This article is authored by Amber D. Lengacher, CEO/Founder of Purple Circle Services, and is presented here at Beard Bros Pharms. We are committed to amplifying diverse industry voices and fostering informed discussions on critical cannabis sector issues.
Last week, a complaint was filed in Sangamon County Court against the Illinois Department of Agriculture (“IDOA”), which oversees part of Illinois’ adult-use cannabis program. The plaintiffs include several licensed “social equity” adult-use transporting organizations (“Independent Transporters”) in Illinois who are part of a larger group of Independent Transporters that are 68.8% majority owned by people who identify with a minority population and/or women.
The plaintiffs allege that the IDOA’s administration of the Cannabis Regulation and Tax Act (CRTA) (the “CRTA”) had a discriminatory and damaging impact on minority- and/or women-owned Independent Transporters in violation of the Illinois Civil Rights Act of 2003 (the “ICRA”). The plaintiffs are represented by Benesch Friedlander Coplan & Aronoff LLP (“Benesch”), namely attorneys Bryna Dahlin, Ali Jubelirer and Denis Yavorskiy. I am a long-time cannabis consultant and brought the case to Benesch after working with Independent Transporters since 2020 to try to make their businesses viable.
The plaintiff Independent Transporters all met criteria set forth by the State of Illinois for “social equity” cannabis licensees who were disproportionately harmed by the failed war on drugs. These social equity licensees were supposed to be prioritized when Illinois launched the adult-use cannabis program in 2020 with the central goal of creating diversity, equity and inclusion.
Nevertheless, since 2020, the plaintiffs have faced insurmountable odds – many of which were unnecessarily caused, exacerbated, or ignored by the IDOA – to obtain their license, become operational, find customers, and generate revenue.
Meanwhile, at the IDOA’s discretion and before a single Independent Transporter was even issued a license, the IDOA issued secondary “quickie” transporter applications and licenses to the established Medical Cultivation Centers in Illinois (who controlled 95% or more of the $1.5b annual adult-use market in FY2023), allowing them to begin transporting their own products. When asked for secondary application in a FOIA request in 2023, the IDOA failed to provide a copy, but IDOA staff have since confirmed this timeline in subsequent FOIA request responses.
The disparities became even more apparent after the Illinois Cannabis Regulation Oversight Office (“CROO”) released a CRTA-mandated Disparity Study (the “Study”), which evaluated the effectiveness of the Illinois cannabis program in combating past discriminatory harms and diversifying the industry. When the Study ended on January 1, 2023, there were no active Independent Transporters, so it was too early to determine whether the “observed disparities” were evidence of discrimination.
Despite this, when the Study was released in July 2024, it recommended that other cannabis operators be required to use third-party transporters for at least some part of their transportation needs.
Plaintiffs’ complaint uses the Study findings as the foundation for the updated data cited in the lawsuit. Plaintiffs say this data shows only 2 out of 55 minority and/or women-owned independent transporters are active after four years (and notes that none are stable or profitable).
Last year, a group of Independent Transporters known as the Illinois Independent Cannabis Transporters Association worked with state lawmakers to get legislation passed in Illinois that waived their renewal fees for three years and placed a moratorium on additional transporter licensing (which was required annually). Unfortunately though, the new law did not solve the ultimate issue they were facing: that they cannot get enough contracts to make their businesses viable.
These plaintiffs have invested their respective life savings into cannabis transportation businesses after being told it was their opportunity at generational wealth. The reality is they’ve lost everything. This case, if successful, will hopefully help these plaintiffs recover some damages for the harm they’ve experienced and have a positive impact for social equity applicants and licensees around the country.
It’s time that lawmakers and regulators understand, if they are propping up a brand-new industry supply chain like in cannabis, they have a duty to ensure that the supply chain works for everyone, including social equity operators.
Contact Amber D. Lengacher at Amber@PurpleCircleServices.com for more information.
