After another record-breaking month in July, Illinois is now on pace to cash in on $1.3 billion in adult-use cannabis sales this year—a 93% increase from 2020.

Not too shabby for a state that’s still picking up speed.

But with all that money at stake, a saga of licensing disputes continues to clutter the courtroom with lawsuits tied to a three-part lottery series—110 new dispensary licenses for social equity applicants were awarded July 29 and Aug. 5. And a third lottery of 75 additional retail licenses for businesses with perfect application scores was scheduled for Aug. 19.

But a Cook County judge barred the state from issuing any final dispensary licenses until a lawsuit, brought forth by a rejected applicant, WAH Group LLC, is settled, as Cannabis Business Times Senior Digital Editor Melissa Schiller reported Aug. 12.

WAH Group’s lawsuit alleges that the state mistakenly excluded the company from Illinois’ first licensing lottery and that state officials told the company it would qualify for the second lottery. WAH Group also alleges the scoring process was flawed and unfairly required veteran ownership to achieve a perfect score.

That legal action is among several other lawsuits filed against the Illinois Department of Financial and Professional Regulation (IDFPR) since Gov. J.B. Pritzker announced July 15 that the state would be moving forward with the lotteries.

Justice Grown, Emerald Coast LLC and ReNu LLC sued the IDFRP, claiming in a July 30 federal court filing that they were wrongfully excluded for the Aug. 19 lottery because their applications should have received perfect scores. They alleged regulator errors wrongfully denied them points.

Also, Suite Greens LLC and So Baked Too LCC filed a lawsuit Aug. 16, claiming state officials wrongfully forced them to give up three of their spots in the final licensing lottery.

The 75 licenses attached to the third lottery were originally supposed to be awarded in May 2020 but were delayed due to the COVD-19 pandemic. More than 700 applicants applied for those licenses, which aimed to provide new operators access to the Illinois adult-use industry (only existing medical cannabis businesses were able to serve the state’s adult-use market when sales launched Jan. 1, 2020).

Then, that 75-license batch was derailed further by litigation accusing the state’s scoring system of playing favorite to big businesses with deep pockets.

While the intent of awarding 185 retail licenses through the three-part lottery was to create a fair and inclusive industry that would put an end to the monopoly of already existing dispensaries, the process of picking winners has been marred by lawsuits from losing applicants.

Opponents might say heck with the lottery. Why not allow all of them to open up shop and let the consumers decide who stays in business?

Some states have taken that free-market approach, like Oklahoma, where 2,325 medical cannabis dispensaries are licensed as of this month. That market has gained attention as the “Wild West” of the industry.

Other states have been at the opposite end of the spectrum, like New York, whose medical cannabis program only licensed 10 operators since legalization in 2014.

In Illinois, which became the first state to legalize the commercial sale of adult-use cannabis through an act of state legislature in 2019, lawmakers have done their best to find a happy medium. But when it comes to winning a cannabis license, there will always be losers. And when $1.3 billion is at stake, those losers won’t be happy.  

-Tony Lange, Associate Editor