Has the Illinois Cannabis Dispensary Lottery been rigged? It sure looks that way!

I was born in Rogers Park, Chicago. When I left college (one of the times) I moved back to work in a Greek and Albanian restaurant and to live with my grandparents. I used to enjoy sitting at the breakfast table with them and reading the tribune, which often contained stories of corruption in the cities and inland. My grandfather shared stories of local aldermen spending $ 1 million to get $ 70,000 jobs (which is still happening) and related the sagas of the state’s jailed governors (there were four in his day). This kind of stuff is endemic to Illinois, the nation’s most corrupt state by evidence and shouting. It’s chinatown.

Since I am personally interested in these transplant and misconduct stories, and because I am a cannabis business attorney, I thoroughly enjoyed this gem of a post by Thomas Howard, Esq., On LinkedIn last week:

Do I trust Mr. Howard’s research and his math? I want – after all, he’s a lawyer and “license nerd”. Of course, nothing I wrote about Illinois above would be admissible as evidence of a lottery ticket if we were in court; nor would Mr. Howard write anything (although he is closer). You have to prove it. But the lottery was already fraught with problems that were declared “clerical failures” and led to at least six lawsuits. If Mr Howard’s data is correct, we should see more of this soon on theories ranging from civil rights to administrative procedures. A couple of takeaways here in the meantime.

Cannabis license lotteries are a bad idea

Cannabis license lotteries inevitably lead to litigation, as a quick Google search of states like Washington and Massachusetts will reveal until at least 2014. Lotteries in general are a problematic tool when dealing with scarce supplies, as shown in categories from Housing to Visa. For cannabis, the government creates and regulates the scarcity in real time, so it’s probably more like visas than housing. In other words, in the case of cannabis, public order does not merge with market factors over a long period of time to create a limited class of goods. The government just says, “We’re only going to issue X cannabis licenses, and you can all fight for them.”

Photo by Pedro Lastra via Unsplash

When a jurisdiction decides to create a limited pool of cannabis licenses, it typically takes one of three licensing approaches. These include: 1) competitive licenses (which can also be controversial – we have filed these lawsuits); 2) “first to apply” (always a disaster – e.g. LA in 2019; Oregon in 2014); or 3) the lottery. Of the three, competitive licensing and lotteries are attractive to policymakers because the systems can be designed to favor certain classes of applicants – which Illinois allegedly tried to do with social justice applicants.

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However, in my opinion, the best approach is NOT to artificially limit license numbers. There are better ways to help applicants for social justice and marginalized communities, from priority application processing to grants, reduced or waived fees, reinvestment of tax revenues in disproportionately affected areas, automatic deletion, and so on licensed companies, with zoning laws and local control factors that are allowed to shape the market. Could you end up like Oklahoma? Secure. But things will balance each other out. Here, the market, not the state, should select winners.

Public records and transparency are essential

We recently wrote about public records in the cannabis context, spurred on by some frustrating experiences here in Oregon. The Public Register Act is vital in the context of cannabis licensing. Presumably, Mr Howard extrapolated his data from a review of public records, a valuable tool for government scrutiny, gathering market intelligence, or even defending cannabis companies in administrative proceedings.

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Some government records, including meetings, are made public and easily accessible to the public. Other records require some digging. You may even have to pay the government agency a small fee for their time and effort in fulfilling the request; but most of the information is up for grabs. For the Illinois cannabis lottery, it appears this is where you can find information about the process and program. But that’s not the end of the story. You can bet that the state has a spate of public record requests regarding its cannabis lottery and will be for a while.

“A couple of politicians meeting in Chicago is now a crime scene”

A federal attorney named Jeff Cramer told us this wonderful joke. Chicago – and Illinois – have always been known to be corrupt. But was the lottery rigged? Maybe like this! It is more likely, however, that most of these licenses were legitimately and some were improperly granted. If so, the system would still follow a great Illinois tradition that goes back generations – politicians who use a state machine for personal gain. Why should cannabis be different?

Vince Sliwoski is an attorney with Harris Bricken, a law firm with attorneys in Seattle, Portland, Los Angeles, San Francisco, Barcelona, ​​and Beijing. This story was originally published on the Canna Law Blog and was republished with permission.