Legalization

Illinois high court to rule on cannabis-license dispute

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CHICAGO (AP) – The stage is set for a decisive legal battle in Illinois’ highest court between a large, well-established company and a far smaller upstart over a cannabis-growing license potentially worth millions.

The long-running case between Curative Health Cultivation LLC and Medponics Illinois LLC is expected to be heard by the Illinois Supreme Court early in 2021, the Chicago Tribune reported.

Aurora-based Curative – owned by New York-based Columbia Care, one of the world’s largest cannabis operators – was granted the coveted license in 2015, then lost it after a lower-court ruled against it, before managing to get that ruling reversed on appeal.

Medponics, which wants to set up operations in Zion, hopes that the high court will side with it, clearing the way for it to secure the license. It would use it to launch a large-scale cannabis business that would include a hydroponics greenhouse in Zion, just north of Chicago near the Wisconsin border.

The city of Zion has backed Medponics bid for the license, with expectations that a land-lease deal with the company could generate some $1.5 million in new revenue for the cash-strapped city that was hit hard financially by the closure of a major nuclear plant in 1998.

“This is just the right thing to do … to award the license to them,” said the city’s administrator, David Knabel.

Many city leaders in Aurora, a suburb just west of Chicago, have been equally vocal in their support for Curative’s claims to the license.

The license in question, which is among the last of its kind to be disputed in court, would enable the production of large amounts of marijuana for medical and recreational uses, making it more lucrative than more recent and restrictive permits, according to the Tribune.

Retail cannabis sales in Illinois were expected to top $1 billion for 2020, and the kind of large-scale operation envisioned by the holder of the contested license could be valued at around $100 million, financial analyst Matt Karnes, of Greenwave Advisors in New York City, estimated.

The legal issues in the case are complex. They are focused on the vetting process of the companies who vied for such licenses some five years ago. Medponics said that, while Curative did receive the highest rating of the companies considered, it should have been disqualified because its operations would be too close to an area zoned exclusively for residential purposes.

The lower court judge, Michael Fusz, agreed with Medponics in a lawsuit it filed in 2017, saying in his written ruling that Illinois’ agriculture department didn’t properly apply state law in picking Curative.

“The award of the license to Curative is therefore clearly erroneous; the Court has the definite and firm conviction that a mistake has been made,” Fusz wrote.

But the judge also said his ruling wouldn’t necessarily mean the license should go to Medponics, which garnered the fifth highest score during the vetting. He said the department should reevaluate and rescore the applicants. A state appeals court then partially overturned that ruling, reinstating the license, concluding that the zoning issue wasn’t as clear cut as the lower court found.

According to the Tribune, even if the Illinois Supreme Court rules against Curative, it will likely still be up to the state to decide if Medponics or some other company ultimately gets that license.