700 weed applicants, 21 finalists: Some hopefuls aren’t happy about who’s still in the running for Illinois’ 75 marijuana dispensary licenses

When Illinois put 75 licenses to operate recreational marijuana dispensaries up for grabs earlier this year, more than 700 groups submitted 4,000 applications.

On Thursday, the state said 21 of those groups will proceed to the final phase: a lottery to award the licenses.

Some applicants who did not make the cut are unhappy that number is so low. Black lawmakers are calling on Gov. J.B. Pritzker to halt the lottery, and others say the state’s selection process, designed to diversify a largely white-owned industry, has shut out some of the smaller players.

“These are people who were (resourceful) enough to apply in almost every region,” said Nakisha Hobbs, whose group made two failed bids for dispensary licenses. “Some people have more resources than others, but it was a little bit alarming to see that. I thought the list would be a little bit more diverse.”

Illinois’ recreational marijuana law laid out social equity rules, which awarded extra points on the scored applications to companies that were majority owned by a person who has a marijuana-related arrest on their record, lives in an area affected by the war on drugs or meets another qualification. Companies could also employ at least 10 people that meet those qualifications to be considered a social equity applicant.

To get a perfect score on the dispensary applications, the applicant had to achieve social equity status and veteran status, meaning at least 51% of the organization must be owned by a veteran or group of veterans.

Each of the 21 companies that proceeded to the lottery phase got a perfect score on their application, according to the Illinois Department of Financial and Professional Regulation, which regulates dispensaries.

The state said 13 of the 21 companies are majority owned by a person of color, 17 have at least one owner who is a person of color, and 16 have at least one owner who is a woman.

But some social equity advocates say they are concerned about the ownership behind the 21 finalists, and worry those most harmed by the war on drugs won’t be able to benefit from the lucrative industry as much as they’d hoped.

The licenses mark the first opportunity for new weed entrepreneurs to get into the industry. So far, companies that operated in Illinois’ medical marijuana market have been the only ones allowed to open new dispensaries and benefit from recreational sales, which topped $300.1 million in the first seven months.

Several of the 21 companies have ties with those already operating in the marijuana industry. Others hold sway in different areas of Illinois’ business world.

Fortunate Son Partners, for example, will get at least one entry into the lottery in each of Illinois’ 17 Bureau of Labor Statistics regions. The agent for that company is Jeff Rehberger, according to Illinois’ Secretary of State website. Rehberger is president of Lucky Lincoln Gaming, a slot machine operator.

A manager of another finalist, 127 IL, is Nicole van Rensburg. She owned Midwest Compassion Center in Romeoville, which won one of the first medical cannabis dispensary licenses in Illinois in 2015. That dispensary currently is owned by Chicago-based PharmaCann, and is called Verilife.

Van Rensburg became partner and co-founder of medicinal marijuana businesses in multiple states, and CEO of Bloom Medicinals in Boca Raton, Fla., which grows and sells cannabis in several states.

Van Rensburg and Rehberger could not be reached for comment Friday.

Mint Illinois also gets at least one entry into every region’s lottery. The Arizona-based brand had dispensaries in that state and is set to open its first store in Michigan within a month, said Omar Fakhouri, one of the founders and owners of Mint Illinois.

Mint Illinois is working with a social equity partner in the state, Fakhouri said. Because the social equity qualification required a minimum of 51% ownership, some companies partnered with people who qualified as social equity applicants for their Illinois operations.

“What the state did to really give social equity applicants a chance actually worked as it intended,” Fakhouri said. “As a social equity applicant, you want to be partnered up with somebody that has that experience. Running a business in the industry is not easy.”

Mint is not making its Illinois social equity partner available for interviews yet, Fakhouri said.

Each BLS region is allotted a certain number of the 75 licenses. The Chicago area could get up to 47 new dispensaries. When the state holds its lottery, each finalist will receive an entry into the lottery of each region for which they paid an application fee.

Michael Malcom, a Black real estate agent in Chicago who filed multiple applications with help from marijuana company Columbia Care, was disappointed he didn’t make the list of finalists.

It was impossible to win without a veteran as the majority owner, and that defeated the purpose of the social equity program, he said.

“The whole purpose was to get people who are actually affected (by the war on drugs) into the industry. Equity is to spread it around some. For 21 entities to be up for 75 licenses, that’s not equity at all,” he said. “The state just helped to create monopolies.”

The 21 entities that remain in the running filed 343 applications, said Toi Hutchinson, senior adviser to the governor on cannabis control. Ultimately, a company can’t own more than 10 dispensaries in Illinois, so some of those finalists will need to choose which region’s lottery they’ll end up competing in.

Hutchinson said she understands the disappointment some of the applicants feel, especially “after such a long and arduous process.”

She said achieving social equity takes time. It is written in the law that the state can award up to 425 more licenses after the first 75. She said the state will study the makeup of the industry, nationally and in Illinois, and figure out what can be done to make it better and more equitable.

“The thing that heartened me actually was that 60% of these applications satisfy the social equity portion of it because of who they are, and it wasn’t because of who they hired,” she said. “That was probably one of my biggest fears ... (that) it was going to be just a whole bunch of people that hired people.”

There is no date set for the lottery, but Hutchinson said the licenses in all regions will be issued in a lottery on the same day. According to the law, that cannot occur before Sept. 18.

The Illinois Legislative Black and Latino caucuses called for the Pritzker administration to suspend the lottery until the public can learn more about how and why the 21 groups were selected.

In a Friday letter to Pritzker, the Black caucus said its members voted for a law that would create more Black and Latino cannabis companies than any other state, and was “shocked” to see the licenses would go to 21 entities.

“Our shock is outweighed by the countless calls we’ve fielded from constituents questioning if this process was equitable and achieves the goals we share to diversify the cannabis industry,” the letter said.

Anton Seals Jr. said his group in Chicago got expert help on its multiple applications from cannabis company Revolution Global, but did not make the list.

His group, Organic Urban Revitalization Solutions, will review the scores to see whether the process was handled fairly. While many applicants burned through their savings to apply, he said, applicants with enough money left to hire attorneys might file suit over the scoring.

“It’s like the Bulls losing in game 7 of the finals,” he said. “I’m not happy about that, but I’m hoping these (finalists) are real social equity applicants, small Black entrepreneurs, and not fronts for larger players to expand their territory.

“If not, (Gov. J.B.) Pritzker’s going to have a lot of problems on his hands.”

Bucking the trend of corporate finalists were Jon and Megan Kemp, a husband and wife team who own Kemp’s Upper Tap, a craft beer bar in Lexington, Illinois, off I-55 just north of Bloomington-Normal.

State regulators initially left the Kemps off the list of finalists, so he thought he had missed out until a Tribune reporter told him. He declined to say how they qualified as social equity applicants, but said their business partner, Terry Bittner, is a military veteran.

“I’m speechless right now,” Jon Kemp said. “We knew this was David vs. Goliath, but I felt our application was great.”

There was spirited debate at the city council whether to allow a dispensary, Kemp said, but he felt their track record of running a business helped them get local approval.