TRO hearing set over medical marijuana license controversy

Ann Maher Mar. 3, 2015, 1:58pm

A Cook County judge will decide whether to halt licensing for a medical marijuana cultivation facility to a controversial applicant following a 2:30 p.m. hearing today.

PM Rx LLC filed suit last week against the Illinois Department of Agriculture seeking to enjoin the department from issuing a growing permit to its rival Cresco Labs in a district that includes Kankakee.

In its suit, PM Rx argues that the Department of Agriculture failed to follow its own rules for reviewing applications by not conducting required background checks, awarding a permit to a company that lacked adequate funding and not adhering to an applicant scoring system it created.

PM Rx argues that Cresco lead cultivator and consultant Kayvon Khalatbari has publicly admitted his past history as a dealer and consumer of illicit drugs.

It also argues that Cresco, which has two other permits to grow in other parts of the state, lacked the funding necessary to be awarded permits in three total districts.

"Of the $7 million Cresco claims to possess now, $4 million was apparently raised in the fall, after applications had been submitted," PM Rx argues.

"In contrast, at the time of its application, Plaintiff had already secured $600,000 in liquid funds and $10 million in total investments."

PM Rx also argues that under a scoring system adopted by the Department of Agriculture, Cresco received different scores in the three districts where it applied..."demonstrating that the scoring (which was supposed to be performed applying the same system to each application in a fair and unbiased fashion) was in fact performed arbitrarily."

"Indeed, Cresco’s bona fides for purposes of opening up a facility would be the same, regardless of which district in which it was applying," PM Rx argues.

The company says that Gov. Bruce Rauner's administration found problems with the application process after it conducted a legal review, and later released this statement:

"We understood and acknowledged that the process the Quinn administration applied would likely expose the State to significant and costly litigation. We believe the steps we took to fix the errors in the Quinn selection process reduce, but cannot entirely eliminate, the risk of litigation. We will fully participate in any judicial review of the selection process and comply with any orders issued by a court as it relates to this particular applicant or any other applicant that seeks judicial review."

Peter E. Kanaris and John N. Rooks of Fisher Kanaris in Chicago represent PM Rx.

Circuit Judge Kathleen Kennedy presides.

A newly formed association that advocates for the "honest and straightforward" application and enforcement of the state's medical cannabis law - the Illinois Cannabis Therapeutics Association (ICTA) - is closely observing what happens in PM Rx's case.

"The ILCTA is committed to ensuring a fair and transparent process for therapeutic cannabis in Illinois,"said the group's executive director Scott McPherson.

"We support strict enforcement of rules and regulations surrounding therapeutic cannabis cultivation, distribution, and patient use."

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