Craft cannabis growers want judge to reverse order that has put the industry on hold in Illinois amid lawsuit

Craft cannabis growers hope that a judge Wednesday will reverse his order that shut down the entire industry, arguing that they were unfairly shut out of the process.

The court order appears to affect all craft grower licenses, including the 40 issued last year and 48 issued this year. Winnebago County Associate Judge Stephen Balogh issued the sweeping order June 6 after holding a hearing without anyone representing the state or the craft growers.

Scott Redman, president of the Illinois Independent Craft Growers Association, an attorney and craft license winner, said the ruling means that startup companies will continue to lose money on property, financing and consultants with no idea when they’ll be able to conduct business.

“The normal discussions a judge would have for something like this that affects an entire industry, we don’t believe happened,” Redman said. “This stops all aspects of the business. It’s a disaster.”

The order declares that “all craft cannabis licenses are locked in place and can’t start operating by Defendants issuing preconstruction permits, security plan approvals, site plan approvals, final construction approvals, label/packaging approvals, granting extensions to the operational requirements, or any other affirmative action that would permit craft growers to operate.”

The temporary restraining order comes in response to a suit filed by Sustainable Innovations Inc. and 11 other craft grow license applicants against the Illinois Department of Agriculture and its director, Jerry Costello II.

The order states that the defendants were given notice and failed to appear. The Illinois attorney general’s office confirmed it was an “ex parte” ruling with only the plaintiffs present, but did not explain why it did not attend. In a quick turnaround, the suit was filed Friday, June 3, and the hearing was held and the ruling issued on the following Monday.

The decree states that based on the pleadings, the plaintiffs would suffer “irreparable harm” if they don’t get a license and have “a likelihood of success” for their lawsuit.

In response, the attorney general’s office filed requests for the judge to reverse his order and dismiss the lawsuit. The state lawyers said they weren’t properly notified, and didn’t realize the plaintiffs were seeking a temporary restraining order. They argued that the court doesn’t have jurisdiction over the matter, and that the plaintiffs are “highly unlikely” to win their case.

The losing applicants don’t face irreparable harm, the state’s lawyers argued, because the state can give each of them the ability to obtain a license through judicial review if they show they should have gotten one.

The new restraining order came in contrast to a ruling issued in a federal case by U.S. District Judge Rebecca Pallmeyer Thursday, though the specifics differed significantly. In that case, two would-be dispensary applicants sought an injunction against the state issuing licenses for 185 cannabis dispensaries. After about a month of consideration, the judge allowed the licensing to proceed.

The new suit challenges various licensing rule changes by the Department of Agriculture that the plaintiffs say violated the state law that authorized craft licenses. For instance, while the law allowed applicants to qualify for favored “social equity” status by hiring workers from areas most affected by the war on drugs, the agency changed the rules to allow those applicants to lay off those employees while waiting for a license.

The plaintiffs maintain they are “true” social equity applicants, with majority ownership by people who lived in areas disproportionately affected by poverty or cannabis law enforcement, or who had low-level cannabis arrests or prosecutions.

The suit also challenges the state allowing applicants to change the locations of their proposed businesses during the licensing process. It further notes that the law called for licensees to be operational within six months, but none of them have opened for business.

The plaintiffs say they do not have majority veteran ownership status, and also are challenging the bonus points for veterans in the license application scoring that resulted in all of the winners having to be veteran-owned.