Yesterday the Illinois Department of Financial and Professional Regulation issued notice of an emergency rule that, if enacted, will govern the issue of what happens if there is a tie between applicants in the current point-based scoring process for Conditional Adult Use Dispensing Organization licenses under Illinois’s Cannabis Regulation and Tax Act (410 ILCS 705).

Briefly, given that there are 250 points available to each cannabis dispensary license applicant in the cannabis point system as detailed in the statute (plus an extra 2 for community engagement) the system allows for a tie as all or some of the applicants in the top spots for a BLS district could end up with an equal number of points.

The Cannabis Regulation and Tax Act awards licenses to the highest point achievers, but does not address what should happen in the event of a tie, so the Department has adopted this emergency rule.

Applicants in a tie will be allowed entry into the drawing on a per applicant – NOT PER APPLICATION – basis and spots in the lottery are further limited by relatedness of principal officers such that any lottery can only contain as many applicants with a related principal officer as there are potential cannabis dispensary licenses up for awarding in the lottery. 

Additionally, the emergency rule eliminates the need to go through the administrative review process to sue over issues an unsuccessful applicant may want to challenge in a lawsuit and allows the applicant to file suit against the Department in court.

Some potential issues with this:

  • Wasn’t the intent of Illinois’s Cannabis Act to have a factored and merit based analysis and not just leave the methodology up to a draw? As the recent FAQs show, some of the points are simply awarded on a binary yes or no basis, when they could be broken up into a series of questions which, even on such a basis, could result in further differentiation between applicants. For example, if all the experience points just weren’t awarded on a yes or no basis, but if there were fifteen questions about experience on such a basis then only in getting all fifteen questions right would the full fifteen be awarded, but a lesser number would result for some but not all issues/questions.
  • Why does the lottery take into account the number of applicants a person is affiliated with and not simply the number of tied applications submitted when the Act clearly favos applications over applicants? It would appear that the emergency rule regarding a tie in the process for awarding cannabis dispensary licenses does something interesting in entering people into the drawing/lottery for a tie – it negates their applications. Illinois Cannabis Attorneys and Cannabis Dispensary Applicants will note that the rule does not state that all similar scoring applications will be entered, it says that the “applicants” will be entered, so in a situation where, as here, the Act and rules allow one applicant to submit the same form for multiple applications, if that form scored a tie, you would ostensibly only get one entry into the lottery even though you had paid for multiple applications. Section 1291.50(a)(1) of the proposed emergency rule improperly limits the number of “applicants” in the lottery which is in no way consistent with the Act which allows an applicant to submit multiple applications for a given region. The way the tie-breaker rule reads, a cannabis dispensary applicant with 20 applications all with the same score tied with one other applicant for a final remaining dispensary license in a BLS region would only have one slot and not 20 whereas the Act, assuming that that applicant had the highest score for 25 available licenses with no tied other applications would award 20 licenses to the applicant. Why does the tie-breaking process eliminate the applications thereby negating the applicant’s payment of the fee – will the fee be refunded in such a case?
  • There appears to be a typo in 1291.50(c)(3) and it should probably read that the number of eligible applicants drawn will be five times the number of remaining available licenses, not eligible applicants.

The post Illinois issues emergency rule for tie-breaker situations in adult use cannabis dispensary licensure point-scoring process appeared first on Libation Law Blog.