A well-connected River North cannabis dispensary has filed suit to try to keep a competitor from opening its doors nearby.
GRI Holdings LLC, which operates a Green Rose store, filed suit this week to prevent Bio-Pharm LLC from opening a store two blocks away in the former Rainforest Cafe at Clark and Ohio streets.
The suit is against Bio-Pharm and the Illinois Department of Financial and Professional Regulation, claiming the agency is illegally approving the license.
At issue is part of the law that legalized marijuana in Illinois. To prevent oversaturation in the most lucrative areas, the law has a general prohibition against pot stores locating within 1,500 feet of an existing weed retailer.
But lawmakers made an exception for “social equity” businesses, generally defined as those with majority ownership by people with minor cannabis charges or convictions, or those who live in areas with high poverty or arrest rates, or employees from those areas.
That exception resulted in four weed retailers locating within a few blocks of each other downtown. One of those, Green Rose, includes owners restaurateur Phil Stefani, former Chicago police commander Thomas Wheeler Jr., and consultant Jay Stewart, former head of cannabis dispensary licensing for the state.
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Green Rose qualified for licensing by hiring people who lived in social equity areas, rather than having owners who qualified.
Progressive Treatment Solutions, or PTS Corp., which operates a grow house and five Consume dispensaries in Norwood Park and elsewhere in Illinois, previously had been rebuffed from opening at Rainforest Cafe because PTS was not a social equity license holder. It teamed up with Bio-Pharm, which is a social equity licensee, to try to open on the site.
After initially rejecting that proposal, the Illinois Department of Financial and Professional Regulation gave preliminary approval for the plan. But the opening has been delayed by another lawsuit by a River North resident who asserts that Chicago’s zoning approval process was flawed.
The new suit by Green Rose argues that the state law does not allow social equity businesses to move within 1,500 feet of each other — as regulators stated publicly, before revising rules to allow it. While the law sets parameters for licenses, the agency’s rules govern the specifics of licensing. State regulators and Bio-Pharm did not immediately respond to requests for comment.
In addition, a letter from 12 state lawmakers to state regulators stated their siting social equity businesses near each other violates the intent of the law and creates too much competition for startup businesses.
“The initial vision was to empower these businesses to establish themselves successfully in various prime locations,” the lawmakers wrote, “without having to worry about other social equity groups setting up shop nearby.”
