Judge refuses to toss TRO over pot-growing permit; sets plaintiff's bond at $200K, not $2M as requested

Bethany Krajelis Mar. 19, 2015, 4:47pm

A temporary restraining order preventing the state from issuing a pot-growing permit in the Kankakee area will remain in place until further order of the court, a Cook County judge ruled Thursday.

Cook County Circuit Judge Kathleen Kennedy delivered her ruling from the bench, shortly after attorneys for the three parties notified her they had just learned the First District Appellate Court rejected the state's recent appeal in the case by upholding her decision to enter the TRO.

In addition to denying defendant Cresco Labs' motion to dissolve the TRO, Kennedy granted, in part, requests from Cresco and the state to make the plaintiff, PM Rx, post bond as security for potential damages if it turned out the TRO was wrongfully entered.

While the defendants sought a bond of at least $2 million, Kennedy set it at $200,000, an amount she said is appropriate and will go to the state, not Cresco. She gave PM Rx 10 days to post it.

Kennedy, who heard two hours of arguments over the TRO and bond issues Wednesday, also told the attorneys to set a time to meet Monday. They agreed on 9:30 a.m. It is unclear exactly what will be the focus of next week's hearing, but the judge did note the state's motion to dismiss PM Rx's suit remains pending.

PM Rx sued the Illinois Department of Agriculture last month following the Feb. 2 announcement from Gov. Bruce Rauner’s administration regarding the winners of  licenses to grow and sell pot under the medical marijuana pilot program.

PM Rx had applied for the license to grow in the Kankakee area, but lost out to Cresco Labs, which won a total of three states licenses. The new program allows for one cultivation license to be issued in each of the state’s 22 police districts.

Cresco was added as a defendant to PM Rx’s suit earlier this month, after Kennedy ordered it to do so and entered the temporary restraining order to prevent the state from awarding the permit for Illinois State Police District 21, the one at issue in the suit.

In its initial lawsuit, PM Rx accused the state of failing to follow its own rules for reviewing and scoring applications for pot-growing licenses and not conducting the required background checks before awarding Cresco the District 21 permit.

The company also pointed out that Cresco’s lead cultivator and consultant Kayvon Khalatbari has publicly admitted his past history as a dealer and consumer of illicit drugs, and alleged Cresco lacked the funding necessary to be awarded licenses in three districts.

At Wednesday afternoon’s hearing, Steven Levy, one of the attorneys representing Cresco from Goldberg Kohn Ltd. in Chicago, asked Kennedy to dissolve her March 4 TRO, saying his clients rights were violated because it didn’t have a chance to respond to the TRO request since it wasn’t named a party until after she entered it.

On behalf of Cresco, he also said the TRO should be dissolved because PM Rx can’t show it it has a likelihood of being successful on its claims.

PM Rx's attorney, John Rooks of Fisher Kanaris, told Kennedy on Wednesday that the TRO didn’t violate Cresco’s rights because it wouldn’t have made a difference if it had been given notice and named as a defendant earlier.

Rooks further argued that Cresco lacked the standing needed to ask for the TRO to be dissolved. He said Cresco was not party to the TRO because it was not a named party and the TRO prevented the state from taking action on the District 21 license.

At Thursday's hearing, Kennedy briefly explained that Cresco failed to convince her that she erroneously entered the TRO. She said the initial complaint, on which she entered the TRO, sought no relief against Cresco, but now that an amended complaint has been filed naming it as a party, Cresco can participate going forward.

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