND Ill).